Tesla co-founder leads US ‘urban mines’ to compete with China in battery recycling, critical minerals | Luck
Tesla co-founder JB Straubel served as the brains behind battery development for the electric vehicle giant, and he’s seen firsthand the vast amounts of critical minerals that are potentially wasted when it comes time to scrap each electric car — raw materials plucked to be recycled and repurposed.
China dominates most of the world’s critical mineral supply chains. Each EV battery is a treasure trove of lithium, cobalt, copper, nickel and more that can be reused for brand new energy storage batteries and for a variety of devices from AI data centers to military equipment to smartphones and computers. There are 60 natural elements that the US government considers “critical minerals,” and America only produces a small minority of them.
Straubel founded Redwood Materials in 2017, a rapidly expanding company that has become the United States’ first line of defense for recycling critical minerals in a potential supply chain cold war with China — now under temporary truce.
“Being able to use materials that are already on the market can dramatically reduce the pressure on what’s needed to mine,” Straubel said. Luck. “Once you have some variety of supply, you reduce the risk of (Chinese) monopoly and geopolitical concentration.”
Since the US launched a tariff war earlier this year and China threatened to withhold certain critical minerals, the US has been aggressively emphasizing investments and partnerships to develop its own mining, refining, recycling and magnet and battery manufacturing. China currently accounts for more than 80% of global battery material production.
Developing domestic
The US can’t just open a dozen new mines overnight. Recycling will increasingly play a key role, and Redwood Materials already controls roughly 90% of lithium-ion battery recycling in North America – the equivalent of 250,000 EV batteries per year. Still, that 90% equates to only about 10% of EV battery deployment in the US each year. This means that Redwood could expand its capacity 10 times, even if the electric vehicle market share remains the same in the US
Straubel refers to Redwood’s facilities as “urban mines.” Redwood runs battery recycling from its Nevada campus and now has a brand new $3.5 billion, 600-acre facility in South Carolina. Nvidia recently came on board as a strategic investor.
“The ultimate goal is to create a circular economy where recycling — not mining — becomes the primary source of minerals,” Straubel said. “You’re disconnected from the geological mine from where these things are naturally found in the ground.”
Redwood is already the country’s unofficial leading cobalt “miner” thanks to its recycling efforts, and is near the top in lithium and nickel.
“It’s kind of obvious, but not very intuitive, that almost all of the raw materials inside batteries are reusable,” Straubel said. “They are not consumed in the application. We build the device, we put a lot of effort into it, but then it basically stays there for life.
“As electric vehicles and other energy storage products proliferate on the market, we have this incredible opportunity to evolve toward this materials economy for products that will be 98% or 99% recycled over time.”
In addition to mining batteries for parts, Redwood is already developing its own battery energy storage systems, called BESS, from recycled materials, especially as batteries are increasingly coupled with solar and wind power for increased reliability. Redwood has already deployed a battery storage microgrid for OpenAI’s Stargate data center campus in Texas.
Redwood’s primary source of batteries is electric vehicles, but the company can recycle lithium-ion batteries of all shapes and sizes. Getting access to them is a challenge.
“With electric cars, it’s relatively easier because of the size and scale. You can’t just put it in the trash. That’s more of a business-to-business journey. It’s much harder with consumer products and devices. Unfortunately, they tend to have a high percentage that end up in landfills and landfills. It can also be dangerous,” Straubel said, noting that most fires are caused by battery misplacement.
The U.S. needs to better inform consumers about proper battery disposal and make disposal sites much more accessible, he said. “There are no strong programs or rules for this in the US yet.”
Repair of magnets
Besides batteries, other products dominated by China are high-power magnets used in all kinds of electronics, including vehicles, drones and rockets.
These specialized magnets depend on rare earths, which make up 17 of the 60 designated critical minerals.
The only major US miner of rare earths is MP Materials and its Mountain Pass mine in California. Now MP Materials is focusing on building magnet manufacturing and recycling capacity.
The US Department of Defense even bought a 15% ownership stake in MP, and then the company entered into a $500 million partnership with Apple to produce rare earth magnets from 100% recycled materials.
“When you make a magnet, typically 20 to 50% of the material in the manufacturing and finishing process falls off the line as waste. That’s a huge part of your cost structure,” MP Materials CEO James Litinsky told Fortune. “If you have a refinery and the ability to put it back into your business and recycle it, that’s a huge economic advantage.”
That’s the last part of what Litinsky calls a domestic vertical integration strategy — mining, refining, magnet manufacturing and recycling.
“Multibillion-dollar supply chains don’t move overnight, and it was clear that it would take a long time. We did it thoughtfully in stages,” Litinsky said. “You’ll see us grow our recycling business because that’s critical to being an efficient magnetics business.”