US Battery Recycling Gains Momentum After Export Ban on Used Battery Materials

The United States is racing to build a domestic battery recycling industry, and the latest sign of that shift came on September 22, 2026, when Massachusetts-based critical minerals refiner Nth Cycle signed a binding term sheet with commodities giant Glencore. The 10-year partnership carries an estimated offtake value of more than $1 billion, based on forecast metal prices from the second quarter of 2026. The agreement was signed at Glencore's New York offices during the week of the United Nations General Assembly, where critical minerals have become a central topic in trade discussions.

Under the terms, Glencore will supply all of the black mass needed by Project SHIELD, Nth Cycle's planned commercial refinery, drawing on its trading network and its operational US battery shredding sites. Black mass is the dark powder obtained after spent lithium-ion batteries are discharged, shredded and sorted, and it contains lithium, nickel, cobalt and other valuable metals. Glencore will send roughly 24,000 metric tons of black mass per year to the facility and will buy back its output, a high-purity nickel-cobalt mixed hydroxide product and battery-grade lithium carbonate. Both companies will also assess an existing Glencore site in the United States that could speed up construction, and they plan to explore deployments of Nth Cycle's technology in Europe and for rare earth and copper recovery.

With this deal, Nth Cycle says it now holds binding term sheets covering all of its projected feedstock and offtake needs for Project SHIELD. The companies aim to sign definitive agreements on black mass supply and product offtake by the end of 2026. The Glencore contract adds to a 10-year offtake term sheet with commodities trader Trafigura, valued at about $1.1 billion, which Nth Cycle disclosed earlier this year. Analysts have noted that the Trafigura arrangement is still a letter of intent rather than a final contract.

The timing is also tied to capital markets. On July 22, 2026, Nth Cycle agreed to go public through a merger with Kensington Capital Acquisition Corp. VI, a special purpose acquisition company listed on the New York Stock Exchange. The transaction values Nth Cycle at an implied enterprise value of about $585 million, and the combined company is expected to trade under the ticker NTH once the deal closes, targeted for the fourth quarter of 2026. Securing a commodities heavyweight as an anchor partner shortly before the listing gives public investors a strong credibility signal, while showing that battery recycling is turning into real critical minerals infrastructure rather than a purely environmental project.

Nth Cycle already operates a refinery in Fairfield, Ohio,* where its modular electro-extraction unit, called the Oyster, processes black mass from recycled batteries and nickel-bearing scrap. The company describes the site as the first US refinery producing high-purity nickel-cobalt mixed hydroxide from recycled battery material. The Ohio unit can handle up to 3,100 metric tons of scrap per year and produce up to 900 metric tons of this nickel-cobalt product. Project SHIELD would scale that model up considerably. The company first planned to build the plant in South Carolina and open it in 2028, but it now says the site will be announced later and that operations should start around 2029, somewhere in the US Southeast.

Federal support is a key driver. On August 20, 2026, the Department of Energy selected Nth Cycle for award negotiations worth up to $100 million to build Project SHIELD, as part of about $500 million in grants to seven companies working on lithium, cobalt and battery materials. Princeton NuEnergy, which recycles cathode materials, was selected for $50 million in the same round. The Nth Cycle plant could support more than 800 construction jobs and over 50 permanent positions.

The biggest policy change for the sector is a new export restriction on black mass. After a presidential determination issued on July 30, 2026 under the Defense Production Act, the Commerce Department's Bureau of Industry and Security published a temporary rule on August 6, 2026 covering black mass and tungsten scrap. Since August 27, 2026, US companies selling black mass must allocate 100 percent of their monthly sales to US buyers unless they obtain an exception or adjustment from the bureau in advance. The rule stays in force for 386 days from publication, which means roughly one year, and it even applies to transfers between affiliates or divisions of the same group. A recycler therefore can no longer route black mass from a US shredding plant to its own refinery in Asia or Europe without authorization. Companies can submit public comments until November 4, 2026.

Until now, much of the black mass produced in North America was shipped abroad, mostly to refiners in China and South Korea, because domestic refining capacity was limited. The restriction is designed to keep these recoverable critical minerals inside the country, and analysts expect it to deprive Chinese refiners of a source of cheaper feedstock. They also warn that Beijing could respond by accelerating its own recycling or by using its export controls on rare earths and magnets as leverage. The move came alongside other measures targeting the battery supply chain, including an executive order signed on August 26, 2026 that bans imports of foreign battery energy storage systems.

The main weakness of the strategy is the gap between shredding and refining. Research published by the Union of Concerned Scientists estimates that North America had about 7,000 metric tons of black mass refining capacity in 2026, compared with around 65,000 metric tons of black mass feedstock to process. The same analysis finds an overcapacity in shredding and pre-processing, but warns that refining capacity will not be large enough to absorb domestic volumes until about 2030. With exports blocked and few domestic outlets, shredders face a growing risk of stockpiling black mass, lower prices for their material and tighter cash flow in the coming months.

The US recycling landscape has already gone through a hard consolidation. Li-Cycle, once one of the leaders of the sector, filed for bankruptcy after cost overruns at its Rochester Hub in New York, a project paused in 2023 that never began operations. Glencore, its main secured lender, took over Li-Cycle's assets in August 2025 through a credit bid of about $40 million, gaining the unfinished Rochester site and several shredding facilities in the United States. Around $44 million in construction liens on the Rochester project were paid off in November 2025, a move seen locally as a step toward reviving the hub. The Nth Cycle agreement now gives Glencore a refining outlet for the black mass produced by these assets.

Other players are adapting their business models. Nevada-based Redwood Materials, founded by Tesla co-founder JB Straubel, closed a $425 million funding round in January 2026 for Redwood Energy, a unit that repurposes used electric vehicle batteries into grid-scale storage for data centers, with backing from Google and Nvidia's venture arm. Redwood is also expanding consumer battery collection in Nevada with smart drop-off bins, while the Environmental Protection Agency is still expected to propose updated rules for handling waste lithium batteries.