Battery recycling is widely regarded as one of the most important pillars of Europe’s future critical raw materials strategy. Recovering valuable metals from spent batteries can reduce dependence on imported resources, strengthen domestic supply chains and support the European Union’s circular economy objectives. While the long-term outlook is compelling, the sector has yet to become a straightforward investment opportunity.
The biggest obstacle is not recycling technology itself—it is the availability of sufficient battery waste, or feedstock, needed to keep recycling facilities operating efficiently. Until larger volumes of end-of-life batteries become available, many recycling projects will continue to face commercial and financial challenges despite their strategic importance.
Fortum Expands Europe’s Battery Recycling Ambitions
Among Europe’s leading companies in the sector, Fortum Battery Recycling has positioned itself as a key player in developing large-scale battery recycling capacity. The company recently received €84.6 million in funding from Business Finland to support the potential expansion of its hydrometallurgical battery recycling operations in Harjavalta, Finland. Fortum’s existing facility currently processes approximately 3,000 tonnes of black mass annually, while the proposed expansion could increase total processing capacity to around 28,000 tonnes per year.
The company is also developing its NEXT HYDROMET project, designed to produce battery-grade:
According to Fortum, future production could supply battery materials sufficient for approximately 138,000 electric vehicles each year, although the project remains under development and still requires a final investment decision before construction can proceed.
Public Funding Supports Growth, but Commercial Risks Remain
Fortum’s development strategy reflects a broader financing trend across Europe’s battery recycling industry.
Governments have shown strong willingness to support recycling projects because they contribute to:
- Circular economy objectives
- Reduced dependence on imported raw materials
- Lower environmental impact
- Greater supply-chain resilience
Public grants often provide the first stage of project financing.
Lenders and private investors continue to focus on more traditional commercial questions, including:
- Reliable feedstock supply
- Sustainable operating margins
- Long-term customer demand
- Stable recovered-metal prices
Government support can reduce project risk, but it cannot replace commercial viability.
Northvolt’s Collapse Exposed the Feedstock Challenge
The industry’s dependence on feedstock became significantly more visible following the collapse of Northvolt, once regarded as Europe’s flagship battery manufacturing company. Northvolt had raised more than US$10 billion before entering bankruptcy proceedings with more than US$8 billion in debt across entities involved in its Chapter 11 restructuring process. The company’s financial difficulties had implications beyond battery manufacturing.
Battery recycling facilities had expected large volumes of manufacturing scrap from expanding European gigafactories. When production failed to reach anticipated levels, recyclers also lost an important near-term source of black mass, the processed battery material used for recovering valuable metals. The event highlighted how closely battery manufacturing and recycling are connected within Europe’s emerging battery ecosystem.
Hydrovolt Demonstrates Industry Consolidation
The restructuring of the battery sector has also accelerated consolidation among recycling companies. Following Northvolt’s financial difficulties, Norsk Hydro acquired the remaining ownership stake in Hydrovolt for NOK 78 million, increasing its shareholding to 100%.
Hydrovolt operates one of Europe’s largest electric vehicle battery recycling facilities in Fredrikstad, Norway.
Despite its established position, Norsk Hydro has emphasized that continued expansion will require:
- Strategic industrial partnerships
- Long-term financing
- Reliable feedstock availability
The transaction illustrates how major industrial companies are strengthening control over recycling assets while preparing for future growth in battery waste volumes.
Timing Remains the Industry’s Biggest Commercial Challenge
Perhaps the greatest challenge facing battery recyclers is timing. The number of electric vehicles on European roads continues to grow rapidly, but most of those batteries are expected to remain in service for many years before reaching the end of their useful lives. As a result, large volumes of recyclable EV batteries have yet to enter the market.
In the meantime, recycling companies depend on alternative feedstock sources, including:
- Manufacturing scrap
- Defective battery cells
- Consumer electronics
- Industrial battery systems
- Imported black mass
If European battery production develops more slowly than anticipated, recycling companies may face extended periods of limited feedstock availability.
Long-Term Potential Remains Strong
Despite these short-term challenges, the long-term investment case for battery recycling remains compelling. As electric vehicle adoption accelerates over the coming decade, end-of-life battery volumes are expected to increase substantially, creating a growing domestic source of valuable materials such as:
- Lithium
- Nickel
- Cobalt
- Copper
Recovering these metals will reduce reliance on imported raw materials while strengthening Europe’s circular economy objectives. Companies must remain financially resilient during the transition period before feedstock volumes reach commercially attractive levels.
Investors Should Treat Recycling as Long-Term Infrastructure
Battery recycling should not be viewed as an industry capable of delivering immediate revenue growth.
Instead, it increasingly resembles critical industrial infrastructure requiring:
- Significant upfront investment
- Long development timelines
- Stable regulatory support
- Reliable material flows
- Long-term customer relationships
Companies such as Fortum, Norsk Hydro, Hydrovolt, Umicore and other circular-metals businesses are well positioned to benefit from this structural trend. Nevertheless, investors must carefully evaluate project timing, processing capacity, financing structures and market positioning before assuming that strategic importance will automatically translate into financial returns.
The Winners Will Be Those That Can Survive the Transition
Europe’s need for battery recycling is no longer in doubt. As battery production, electric vehicle adoption and circular economy policies continue to expand, recycling will become an increasingly important source of critical raw materials. The key question is not whether Europe will require battery recycling—it almost certainly will.
Instead, the decisive factor will be which companies possess the financial strength, technological expertise and operational resilience to bridge the period before feedstock volumes, policy support and recovered-metal economics fully align. Those companies are likely to become the long-term leaders in Europe’s rapidly evolving battery materials industry.
