What is Black Mass?

Black mass is the remains of lithium-ion battery packs after shredding, sorting, and some processing. It contains valuable metals such as lithium, cobalt, nickel, and manganese, making it a crucial material for battery recycling. As demand for electric vehicles (EVs) and energy storage solutions increases, black mass has become a key commodity in the global battery supply chain.

However, its classification varies by country, influencing trade flows, refining capabilities, and pricing. Some nations treat black mass as a hazardous material, while others are working to integrate it more seamlessly into their battery recycling ecosystems.

Differing Approaches: The US vs. the EU

United States: Expanding Refining Capacity but Reliant on Exports

The U.S. is poised for significant growth in black mass production, with forecasts predicting an increase from 40,000 tonnes in 2024 to 270,000 tonnes by 2034. However, despite a push for domestic refining, much of this material is still exported due to limited processing capacity. The Biden administration has introduced incentives such as the Bipartisan Infrastructure Law and the Inflation Reduction Act to strengthen domestic battery recycling, but refining infrastructure remains insufficient. Until capacity catches up with production, U.S. black mass will continue flowing to South Korea and Southeast Asia, where buyers offer higher payables.

European Union: Tightening Export Controls to Secure Supply

In contrast, the EU is moving toward stricter regulations. The European Commission is considering classifying black mass as hazardous waste, which would restrict exports outside OECD countries. This aligns with the EU’s Critical Raw Materials Act, which prioritizes securing domestic supply chains for essential battery materials. While these measures aim to boost Europe’s recycling sector, the region still lacks sufficient refining capabilities. Unless new capacity is developed, surplus black mass may face bottlenecks, limiting Europe's ability to capitalize on its own recycling efforts.

China’s Market Opportunity and Regional Responses

China: Opening the Doors to Black Mass Imports?

China has historically classified black mass as hazardous waste, restricting its import. However, recent signals suggest a shift in policy. Limited volumes of high-quality black mass from cathodes with over 50% nickel, cobalt, and manganese content have already entered the country. Authorities are reportedly considering reclassifying black mass as a “product,” which would make imports easier and intensify global competition for supply.

If China fully opens its market, demand for black mass will surge, driving up prices and potentially disrupting existing trade routes. Companies in Southeast Asia and South Korea, which currently enjoy steady access to black mass, are particularly concerned about losing supply to Chinese buyers.

South Korea and Southeast Asia: Bracing for Increased Competition

South Korean recyclers are already feeling the effects of rising competition. With China potentially easing import restrictions, black mass prices are increasing, making it harder for South Korean buyers to secure material at competitive rates. Payables for lithium cobalt oxide (LCO) black mass are rising, reflecting a tightening market.

Meanwhile, Southeast Asian processors in Thailand, Malaysia, and the Philippines have carved out a niche by refining black mass to remove unwanted elements like lead, cadmium, and lithium. This preprocessing allows them to classify black mass under different HS codes, such as mixed hydroxide precipitate (MHP), making it easier to export to China. If China fully liberalizes black mass imports, these intermediary processors may need to rethink their strategies as Chinese buyers bypass them to source directly from global suppliers.

Market Outlook and Strategic Considerations

The black mass market is evolving rapidly, driven by shifting regulatory landscapes and increasing competition. If China becomes a major importer, the balance of power in global black mass trade will change, impacting suppliers in the U.S., EU, South Korea, and Southeast Asia.

To remain competitive, market participants must adapt by securing long-term supply agreements, investing in refining capacity, and closely monitoring policy developments. As battery recycling becomes a cornerstone of sustainable energy transitions, black mass is set to become one of the most valuable commodities in the global clean energy economy.

Additionally, these market and regulatory dynamics are contributing to increased volatility in the commodities used in black mass, particularly lithium, cobalt, and nickel. Market participants can hedge their exposure to these price fluctuations through risk management strategies and financial instruments. Platforms like Pillar offer solutions to traders, suppliers, and end-users to mitigate risk and insulate their businesses from market turbulence.