Battery Recycling

What it is

Battery recycling takes back retired vehicle batteries, breaks them down, and recovers the metals: nickel, cobalt, lithium, manganese and, increasingly, graphite and phosphate. The recovered metals go back into cathode materials and lithium supply. China's regulator brought in interim measures for recycling waste power batteries in the first half of 2026, which Hunan Yuneng cites in its report (2026 interim report, p. 11).

Where China stands

• GEM (格林美, 002340.SZ) earned ¥942.4m from power battery recycling in the first half of 2026, up 8.70%, 5.24% of its revenue, at a 9.69% gross margin. Its larger business is metal recycling and extraction, at ¥7.16bn and a 13.77% margin. It says it has six recycling plants in China and joint ventures in South Korea and Indonesia, and handles 10% of China's retired lithium batteries, which is its own claim (2026 interim report, pp. 10, 11, 33).
• Huayou Cobalt (华友钴业, 603799.SH) has three subsidiaries on the approved recycler lists and works with carmakers including BMW, Volkswagen, Toyota, NIO and Li Auto, but gives no recycling revenue. It quotes SMM data that recycled material rose from about 13% of cobalt raw material supply in early 2025 to about 34% in the second quarter of 2026 (2026 interim report, pp. 9, 10).
• Others build recycling into their chains. CATL reports battery materials and recycling together with mineral resources at ¥18.8bn, up 67.2% (2026 interim report, p. 16), Hunan Yuneng is adding recycling, and Tinci uses recycled lithium to supply its salts (Yuneng p. 15, Tinci p. 12).

Economics

Recycling pulls in cobalt supply at a time when primary supply is short: Huayou says cobalt raw material was in shortage by about 23,000 tonnes in the half and that export quotas from the main supplying country limit supply (Huayou pp. 9, 10). GEM's separate battery line earns under 10%, and its scrapped-vehicle line fell 69.74% in the half (GEM p. 33).

Our view: recycling today matters more as a source of cobalt and nickel than as a business in itself. The recycler with the most disclosure, GEM, makes about a tenth of its sales from batteries at a 9.7% margin, and its profit comes from metals and materials. The large amounts of retired batteries that would make recycling a big business are still ahead.

What to watch

• Recycled share of metal supply. The 13% to 34% jump in recycled cobalt is the figure to track.
• Regulation. The interim measures put recycling under closer control, and three Huayou subsidiaries are already on the approved lists (Yuneng p. 11, Huayou p. 9).
• Metal prices. GEM and Huayou both report earnings affected by nickel and cobalt prices and by the sulfur price rise in Indonesia (GEM p. 12, Huayou p. 9).