How to Decide Battery Recycling Partnerships in China: 2026 Guide

Battery Recycling Circular Economy Partnership Regulatory 2026 Guide

Last updated: July 2026

Executive Summary

China’s battery recycling industry has undergone a dramatic transformation between 2020 and 2026. Once a fragmented, informally regulated sector dominated by small players using rudimentary recycling methods, it has matured into a structured, increasingly regulated, and technologically sophisticated industry. With China’s first wave of EV batteries from the 2018–2020 period now reaching end of life, the volume of spent batteries available for recycling has surged, creating both an environmental imperative and a compelling economic opportunity.

For foreign companies that manufacture or sell batteries in China — or that import Chinese-made batteries into their home markets — establishing a recycling partnership in China is no longer optional. Under the EU Battery Regulation, producers placing batteries on the EU market must provide for their end-of-life collection and recycling, regardless of where the battery was manufactured. In China itself, battery manufacturers are required by MIIT regulations to establish recycling channels for their products. This guide provides a comprehensive framework for selecting the right recycling partner, structuring the partnership, and navigating China’s evolving battery recycling regulatory landscape.

1. The Battery Recycling Landscape in China (2026)

1.1 Market Size and Growth

China’s battery recycling market has grown from approximately 200,000 tonnes of spent battery processing capacity in 2022 to an estimated 1.2 million tonnes of installed capacity in 2026. Actual throughput in 2025 was approximately 600,000 tonnes, as the supply of retired batteries is still ramping up. The “retirement wave” — the mass retirement of EV batteries from vehicles sold in 2018–2021 — is projected to peak between 2026 and 2030, creating a supply of 1.5–2 million tonnes of spent batteries annually by 2028–2029.

The economic value of recovered materials from China’s battery recycling industry was approximately ¥45 billion ($6.2 billion) in 2025, projected to reach ¥120 billion ($16.5 billion) by 2030. The key value drivers are lithium carbonate (accounting for ~35% of recovered value), cobalt (~25%), nickel (~20%), and copper and other materials (~20%).

1.2 Regulatory Framework

China’s battery recycling regulatory framework has evolved rapidly, with several key pillars:

MIIT Standard Conditions (电池回收利用规范条件): First published in 2018 and revised in 2022 and 2024, these conditions establish the minimum requirements for battery recycling enterprises. Key requirements include: minimum annual processing capacity (5,000 tonnes for lithium-ion batteries), environmental protection standards (wastewater treatment, air emissions control, hazardous waste management), and technology requirements (recovery rates: ≥98% for cobalt, ≥98% for nickel, ≥98% for copper, ≥85% for lithium). Only enterprises that pass MIIT review and are listed on the official “White List” can legally operate as battery recyclers and receive government subsidies.

Extended Producer Responsibility (EPR): Under the “Measures for the Administration of Recycling of New Energy Vehicle Power Batteries” (2021), battery manufacturers and vehicle OEMs are responsible for establishing recycling channels for their batteries. This includes setting up collection points, contracting with qualified recyclers, and reporting recycling volumes to the government. Foreign battery manufacturers selling in China must comply through partnerships with MIIT-listed recyclers.

Battery Traceability Platform: Since 2018, all traction batteries sold in China must be registered on the national battery traceability platform with a unique ID. The platform tracks the battery from production through vehicle installation, use, and eventual recycling. This creates a “cradle-to-grave” data trail that enables precise monitoring of recycling outcomes.

Battery Passport (Coming 2027): China is piloting its own battery passport system, aligned with the EU Battery Regulation. The Chinese battery passport will include material composition, carbon footprint, recycling content, and end-of-life management data. This will further integrate recycling data into the battery’s lifecycle documentation.

2. Battery Recycling Technologies in China

2.1 Pyrometallurgical Recycling (Smelting)

Pyrometallurgy is the most mature recycling technology. Spent batteries are fed into a high-temperature furnace (1,200–1,500°C) where organic materials burn off and metals are recovered as alloys or matte. The process is energy-intensive (8–12 MWh per tonne of batteries) and recovers primarily cobalt, nickel, and copper — lithium is lost to the slag and is not economically recoverable in most pyrometallurgical processes.

Advantages: Simple process, can handle mixed battery chemistries, no need for extensive pre-processing, well-established technology. Suitable for bulk processing of general industrial waste streams.

Disadvantages: Low lithium recovery (typically <5–10%), high energy consumption, significant CO₂ emissions (3–5 tonnes CO₂ per tonne of batteries), and lower overall value recovery. The loss of lithium is increasingly unacceptable given its critical material status and price.

Leading Chinese pyrometallurgy operators: GEM Co. (also uses hydrometallurgy), Huayou Recycling, and several smaller operators. Pure pyrometallurgy is declining in China — most advanced recyclers are transitioning to hybrid or fully hydrometallurgical processes.

2.2 Hydrometallurgical Recycling (Chemical Leaching)

Hydrometallurgy has become the dominant recycling technology in China, accounting for approximately 50% of total processing volume in 2025 and growing. Spent batteries are first discharged, dismantled, and separated into components (cathode, anode, separator, casing). The cathode material is then subjected to chemical leaching using acid or alkaline solutions, followed by solvent extraction, precipitation, and crystallization to recover individual metals as high-purity compounds.

Advantages: High recovery rates for all metals (≥98% for Co/Ni/Cu, ≥90% for Li with optimized processes), lower energy consumption than pyrometallurgy (2–4 MWh per tonne), lower carbon footprint, product-grade materials directly usable in new battery production.

Disadvantages: Requires separation of battery chemistries (cannot mix NMC and LFP in the same process), generates wastewater (approximately 8–15 m³ per tonne of batteries) that requires treatment, higher capital investment, and more complex process control.

Leading Chinese hydrometallurgy operators: GEM Co. (largest and most advanced), Brunp Recycling (CATL subsidiary, focused on LFP and NMC), and Huayou Recycling. These three companies collectively account for approximately 55% of China’s hydrometallurgical battery recycling capacity.

2.3 Direct Recycling

Direct recycling (also called “direct cathode-to-cathode” recycling) is the newest and most advanced recycling approach. Rather than breaking down cathode materials into individual metals and reconstituting them, direct recycling separates the cathode material from the current collector, regenerates it, and recoats it onto new foil. The technology preserves the original crystal structure of the cathode material, avoiding the energy and cost of complete chemical breakdown and resynthesis.

Advantages: Lowest energy consumption (0.5–1.5 MWh per tonne), highest value retention (cathode material retains 80–90% of its original value), lowest carbon footprint, most circular approach. Ideally suited for closed-loop systems between battery manufacturers and recyclers.

Disadvantages: Most technically challenging — requires precise sorting by cathode chemistry, removal of electrolyte and binder without damaging the cathode structure, and regeneration of the cathode material’s electrochemical properties. Only works with unmixed, known-chemistry battery streams. None of the commercial-scale operators in China use pure direct recycling — it is still in pilot and demonstration phases.

Key players in direct recycling R&D (2026): CATL (through Brunp), GEM Co. (pilot scale), and several university spin-offs. Direct recycling is expected to reach commercial scale in China by 2028–2029.

3. Partner Evaluation Framework

Selecting the right battery recycling partner in China requires a structured evaluation across multiple dimensions. Below is a comprehensive framework.

3.1 Regulatory Compliance

3.2 Technology and Process Capability

Recovery rates: The most important technical metric. MIIT minimums are 98% for Co/Ni/Cu and 85% for Li. Tier-1 Chinese recyclers (GEM, Brunp, Huayou) consistently achieve 98–99.5% for Co/Ni/Cu and 90–95% for Li. Tier-2 recyclers may meet minimums but rarely exceed them.

Chemistry compatibility: Not all recyclers can process all battery chemistries. LFP and NMC require different leaching chemistries and process conditions. Semi-solid-state and solid-state batteries require even more specialized processes. Verify that your partner has demonstrated capability with your specific battery chemistry.

Material quality: The recovered materials (cobalt sulfate, nickel sulfate, lithium carbonate, lithium hydroxide) must meet battery-grade purity specifications to be reused in new batteries. Tier-1 recyclers produce products that meet Chinese national standards (GB/T) for battery-grade materials. Request product specifications and independent laboratory test reports.

Pre-processing capability: The most dangerous and difficult part of battery recycling is the initial discharge, dismantling, and separation. Evaluate the partner’s automation level (robotic dismantling vs. manual), safety protocols (fire suppression, gas monitoring, explosion-proof equipment), and throughput capacity.

3.3 Capacity and Geographic Coverage

China’s spent batteries are geographically dispersed, concentrated in major EV-using regions (Guangdong, Jiangsu, Zhejiang, Beijing-Tianjin-Hebei, Sichuan). An ideal recycling partner should have collection points or logistics capabilities covering the regions where your batteries are deployed.

• GEM Co. — Headquartered in Shenzhen. Collection network: 200+ collection points across 31 provinces. Processing capacity: ~200,000 tonnes/year. Operating facilities in Hubei, Jiangxi, and Henan.
• Brunp Recycling (CATL subsidiary) — Headquartered in Ningde, Fujian. Collection network: integrated with CATL’s battery sales network. Processing capacity: ~150,000 tonnes/year. Facilities in Fujian, Jiangsu, and Sichuan.
• Huayou Recycling — Headquartered in Tongxiang, Zhejiang. Collection network: 150+ collection points. Processing capacity: ~100,000 tonnes/year. Facilities in Zhejiang and Jiangsu.
• Tianneng Recycling — Headquartered in Changxing, Zhejiang. Primarily lead-acid historically, expanding into lithium-ion. Processing capacity: ~80,000 tonnes/year (lithium-ion).

3.4 Financial Stability

Battery recycling is capital-intensive and has historically been a low-margin business (gross margins of 5–15% for Tier-1 operators in 2023–2024). Margins improved to 12–20% in 2025–2026 as processing volumes increased and lithium recovery technology improved. Evaluate financial health through:

• Revenue and growth trajectory: Tier-1 recyclers grew revenue 30–50% year-over-year in 2025. Sustainable growth at 25–40% is expected through 2028.
• Debt levels: Chinese recyclers have significant debt due to high capital expenditure for processing facilities. Debt-to-equity ratios above 80% are common but concerning. Target partners with debt-to-equity below 60%.
• Strategic backing: Recyclers backed by major battery manufacturers (Brunp/CATL, Huayou/Huayou Cobalt) or the government have the strongest financial stability.

4. Partnership Structures

4.1 Offtake Agreement

The simplest partnership structure. Your company agrees to deliver a specified volume of spent batteries to the recycler over a defined period (typically 1–3 years). The recycler pays a price based on the contained metal value, minus processing fees (typically 15–30% of contained metal value, depending on chemistry and volume).

When suitable: For companies with moderate battery volumes (under 500 tonnes/year) or those in the early stages of their recycling program. Low commitment, easy to establish (1–2 months for contract negotiation).

Key terms: Volume commitment (with ±20% flexibility), battery chemistry specification, acceptable state of charge for transport, pricing formula (typically LME/Asian Metals price × contained weight × recovery rate × (1 − processing fee %)), logistics responsibility (FOB, CIF, or delivered), quality-based penalties.

4.2 Strategic Cooperation Agreement

A more structured relationship involving regular reporting, technology exchange, and potential joint investment in collection infrastructure. Both parties commit to a multi-year relationship (3–5 years), share data on battery volumes and recycling outcomes, and may co-finance collection points or logistics networks.

When suitable: For companies with battery volumes of 500–5,000 tonnes/year. The agreement provides better pricing (processing fees 10–20% lower than offtake), priority access to capacity during peak seasons, and shared ESG reporting benefits.

4.3 Joint Venture (JV)

The most integrated partnership structure. The foreign partner and Chinese recycler establish a jointly owned company dedicated to recycling the foreign partner’s battery chemistries. The JV may operate its own processing facility, or more commonly, a dedicated processing line within the recycler’s existing facility.

When suitable: For companies with battery volumes exceeding 5,000 tonnes/year (or projected to reach that within 3 years), those with proprietary battery chemistries requiring specialized processing, or those seeking maximum control over the recycling process and recovered material quality.

Key terms: Equity split (typically 50:50 or 60:40 in favor of the Chinese partner with operational control), capital contribution (JV facility construction cost divided pro rata), technology contribution (foreign partner provides battery chemistry data and processing specifications, Chinese partner provides recycling technology and facility), offtake rights (foreign partner has priority claim on recovered materials at market prices), governance (board composition reflecting equity share, foreign partner board seats with veto rights on capital expenditures and material contracts).

4.4 Equity Investment

A minority equity investment (10–25%) in an existing Chinese recycler provides strategic influence without operational responsibility. The investment typically includes a right-of-first-refusal on recycling services and access to the recycler’s capacity during supply shortages.

When suitable: For companies that want to secure recycling capacity for their growing battery volumes but lack the operational readiness for a full JV. Particularly attractive for venture capital and strategic corporate investors.

5. Economics of Battery Recycling Partnerships

The economic viability of a battery recycling partnership depends on several factors:

• Battery chemistry: NMC batteries have the highest value per tonne due to cobalt and nickel content ($1,500–3,000/tonne of recovered material value at 2026 prices). LFP batteries have lower value per tonne ($300–600/tonne) but higher volume potential.
• Collection volume: Collection costs in China range from ¥500–1,500/tonne, depending on geographic dispersion. Larger volumes reduce per-unit collection costs through route optimization.
• Processing fee: Tier-1 recyclers charge processing fees of 15–25% of contained metal value for standard NMC batteries, and 20–30% for LFP batteries (which have lower value per tonne and less efficient lithium recovery). JV partners typically receive a 10–15% discount.
• Transportation: Spent batteries are Class 9 hazardous materials. Transport costs within China range ¥1,000–3,000/tonne depending on distance, volume, and regulatory compliance.
• Revenue share: Under an offtake agreement, the recycler typically pays 70–85% of the contained metal value (net of processing fee). The recycler retains 15–30% to cover costs and profit. For a 1-tonne shipment of NMC 811 batteries, the payout to the battery owner would be approximately ¥12,000–18,000 in 2026 market conditions.

6. How to Select Your Recycling Partner — A Step-by-Step Process

1. Quantify your battery flows: Estimate the volume, chemistry mix, and geographic distribution of batteries that will require recycling. Include batteries currently in the field, projected sales for 3–5 years, and end-of-life timing. This analysis determines the appropriate partnership structure.
2. Screen MIIT-listed recyclers: Download the current MIIT White List and pre-screen recyclers based on geography, chemistry compatibility, capacity, and technology type.
3. Issue an RFQ (Request for Qualifications): Send RFQs to 5–8 pre-screened recyclers. Request: corporate overview, MIIT certification and other licenses, audited financials, customer references, recovery rate data, product specifications for recovered materials, ESG report, and proposed partnership terms.
4. Shortlist 2–3 candidates for due diligence: Conduct: on-site facility audit (focus on safety protocols, quality control, environmental compliance), financial due diligence (review recent 3 years of audited financials, debt levels, ownership structure), customer reference calls, and ESG due diligence (supply chain traceability, labor practices).
5. Negotiate partnership agreement: Engage Chinese legal counsel experienced in recycling and waste management. Key negotiations: pricing formula, volume commitment, quality specifications, liability allocation (particularly for battery fires or environmental incidents), IP protection (if sharing proprietary battery chemistry data), and dispute resolution (CIETAC arbitration is standard).
6. Pilot engagement: Start with a pilot of 10–50 tonnes to test commercial terms, logistics, and quality outcomes. Monitor recovery rates, payout timeliness, and reporting quality. Use the pilot results to refine the partnership agreement for full-scale deployment.

This guide was prepared by China Gateway 360. For recycling partner matching, ESG compliance support, and partnership advisory services, contact our battery circular economy team.