Why We Invested in Metastable Materials
Theia Ventures is excited to announce its investment in Metastable Materials’ seed round led by Sequoia Capital, with participation from Speciale Invest and angel investors.
Metastable Materials is a deep-tech urban mining startup that extracts rare earth materials from end-of-life batteries using a chemical-free carbothermal reduction process. Metastable’s patent-pending technology reduces the capex and opex requirement for a recycling process thus providing an optimum residual value for end-of-life batteries to battery manufacturers along with extended producer responsibility benefits.
Importance of Battery Recycling
The global sales for electric vehicles (EVs) surpassed 10 million in 2022 alone, with China, Germany, and the US markets constituting the highest number of sales. In the case of India, the EV market is projected to grow at a CAGR of 49% between 2022 -2030 and will reach a total of 10 million electric vehicles by 2030. As the EV industry grows and matures, battery recycling and reuse will become vital for both supply chains and circular, low-carbon responsibility.
In this vein, the boom in EVs could leave India with as much as 145,000 tons of used lithium-ion batteries in need of recycling by 2030. Recycling will bring down the costs of batteries and lead to a pathway whereby 2030, India could account for about a third of the global demand for EV batteries, with its battery market estimated to reach $300 billion. Using recycled battery materials (particularly lithium) as inputs for new battery manufacturing would ease demand pressures on major commodities and reduce batteries’ resource footprints.
In India, with small reserves of lithium available as well as a lack of manufacturing facilities for lithium-ion batteries, there is an increased reliance on lithium-ion cells imported from markets such as Taiwan and China.
On an annual basis, India generates approximately 50,000 tonnes of lithium-ion battery waste and only 10% of the total battery solid waste in India forms part of the formal recycling value chain, while the balance is often either incinerated, not safely disposed of, or accumulates in landfills.
This has now prompted a large demand for rare earth materials such as lithium, nickel, and cobalt, which are key components in electric vehicle manufacturing. Almost 50% of the cost of EVs is the battery, out of which 35% is the cost of the metals.
Moreover, beyond the electric vehicle use, case, battery energy storage can enable the transition to a sustainable and secure energy system based on renewable sources, with reduced greenhouse gas emissions and enhanced available energy. There is a growing demand for batteries in stationary clean energy grid storage applications which replace diesel generators, given India’s commitment to building renewable energy installations such as solar, hydro, wind, and bio-power. Batteries can store energy in on-peak times and release the energy when it is more needed in central, decentralized, and off-grid situations. This form of clean energy storage can also offer grid support services such as voltage control and frequency regulation, thereby maintaining grid stability and flexibility.
At the generation level, batteries can store the energy produced with renewables that could not be injected into the grid and would have been curtailed. At the transmission and distribution level, batteries can offer several ancillary services to stabilize the electricity grid, improving its working conditions, extending its capacity, and making it more secure, reliable, and responsive. Finally, at the household level, a battery system connected to a solar panel or small wind generator can increase the amount of self-produced electricity, as well as increase self-consumption.
Regulatory Tailwinds and Industry Mandates
Globally, governments have instituted policy frameworks, bills, and mandates around the promotion of recycling technologies which can recover up to 95% of battery materials. The objectives are to become cost-efficient, reduce dependence on import suppliers and encourage battery longevity, but also to dispose of waste materials in a responsible, low-toxic manner, to reduce further carbon emissions into the atmosphere.
In India, the Government of India (GoI) brought batteries under the Extended Producer Responsibility (EPR) mandate under the revised Battery Management Rules in August 2022, which stipulated that waste batteries should be collected and sent for recycling or refurbishment, and it prohibited the disposal or incineration of this waste in landfills. To meet EPR obligations, producers could now engage themselves or authorize any other entity for the collection, recycling, or refurbishment of waste batteries. Prescribing the use of a certain amount of recycled materials in the making of new batteries, as well as the minimum percentage of materials recovery from waste batteries would necessarily i) reduce the dependency on new raw materials; ii) promote investment into recycling technologies; and iii) contribute to a cleaner urban ecosystem. The GoI also plans to set up an online portal for the exchange of the EPR certificate between the recyclers and the producer and will also set up an audit committee for the monitoring and implementation of the Battery Waste Management Rules.
Although the supply reserves of rare earth materials are growing due to increased mining and recycling, the rising prices would typically be passed along to the end consumer (the EV fleet purchasing the batteries or the factory purchasing the metals). Therefore, finding cost-effective alternatives to both mining and recycling are top of mind for new entrants into this field, which is also combined with the increasing need for carbon disclosures in all industrial production.
Since the traditional recycling process decreases carbon emissions only by 38%, compared to its mining equivalent, and given the rising regulations around carbon accounting and disclosures, it is becoming important for battery recyclers to maintain sustainable recycling practices which use lower carbon-intensive processes.
The sustainable recycling of lithium-ion batteries, in particular, is important as these batteries contain corrosive materials and heavy metals such as cobalt, nickel, manganese, iron, and phosphorous. If diverted to landfill and incinerators, these metals can pose a serious threat to human health and the environment. There is, therefore, a need for recycling processes that use lower carbon, higher salvage value, a cleaner supply chain, lower volumes of water, and lower heat in the form of power, to achieve the same metal extraction outputs.
A cost-effective, greener, and more efficient recycling solution
The most common methods today used for battery recycling are:
Hydrometallurgy, an opex-intensive process to extract metals from end-of-life batteries by using an acid chemical-based, water medium; and
Pyrometallurgy is a capex-intensive, heat-based extraction and purification process, which uses extensive heating to extract the metals through roasting and smelting.
Hydrometallurgy is the most used lithium-ion battery recycling process because it produces battery-grade metals which can be directly used in cathode production, however, the complexity involved in discharging, shredding, and use of chemicals makes it challenging to scale the recycling processes. On the other hand, the pyrometallurgical process generates metals which are needed to be refined to increase the purity to battery grade but the use of the intensive heating process makes this process economically challenging to scale.
Overall, there is a need for a solution that can extract battery grade or below battery grade purity level metals from the battery waste using a simple and scalable, chemical-free, economical, and ‘greener’ method.
Metastable Materials is a deep science company that has developed an innovative, patented carbothermal recycling technology that reduces metals into their elemental or oxide form. When the metals are in black mass form, they undergo a reaction to release the final rare earth materials in their elemental form in their carbonate form. This eliminates the need for chemicals and high temperatures, and significantly reduces water usage to 2-3 liters per kg, making the process more economical and greener. We are excited by the outputs generated by this technology, in terms of the purity of the metals; the potential for high scalability; and the supply chain made safer through their heat and fire-resistant packaging solution for end-of-life batteries. In addition, we see strong capabilities for the business to seek the right types of reverse logistics suppliers for their inputs and finally the strong demand from their target customers – recyclers, battery manufacturers, chemical conglomerates, and mining and trading companies.
At Theia, we have focused on finding circular economy solutions which are serving a large market opportunity and effectively ‘green’ the supply chain. Metastable fits nicely into this thesis, and complements our existing investments in EV fast-charging (Exponent Energy); virtual energy storage (Sheru), and virtual power plants (Edgegrid).
We look forward to a wonderful journey with an incredible team!