IDTechEx reports the data behind the strategy; can the U.S. learn from its ally?

Critical material recovery in Europe is no longer a question of "if" but "when." The EU is rapidly building infrastructure to recover tens of thousands of tons of lithium-ion (Li-ion) battery metals and rare earth elements (REEs) by 2030. However, achieving full-scale material security will require more than just processing capacity – it will depend on effective collection and separation to ensure efficient recycling of end-of-life products.

IDTechEx's latest report predicts a key stopgap between reshoring and ramping up domestic production will require a concerted push toward developing circularity in waste streams – information the U.S. government and mining industry leaders can also use to effectively maneuver toward net zero in the coming decades.

The European Commission is aggressively scaling up its domestic capacity for critical material recovery to mitigate a host of supply chain risks. In March 2025, the EU Commission funded 47 strategic projects, with 10 specifically focused on recycling critical materials such as lithium, nickel, cobalt, graphite, manganese, and REEs.

"Recycling enables the reshoring of strategic regional supply of critical metals, reducing dependence on external and often geographically consolidated producers," said IDTechEx's technology analyst Jack Howley. "Recycling is less energy and carbon intensive, and thus more sustainable, than primary mining activities. Expanding recycling capacity is often considerably less capital intensive than the development of new mines and can be established in comparably fast timescales. Finally, critical metal recycling builds on existing waste collection infrastructure, providing additional economic value to recyclers."

An all-hands approach

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Supplying the growing demand for critical materials due to electrification and new technologies faces risks from geopolitical instability, trade restrictions, and limited reserves. The European Commission is investing in extensive recycling as a solution.

Europe's coordinated response aims not only to build recycling infrastructure but to integrate these capabilities across energy, automotive, and defense sectors that depend on secure access to vital metal and mineral feedstocks.

By supporting initiatives that stimulate innovation in recycling technologies and improve efficiency, scale, and cost-effectiveness, the EU is positioning itself as a leader in sustainable material recovery while creating new jobs and industrial capabilities across member states.

In December 2024, China implemented a ban on exports of antimony, gallium, and germanium to the United States. This was followed by further restrictions in 2025 on tungsten, tellurium, bismuth, molybdenum, and indium – all of which are essential, revealing Western nations' vulnerabilities in semiconductor and industrial supply chains.

These disruptions have catalyzed investment in recycling, highlighting the urgency for nations to diversify strategic material sources. Secondary raw materials from waste and end-of-life products offer a faster alternative to the long timelines of conventional mining.

Scaling challenges

Li-ion battery metal and REE recycling remain in an emerging phase and are unlikely to offer relief in the short term.

"A key reason for this is that waste containing critical lithium, nickel, cobalt and rare earths is simply not yet available in sufficiently high volume," said Howley. "Use of critical Li-ion battery metals and rare earth elements is consolidating in electrified energy (magnets in wind turbines) and transport applications (batteries in EVs). With typical equipment lifetimes ranging from 12 to 30 years and adoption still growing, a high volume and consistent waste feedstock stream for recycling is unlikely to be secured until at least the 2030s. This is reflected by the fact that as of 2025, recycling feedstocks remain dominated by manufacturing scrap, with minimal contribution from end-of-life waste."

However, REE recovery is gaining traction in Europe, with two flagship projects leading the charge: Caremag in France, which aims to process up to 2,000 metric tons of rare earth magnets annually by 2027 using hydrometallurgical and solvent extraction techniques; and HyProMag in Germany, scaling up its hydrogen processing technology, which is expected to process up to 500 metric tons of magnets at full capacity.

IDTechEx's latest report, "Critical Material Recovery 2025-2045: Technologies, Markets, Players," forecasts that by 2040, over 10,000 metric tons of REEs will be recovered annually, marking a significant step toward a circular economy for critical materials.

Battery recycling cornerstone

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These efforts align with the EU's goal of meeting 25% of its raw material demand through recycling by 2030. Raw material extraction is energy-intensive and polluting while recycling repurposes waste into resources, fostering a more resilient and self-sufficient material economy.

Recycling Li-ion batteries is still expected to pack the most punch in determining whether Europe can meet its raw material recycling targets in time. As the first wave of EVs approaches end-of-life over the next decade, their batteries present a massive opportunity for material recovery.

As of 2025, Europe's annual battery recycling capacity stands at 145 kilotons and is projected to grow substantially as more recycling plants come online to take on early EVs reaching end-of-life, with hydrometallurgical recycling outpacing pyrometallurgical methods due to its lower energy footprint and higher material recovery efficiency.

Although EVs will become a major source of recyclable batteries over the next decade, manufacturing scrap currently dominates the recycling feedstock. By 2045, IDTechEx estimates that the Li-ion battery recycling market will reach a staggering $52 billion, driven by the growing volume of decarbonized transport and storage technologies.

"The longevity of recycling looks guaranteed for critical Li-ion battery metals and rare earths, given their importance in electrified technologies such as batteries and induction motors," concludes Howley. "A holistic view of entire metal supply chains must be considered to ensure that recycled metals have a market to supply."

Secondary sources are a quick payoff

The IDTechEx report also highlights a striking trend: urban mining sources (e-waste, end-of-life EVs, industrial scrap) often contain higher concentrations of critical materials than natural ore deposits. This makes secondary sources not only abundant but also economically attractive for recovery efforts.

By 2045, an estimated 3.3 million metric tons of critical materials – worth over US$110 billion – will be recoverable from secondary sources, according to IDTechEx forecasts. The technologies used to extract critical materials – hydrometallurgy, pyrometallurgy, solvent extraction, ionic liquids, and others – are mature and efficient, with new methods springing out of research organizations at a constant rate. This reflects a global shift toward circular economies over extraction-driven models.

However, adaptation to the mixed and composite nature of secondary materials presents a daunting challenge. Devices today are manufactured using complex combinations of materials, adhesives, and coatings, which complicate disassembly and material separation. Despite this, innovation is advancing rapidly.

IdTEchEx

Success stories, market forces

Howley describes the recycling advantage as the world scrambles to develop friendly, domestic, and alternative resources: "How quickly recycling can provide a stopgap depends on existing processing capacity, and most importantly, whether sufficient volume of waste is available to make recycling economical. For example, in established platinum group metal recycling loops, secondary platinum, palladium, and rhodium are routinely recovered from spent automotive catalysts and other sources. The consistent and high-volume supply of platinum group metal-containing waste enables recycling to supply over 20% of global annual demand by weight."

Europe's established case studies provide a model for scaling other recycled material streams. Platinum group metals are routinely recycled largely due to their exceptionally high value and concentration in automotive and industrial applications. Similarly, germanium, widely used in fiber optics, infrared optics, and semiconductors, sees 20% of its global production sourced from recycled optical glass.

"Rising investment and capacity expansion in Li-ion battery metal and rare earth element recycling is a long-term approach for derisking critical material supply," Howley added. "Recyclers are building capacity at pace to meet future demand, in anticipation of secondary streams coming online in the 2030s. Over 140,000 tonnes per annum of battery recycling capacity was added globally between 2023 and 2024, and IDTechEx research finds that rare earth magnet recycling capacity is set to increase by as much as 60 times by 2027."

By 2045, the largest share of recoverable value is expected to shift toward materials used in batteries and electric motors due to the broader decarbonization of energy and transport, which is embedding high-value materials into more distributed and eventually disposable applications. As EV adoption scales and green technologies age out, their waste streams will soon represent a bottomless goldmine for recovery markets.

These successes highlight the economic drivers of recycling: high-value materials with defined uses tend to have better recovery rates. The same holds for emerging recycling sectors, where profitability will drive rapid implementation and long-term success. This suggests that while recycling has technical potential, its large-scale adoption will depend on market forces and industrial investment.

The next decade will be crucial in determining whether these initiatives can scale effectively to meet growing demand and close the loop.