Material Insights · Understanding the Material World

Nickel-rich lithium-ion batteries: Impact and additionality

Child labour, coal-fired nickel and the best recycling economics

What this tab covers The impact and additionality lens: what it displaces on the grid, who gains and who bears the burden along the supply chain, and what happens at end of life.

NMC's climate value lies in cars rather than grids, and its cobalt and nickel supply chains carry the heaviest social and environmental burden of any lithium-ion type; its recycling economics are the best.

Grid decarbonisation versus fossil displacement

Mixed

On the grid, NMC does the same job as LFP: shifting solar a few hours and covering short peaks. Its main decarbonisation contribution is in vehicles, where outside China almost 80% of batteries still use nickel chemistries. New grid storage is now almost all LFP.2

Nickel-based share of EV batteries outside China (2025) almost 80%2

Just transition and local community impact

Unfavourable

Cobalt comes mostly from the DRC, including artisanal mines with known child labour and safety problems, and nickel increasingly from Indonesia, where processing relies on coal power and forest clearance. China refines over three-quarters of cobalt. The IEA reports that the top three producers of key minerals held 86% of supply in 2024, and that 55% of energy-related strategic minerals face some export control.45

China share of refined cobalt over three-quarters5 Top-three producer share, key minerals (2024) 86%4 Strategic minerals under some export control 55%4

Circular economy and end of life

Favourable

Recovered cobalt and nickel are valuable, so NMC recycling pays its way better than LFP. The EU requires 90% recovery of cobalt and nickel from waste batteries by end-2027 and 95% by end-2031, and minimum recycled content of 16% cobalt and 6% nickel from 2031. Most feedstock is still factory scrap, since few EV packs have reached end of life, and China hosts over 85% of recycling capacity.2817

EU cobalt and nickel recovery target 90% by end-2027, 95% by end-20318 EU recycled content from 2031 16% cobalt, 6% nickel17 China share of recycling capacity over 85%2

Sources

  1. Global EV Outlook 2026: Electric vehicle batteries International Energy Agency, 2026
  2. Diversification is the cornerstone of energy security, yet critical minerals are moving in the opposite direction (Global Critical Minerals Outlook 2025) International Energy Agency, 2025
  3. Global Critical Minerals Outlook 2025 International Energy Agency, 2025
  4. EU Sustainable Batteries Regulation (2023/1542), policy summary International Energy Agency policy database, 2023
  5. Regulation (EU) 2023/1542 concerning batteries and waste batteries (Official Journal text) EUR-Lex, 2023