Cobalt Recycling’s Real Value Window Opens in 2028, Not Now

The cobalt market closed 2024 with a surplus of roughly 36,000 tonnes, equivalent to about 15% of total demand. At the same moment, the European Union was finalising binding rules that will require 90% cobalt recovery from waste batteries by 2027. One fact says there is too much cobalt; the other says the system is being engineered to recapture nearly all of it. That contradiction is where the real investment question sits.

The timing is not accidental. The first generation of electric vehicle batteries, sold between 2015 and 2017, is only now reaching end-of-life in 2025 to 2026, which means the recycled supply market is arriving at a structural turning point rather than a mature steady state.

The surplus is a short-term condition. The mandates are long-term architecture. Investors who collapse the two into a single view will either write off a strategically important transition or overpay for a near-term opportunity that is not yet there.

What follows maps where recycled cobalt supply is actually heading, which operators are shaping it, and the specific variables worth watching before committing capital to this corner of the energy transition trade.

A market in surplus today, but structurally tightening toward 2030

Start with the numbers that define the present. According to the Cobalt Institute’s 2024 market report, mined cobalt supply reached approximately 254,000 tonnes in 2024, a 22% jump year-on-year. Refined cobalt production hit 222,000 tonnes, up 17%, driven largely by Chinese output.

That production surge created a surplus of roughly 36,000 tonnes, equivalent to 15% of demand and up from a 25,000-tonne surplus (about 12%) in 2023. In plain terms, the world is making more cobalt than it is consuming, and the gap is widening, not closing.

Three facts anchor the current structure:

• Global mined supply of approximately 254,000 tonnes in 2024, concentrated in the Democratic Republic of the Congo (DRC), which accounts for around 76% of mined output.
• A 36,000-tonne surplus equal to 15% of demand, suppressing prices and margins across the chain.
• Chinese control of roughly 78-79% of refined processing capacity, a midstream chokepoint that applies to recycled material as well as freshly mined ore.

That concentration is the structural risk every cobalt investor carries, regardless of where their supply comes from. You can source recycled cobalt from a plant in Belgium and still find it refined through Chinese capacity.

What the supply curve actually signals

Here is where the contradiction resolves. The Cobalt Institute projects total supply growing at a compound annual rate of roughly 5%, while demand is expected to grow faster as EV battery production scales. A surplus today does not mean a surplus indefinitely. It means the supply curve is running ahead of demand for now, with the gap set to close.

Oxford Energy’s 2025 analysis expects the cobalt market to stay oversupplied for the next few years before shifting toward tighter balances from around 2030, as EV battery demand accelerates.

The read you should take is this: the surplus is not a reason to dismiss recycled cobalt. It is a reason to understand the timing. Current low prices look like a ceiling only if you ignore the trajectory, and investors who treat them as structural will misprice the entire thesis.

How much cobalt can recycling realistically supply, and by when?

Today, recycling is a modest contributor. Secondary cobalt supply was approximately 22,000 tonnes in 2024, around 8% of total global supply, rising toward 10% by 2025. Taken alone, that number invites dismissal. The trajectory is the point, not the current share.

The regulatory architecture is what bends the curve upward. The EU Battery Regulation is the most concrete driver, setting binding recovery and recycled-content targets that escalate across the next decade.

The EU Battery Regulation establishes the binding legal framework for recovery and recycled-content targets, with cobalt recovery thresholds escalating from 90% by 2027 through to 95% by 2031, and minimum recycled-content requirements phasing in from 6% in 2031 to 12% by 2036.

Recovery-rate and recycled-content figures are drawn from Transport and Environment’s battery recycling analysis.

The second constraint is timing, and it comes down to when batteries actually retire. There are two distinct waves:

1. First wave, 2025 to 2026. Batteries sold in 2015 to 2017 reaching end-of-life. A meaningful but limited stream of feedstock.
2. Major wave, 2028 to 2030. The far larger volume of 2018 to 2020 vintage batteries retiring, which is when secondary supply becomes genuinely material.

Transport and Environment projects that by 2030, recycled cobalt could meet up to 19% of battery cobalt demand in Europe, avoiding the mining of roughly 3.7 million tonnes of ore and substituting the output of about one average cobalt mine. By 2040, that rises to the equivalent of four mines and around 14.3 million tonnes of ore avoided.

The 8% share understates the trajectory, but the regulation and the end-of-life timing together tell you something precise. Any recycling capacity built before 2028 is building for a future market, not meeting a present one. That prevents two errors: dismissing recycled cobalt because it is small today, and assuming it can displace primary supply at scale any time soon.

Who is building the recycled cobalt supply chain, and how efficiently?

The operators worth watching are defined by what they actually achieve, technically and commercially. Four stand out, and the gap between them and everyone else is wide.

Battery circularity innovation, spanning second-life applications, direct recycling processes, and patent-protected hydrometallurgical methods, is what separates the technical benchmark operators from peripheral processors, and the gap in recovery efficiency between the leaders and the rest is widening as capital concentrates in proven platforms.

Brunp, the recycler linked to CATL, sets the technical benchmark.

Brunp Recycling reports greater than 99.6% recovery of nickel, cobalt, and manganese, and greater than 91% recovery of lithium from retired batteries, a near-closed loop that already feeds recycled cobalt directly into Chinese battery manufacturing.

On the commercial side, Redwood Materials and Li-Cycle have secured multi-year supply agreements with Tesla, BMW, Volvo, and Volkswagen to deliver recycled cobalt-containing precursor into closed-loop cathode production. These offtake relationships are what separate a genuine value chain from a peripheral processor. Umicore, meanwhile, is positioned as one of Europe’s largest integrated hubs, with throughput and expansion plans reported but not independently confirmed, so treat specific tonnage claims with appropriate caution.

One structural feature cuts across all of them. Even secondary cobalt is frequently refined through Chinese capacity, meaning the same 78-79% midstream concentration that dominates primary supply applies to recycled flows too. Collecting a battery in Germany does not guarantee a non-Chinese refining path.

Together, Umicore, Glencore, Sherritt, GEM, Redwood Materials, and Li-Cycle are reported to control roughly 68-74% of global cobalt scrap recycling capacity. The signal there is competitive concentration. High recovery efficiency at scale demands serious capital and chemical expertise, so this advantage is unlikely to broaden quickly. If you are evaluating exposure, track the leaders rather than assuming the sector is open to newcomers.

What recycled cobalt cannot fix: the DRC dependency, price cycles, and timing risk

The same evidence that shows what recycling can deliver also marks its limits. Four structural barriers deserve a clear-eyed look before sizing any position:

• Geopolitical concentration. Recycling reduces but does not eliminate DRC and Chinese exposure.
• Price cyclicality. Surplus-driven weak prices and sudden disruption spikes both distort investment timing.
• Timing and logistics. Building ahead of the 2028 to 2030 scrap wave carries real execution risk.
• Regulatory asymmetry. Binding mandates exist in the EU but are far less certain elsewhere.

On concentration, the numbers are stubborn. The DRC held around 76% of mined output in 2024, and China controls roughly 78-79% of refined processing, a dominance that extends to secondary material.

The DRC and Chinese midstream dominance that defines primary cobalt supply is not a problem recycling sidesteps; it is a structural feature that persists into secondary material flows, because refining capacity sits downstream of collection regardless of where the battery originated.

The International Energy Agency finds that 70-75% of projected refined cobalt supply growth to 2030 will still come from today’s top three producing countries.

That is the sharpest summary of residual concentration. Recycling chips at the edges; it does not relocate the core of the supply chain this decade.

On price, the 36,000-tonne surplus compresses recycling margins and delays investment decisions today. Yet primary cobalt has shown acute volatility even in surplus conditions, so recyclers face both the risk of weak prices undermining economics and sudden spikes distorting the timing of when to build.

On logistics, the challenge is feedstock. Until the major wave arrives around 2028 to 2030, there simply is not enough scrap to run large plants efficiently. Build too early and you own underutilised capacity; wait too long and you miss the first deficit-driven premium for recycled supply.

What the regulatory map looks like outside the EU

The EU Battery Regulation is the strongest binding driver anywhere, with recovery targets through 2031 and recycled-content mandates through 2036. Outside Europe, the picture is thinner. No confirmed binding recycled-content mandates for cobalt were identified in the US or China in accessible 2024 to 2026 sources. That means the regulatory tailwind is geographically uneven.

Battery recycling policy frameworks vary sharply by jurisdiction, and that variation is material to the investment thesis: the EU’s binding recovery and recycled-content escalator exists alongside a far thinner regulatory environment in the US and China, which limits how quickly the recycled supply chain can scale beyond Europe.

The takeaway for positioning: treating recycled cobalt as a clean substitute for primary supply risk builds on a partial premise. The DRC and Chinese midstream stay embedded in the chain even for secondary material, and understanding that residual exposure is essential before you commit.

What the evidence tells investors about positioning in recycled cobalt now

Pull the strands together and a clear logic emerges. Recycled cobalt is a strategic complement to primary supply exposure, not a replacement for it. The value inflection point is not now; it is the 2028 to 2030 end-of-life wave coinciding with the EU mandates and the deficit window Oxford Energy forecasts from around 2030.

The competitive structure tells you where returns are likely to concentrate. The group of integrated operators holding OEM offtake, recovery efficiency above 99%, and midstream access controls roughly 68-74% of scrap capacity. That advantage favours incumbents over new entrants, and it is unlikely to disperse soon.

Critical minerals portfolio construction requires positioning across the value chain rather than at a single node, because the timing mismatch between when supply constraints emerge and when capital markets price them in creates different entry points for miners, refiners, and recyclers within the same commodity cycle.

Four variables will determine whether the thesis plays out, and they are what you should monitor rather than debating whether to act at all:

1. Collection rate growth in the EU and other jurisdictions, which governs how much feedstock actually reaches plants.
2. Price parity signals, specifically when battery-grade recycled cobalt reaches parity with or a premium over primary supply.
3. Non-EU regulatory developments, especially any binding recycled-content mandates emerging in the US or China.
4. End-of-life wave volume as the 2028 to 2030 retirement surge arrives.

The structural case is sound. The Cobalt Institute’s 5% supply growth sits below projected demand, recycled-content mandates escalate from 6% by 2031 to 12% by 2036, and the current 8-10% recycled share has clear room to grow. But the timing window and the concentration of advantage mean this is a medium-term, patient-capital thesis, not a near-term trade.

Be specific about which part of the value chain you are accessing and when. This is not a broad sector call.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors, and forward-looking statements are speculative and subject to change based on market developments.