South Korea's "urban mining" extracts rare battery materials from recycling

Gunsan, South Korea (Reuters) - A factory in a rural factory in South Korea is busy picking up some of the world's most coveted metals for batteries that power electric cars.

But they are not digging or refining underground. Instead, they are sorting out a bunch of lithium-ion batteries from their old phones and laptops.

As China actively seeks overseas cobalt and lithium electric vehicles to seek price increases and lead to a shortage of major metals in the world, South Korea is increasingly turning to this “urban mining” to recover cobalt, lithium and other rare metals from e-waste.

According to the Korea Industrial Research Institute, 2016 is the most available year for data. From the recycled materials, it extracted 19.6 trillion won (about 18.38 billion US dollars) of metal, accounting for about 22% of the total metal demand in the country.

SungEelHiTech is Korea's largest battery recycler. Ten years ago, the company was at the crossroads of plasma TV panels, extracting gold and silver from it and began to phase out.

It is now part of the supply chain of some of the world's major battery manufacturers, including Samsung SDI (006400.KS) and LGChem (051910.KS).

According to YiKang-myung, president of SungEelHiTech, this year, the company has tripled its production capacity due to a shortage of minerals. It plans to go public in 2020.

“We received a lot of calls from interested people,” Yi said in an interview at the factory.

“The major auto companies are interested in our products, he said, without naming automakers. He added that the battery company and South Korean steelmaker Posco are interested in entering the recycling business.

Because China, the world's largest metal user, captures mineral resources in countries such as the Democratic Republic of the Congo and Chile, scarcity is unlikely to weaken in the short term.

SungEelHiTech, located in the southwestern city of the mountains, processes approximately 8,000 tons of waste lithium-ion batteries and metal scrap annually.

It can produce 830 tons of lithium phosphate, 1,000 tons of cobalt metal equivalent and 600 tons of nickel.

Posco (005490.KS) processes lithium phosphate from SungEel to produce lithium carbonate as a rechargeable battery manufacturer LG and Samsung, according to SungEel and Posco.

Yi said that battery recyclers plan to increase their processing capacity to 24,000 tons by 2019 and further expand in 2021, including increasing their overseas operations.

However, the company is smaller than foreign competitors such as Jiangxi Jifeng Lithium (002460.SZ) and GEM (002340.SZ) in China, and UmicoreSA (UMI.BR) in Belgium.

According to data from the National Institute of Earth Sciences and Mineral Resources of Korea, the main metals imported from South Korea for lithium-ion batteries have jumped in the past three years. In 2017, South Korea imported 3.5 million tons of nickel, an increase of 2% over 2016. Cobalt imports rose by 3.4% year-on-year to 13,972 tons.

Cobalt prices rose to an average of $87,615 per ton in March, about four times higher than in January 2016.

This has led to more long-term supply contracts and development of mine investment and recycling. A company spokesperson said that Samsung SDI may start its own recycling business.

ParkJai-koo, an urban mining expert at Hanyang University in Seoul, said e-waste recycling can help lower prices and limit dependence on external sources of rare metals.

“Korea needs resources, but most of it is imported,” Park said. “Urban mining is more likely to be a road.”

Differential manufacturer

According to the Korea Urban Mining Association, about 150 small and medium-sized enterprises are engaged in urban mining.

At SungEelHiTech, this process is not complicated or highly automated. After the worker removes the battery from the recycling device, the device is powered off and then ground into a powder that separates the various metals.

Most of the recovered products (60% to 70%) come from the United States and Europe, and the rest are from South Korea.

Recycling companies focus on extracting precious metals such as gold and silver. But four companies, including SungEelHiTech, can directly recycle cobalt or produce powders that can be extracted from rare metals.

The Ministry of the Environment of Korea changed its regulations in January to promote recycling by charging higher waste disposal prices.

Yum Un-joo, president of the Korea Urban Mining Association, said that renewable resources, if properly developed, could become a difference maker between the industry and his country.

Yum said: "For South Korea, we have no choice, but if we have resources to recycle, this may be our advantage."

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