A circular economy for critical minerals is fundamental for our future

In traditional linear business models, critical minerals are extracted, then used to manufacture a product and ultimately discarded – recovery or recycling of critical minerals is very limited. However, such models are no longer compatible with current supply chains, growing demand, and existing and future sustainability objectives and regulatory requirements.

The key challenges in the critical minerals supply chain include:

• accelerating energy transition – supply chains are already stretched and may not be able to adapt quickly enough to meet rising demand. By 2035, 74 new lithium mines and 97 new graphite mines will be needed (see figure 1), but bringing a mineral deposit from discovery to production can take 10 to 12 years
• security of supply – the mining and refining of critical minerals is heavily concentrated and exposed to geopolitical tensions and price volatility. For example, just three nations control approximately three-quarters of global cobalt, lithium and rare earths output
• environmental, social and governance issues associated with mineral extraction – these include high carbon emissions, land degradation, biodiversity loss, water stress as well as broader safety and human rights issues.

A circular approach lowers exposure to these challenges by reducing the need to mine critical minerals.

Figure 1. Number of new mines needed to meet projected demand by 2035

The volume of end-of-life green infrastructure assets and electronic waste containing critical minerals is expected to rise sharply in the UK in coming decades. It is predicted that:

• electric vehicles (EVs) will provide 235,000 tonnes of battery material waste by 2040, eight times more than in 2030
• solar panel cumulative waste will reach 30,000 tonnes by 2030 and rise to 1 million tonnes by 2050
• electronic waste will exceed 2.5 million tonnes by 2040.

It is important that we invest in purpose-built facilities and new efficient techniques to recycle critical minerals. For example, with 300 smart phones able to provide enough cobalt for one EV battery, recycling the unused 21 million tech items in UK homes could help supply critical minerals for UK gigafactories. Recycling EV battery waste could also supply enough cathode material to supply 60 GWh of new EV batteries by 2040.

However, the circular economy hierarchy (see figure 2) suggests that recycling should be the last resort. The priority should be to keep materials in use for longer by sharing, leasing, repairing, reusing, remanufacturing and, finally, recycling the assets in which they exist.

Figure 2. Circular economy inverted pyramid hierarchy

Companies should focus first on adding value by extending product lifecycles so that recycling is delayed and less critical minerals for new products are needed.

For example, end-of-life electric vehicle batteries have up to 80 per cent capacity remaining. These can be reused in secondary mobile or stationary Battery Energy Storage applications. Renault is developing Europe’s largest stationary storage system using end-of-life car batteries totalling 70 MWh across several locations.

Where reuse is not feasible, remanufacture can further extend product lifecycles.

For instance, the life of a wind turbine can be prolonged by up to 20 years if it is remanufactured, which would lower the demand for mined rare earth elements. There are other benefits to this too. Remanufactured turbines can be delivered in four months at a reduced cost compared with new turbines that can take up to two years for manufacturers to install.

There is progress in circular design. For example, Fairphone integrated modularity into its mobile phone design to allow for efficient repair and recycling. However, most products are not designed to follow the circular economy hierarchy (see figure 2). Currently, less than one per cent of critical minerals are recovered from products, according to the European Commission, while the UN warns of an impending “tsunami of e-waste” due to short lifespans, difficulty in repair and poor recycling.

We need a complete shift in how we make and use products, and organisations that use critical minerals must see products as carriers of valuable and finite resources.

A product’s end-of-life must be thought about at the design stage and circular principles embedded at the start of the value chain (see figure 3).

Examples include designing for durability, using less toxic materials or using them in a way that allows for safe extraction to facilitate reuse, building with modularity to enable repair and replacing components, and creating a strategy to bring those valuable resources back to the production stage.

Figure 3. The circular supply chain

We need to change our mindset to think about how products are designed so that value is not lost at the end.

Sustainability and resilience are the main drivers for a circular economy. But how can the economic benefits be maximised while accelerating the energy transition?

The commercial motive to implement a circular economy is yet to improve. Products could become more expensive to make and the number sold might decline. Companies may need to increase prices and charge green premiums or look for alternative revenue streams.

For example, smartphones are now more durable, software is offered for longer and consumers keep them for longer. Vendors need revenue from sources other than device sales to make up for such a shortfall – for example, by selling media services and applications.

We need business models that complement and promote circularity.

Leasing is one option. HMD global has introduced a subscription service called Circular where mobile devices are leased to customers – using Nokia’s brand – and given environmental credits as an incentive to keep their phones for longer. Phones are then returned to HMD and refurbished, reused or recycled. In this way, HMD benefits from increased monthly revenue for delivering a robust product.

This completely changes the focus from the number of products sold to the quality of the one in service.

Anything-as-a-service (XaaS) is a model that increasingly uses connectivity and data to offer products as a managed service on subscription rather than for purchase or lease. The product is monitored and maintained by the manufacturer whose revenues are driven by the product’s usage.

An example is Enel X’s Energy as a Service (EaaS) programme where renewable energy is provided as a service to customers charged on a subscription basis for its use. The infrastructure is maintained by Enel X during its entire lifecycle and periodically replaced when necessary. This helps close the loop of raw material use by incentivising:

• the build of sustainable, robust and easily maintainable energy infrastructure
• design for disassembly, recovery, reuse and remanufacture and recycling of materials.

The manufacturer’s priority is to maximise the time its products and parts add value, putting circularity at the centre of the model’s success.

Industry 4.0 technologies combine cyber digital and physical systems and can be used to optimise serviced business models. When these technologies are connected to the internet, they become part of the Internet of Things (IoT), which allows manufacturers to collect data on a product during operation.

This means that live performance data can be captured, allowing strategic and proactive decisions to be made about maintenance and repair as well as inform data driven design alterations. For example, Rolls-Royce uses advanced analytics on data from IoT sensors to monitor and plan maintenance and repairs on jet engines. As a result, their service life is extended by 25 per cent and end-of-life management optimised.

IoT data also enables manufacturers to create digital twins – a virtual, dynamic copy of a physical asset – which mirrors real-time appearance and behaviour.

Digital twins allow changes to be made on a virtual model that replicates a product in operation, as well as run simulations to test new product designs and perform predictive maintenance. Simulations enable manufacturers to test numerous product designs in seconds, rather than hours, improving the ability to efficiently embed circularity within a products design.

The next step would be to connect each stage of the product lifecycle – design, make, move and operate – through a seamless strand of data, called the digital thread. Instant communication between operation, design and manufacture helps continuous data-driven decision-making in the design phase, continually improving product iterations until the product and process are optimised. This further improves manufacturers’ ability to design for performance, as well as longevity, maintenance, reuse, remanufacture and recycling.