Closing the Loop: The Critical Role of Metal Recycling in a Net-Zero Future

Why Metal Recycling Matters

The circular economy, which emphasizes reducing waste and reusing resources, is becoming a focal point in the push for sustainability. Unlike the traditional linear economy, where materials are extracted, used, and discarded, a circular approach prioritizes recycling and repurposing metals to minimize waste.

According to the International Energy Agency (IEA), scaling up metal recycling could reduce the need for new mining activity by 25-40% by 2050. Specifically, it could lower the need for new copper and cobalt mining by as much as 40% and lithium and nickel by 25%.

Mining Capital Requirements in 2040 (shows the financial challenge of relying solely on mining and the potential savings from recycling)

Source: IEA (2024), Recycling of Critical Minerals, IEA, Paris. Analysis based on the Announced Pledges Scenario (APS), covering the announced ambitions and targets for emissions reductions by governments.

The Challenge of Recycling Rare Earths and Lithium

While metals like aluminum and copper have well-established recycling systems, recycling rare earth metals and lithium remains highly complex. Rare earth elements are often used in small amounts within highly specialized applications, making their extraction from end-of-life products technically and economically challenging. Similarly, lithium recycling from batteries is hindered by evolving battery chemistries, inconsistent recycling infrastructure, and high processing costs.

End-of-Life Recycling Rates for Select Metals (illustrates low recycling rates for lithium and rare earth elements)

Source: IEA (2021), The Role of Critical Minerals in Clean Energy Transitions. Data used: Henckens (2021); UNEP (2011) for aluminum; Sverdrup and Ragnarsdottir (2016) for platinum and palladium; OECD (2019) for nickel and cobalt.

Increasing Investment in Recycling Technologies

Given the critical role of recycling in reducing the strain on primary metal supply, investments in battery and rare earth recycling technologies have grown significantly. Venture capital investment in battery recycling has risen sharply since 2020, driven by the increasing need to recover valuable materials from electric vehicle (EV) batteries and industrial applications.

Venture Capital Investment in Battery Recycling and Reuse (highlights the rising investment trend in battery recycling technologies)

Source: IEA analysis based on Cleantech Group i3 database (2023).

Conclusion: A Path Forward

Metal recycling could play a crucial role in securing the materials needed for global electrification while reducing the environmental and geopolitical risks associated with primary mining. However, major challenges remain, especially around recycling rare earth elements and lithium, which require further technological advancements. With increasing investment in recycling infrastructure, the sector could be grow significantly, offering both environmental and economic benefits in the transition to a sustainable, low-carbon economy.

For a deeper analysis of this topic, we encourage you to read the full white paper, which explores the challenges, opportunities, and developments in the metals recycling industry.