GEM plans to build a plant in Hungary to produce high-nickel precursors and recycle used batteries. GEM is currently one of the world's largest battery recycling companies and one of the world's leading producers of precursors and cathode materials. They have been open and transparent about their plans to set up factories in Europe and North America for some time.
GEM's partner Ecopro has decided to build a cathode material plant in Debrecen, Hungary, with an annual production capacity of 108,000 tons through its subsidiary Ecopro BM. GEM and Ecopro have been cooperating for several years and have participated in several cooperative projects. Ecopro supplies cathode materials to three Korean battery makers. GEM delivered technology to Ecopro's recently commissioned Pohang recycling plant in South Korea, which is processing scrap produced at LG Energy Solutions' Polish plant. The two companies have a joint venture, Ecopro GEM, which recently acquired a partial stake in GEM and CATL's nickel projects in Indonesia.
With Samsung SDI and SK operating Europe's largest battery factory in Hungary, supplying batteries to Volkswagen, BMW and other companies, Hungary has become a hot spot for battery production in Europe. The facilities have also attracted other module makers and South Korean battery recycling company Sungeel Hitech, which also supplies materials to Ecopro, which operates two pretreatment plants in the country.
With two of the world's leading battery recyclers in its supply chain, Ecopro and its customers are leading the way in meeting new requirements for recycled content in new battery regulations expected to come into force in Europe in 2023. With China's growing focus on lithium iron phosphate batteries, companies that have traditionally been strong in mid- to high-nickel cathode materials, such as GEM and Huayou Cobalt, are clearly stepping up their activities in Europe and the US, with the still preference for high-nickel cathodes materials in cooperation with Korean battery manufacturers.
At GEM’s shareholders meeting on May 20, the company revealed that the amount of used power batteries in the first quarter of 2022 reached 3,407 tons, a year-on-year increase of 341%, and more than 400 MWh of batteries were reused. Our assumption is that a significant portion of this comes from R&D, testing and pre-production vehicles. Like many other Chinese recyclers, GEM sees challenges in sourcing end-of-life batteries because the disposal of batteries is at the owner's discretion, meaning the batteries are often sold locally to smaller companies.
