Polish recycler bets millions on Europe’s critical metals push

Europe’s push to get a foothold in the critical materials market is poised to benefit Poland’s biggest recycling company as the continent looks to cut its reliance on China.

Elemental Group plans to build a copper smelting and refining facility, taking up two-thirds of an $800 million investment, chief executive officer and founder Pawel Jarski said. The rest will be channeled into a refinery of electric-vehicle battery metals.

The projects, dubbed Polvolt, have already won grants from the European Union and Poland’s government as the bloc seeks to build its own critical raw materials industry. China now controls most of the global production of rare metals that are indispensable for electric vehicles, energy production and defense purposes.

“For the first three to four years we want to focus on copper and electronics because this is where we’re strong and the market is very mature,” Jarski, 46, said in an interview.

The CEO called Elemental “the biggest urban miner in this part of the world,” recycling materials from discarded devices from auto parts to smartphones. Until now its core business was processing car catalytic converters.

Elemental is seeking a minority partner, most likely from Asia, for its copper investment, according to Jarski, who said the future facility would also refine silver and gold as well as other rare earths. The artificial intelligence boom has spurred copper demand, which is needed for data centers and electronics.

“The number of copper buyers at the moment is multiple times bigger than sellers,” said Jarski. “The upward trend on the copper market will only gain in strength.”

EV batteries

It’s a more nuanced outlook for EV batteries, in the midst of a rocky transition in the car industry that’s led to volatile demand from mushrooming battery plants, including ones in Poland.

Elemental, which operates in about 40 countries on four continents, will assess the market’s potential after the first wave of EV batteries suited for recycling hits the market next year or in 2028, Jarski said. The company may then also look for a strategic partner to deliver the best technology for refining battery metals.

Its factory in southern Poland, a joint venture with US-based Ascend Elements Inc., already produces the so-called black mass from batteries.

The facility, operating at only about half-capacity though, currently sends most of its output to plants in China, where refineries further recover valuable metals.

The goal of the investment is to be able to complete the whole process locally — if it can be done cost-efficiently.

Elemental “won’t flex its muscle” for the sake of taking on China with EU grants, Jarski said. “China has huge overcapacity in recycling and refining battery metals.”

Bourse debut

A successful execution of the copper and EV-battery projects may return Elemental to the stock exchange, after its exit from the Warsaw bourse in 2021. The International Finance Corporation, the European Bank for Reconstruction and Development and Poland’s state development fund PFR SA are among Elemental’s current shareholders.

The new investments would first need to reach an advanced stage for investors to be able to price them appropriately, said Jarski, who added that a listing in Amsterdam would likely be the “rational” move in three years at the earliest.

The CEO expects Elemental’s estimated $3 billion annual revenue to double in the next five years once the new projects become operational.

The upbeat projection is partly based on expectations that trade in critical materials is likely to be curbed amid rising protectionism, with countries and economic blocs seeking ways to secure supply chains to protect their industries.

“Exports between continents is becoming more and more limited,” Jarski said. “It’s getting complicated so owning processing centers makes the most sense.”

(By Maciej Martewicz)