Repurposing Over Recycling A Big Opportunity In Last Two Years- Gaurav Dolwani, LICO Materials

LICO Materials – A Mumbai-based Recycling Company in the lithium-ion battery supply chain is one of the cohort of recycling firms that will play a crucial role in India’s plans for recovery of critical materials such as lithium, cobalt, manganese, and nickel to be given back to battery manufacturers to give the materials a second life. Recycling in fact could be serving as much as 50% of raw material requirements for the EV battery industry by 2035 in the most optimistic scenarios. The Indian EV sector expects to grow 250 percent, and energy storage to 42 GW by 2032.

Group Editor Prasanna Singh caught up with Gaurav Dolwani – Founder and CEO of LICO Materials, fresh after the inauguration of their plant in Bengaluru. the 4 GWh plant is expected to be scaled upto 10 GWh by 2027.

Q: When did the idea of LICO Materials come to mind?

Gaurav Dolwani: I first conceived this idea in early 2021. During the pandemic, there was limited information available online, and I could not find any recyclers. Before this, I ran a commodity trading firm in Singapore, importing metals and minerals for industries like steel and cement in India. I had a good understanding of India’s mineral resources. Observing global electrification trends, it was clear that India would eventually follow suit. However, critical minerals like lithium, nickel, and cobalt were not available in India.

This led me to explore alternative ways of building the supply chain, focusing on end-of-life batteries. Drawing lessons from the lead-acid battery recycling sector, I realized it would take time to reach maturity. By 2021, I understood this would be a long journey. In October 2021, we formally established the company, and by October 2022, we started operations at our Mumbai plant.

Q: Where have the recycling inputs come from in the last two years?

Gaurav Dolwani: This year marks a transition towards the end-of-life electric vehicle batteries, primarily from the two- and three-wheeler segment. But buses and cars are not yet part of this trend. By 2025, this transition will likely continue, which is great news for recyclers and producers alike. It enables compliance with the Battery Waste Management Rules and ensures critical resources are reintegrated into the formal supply chain. In contrast, personal device batteries have mostly been lost to the informal sector due to their size and ease of handling.

As formal recyclers, competing with the established “Kabadiwala” network is nearly impossible. This network has existed for hundreds of years, and despite our efforts, we could not make a dent in it. Therefore, we stopped trying.

Another issue, which I believe is a myth in India, is that batteries are going into landfills. Today, India has built significant recycling capacity, and multiple recyclers operate here. Our challenge is filling that capacity, not a lack of recycling. While this may happen in other countries, it is not happening in India due to the limited volume of end-of-life batteries.

Q: What challenges do you face?

Gaurav Dolwani: We keep applying for battery imports. Since batteries are classified as hazardous waste, shipping them across borders is extremely complicated and tiring due to tough documentation and permissions. Despite these hurdles, there is demand for imports, which means batteries from Europe and the U.S. are available at better value than Indian batteries. This in itself is a telling story.

As for landfills, I do not see batteries ending up there in India unless volumes increase dramatically—which is unlikely to happen overnight.

Q: Between the time you started (October 2021) and now, have your assumptions changed on the market? 

Gaurav Dolwani: Of course. Initially, our focus was purely on recycling. However, in 2022 and 2023, we started receiving some batteries from two-wheelers that had great potential for reuse. India has a significant energy deficit, and with no domestic cell manufacturing, it made sense to repurpose these batteries instead of crushing them. This realization led us to enter the repurposing vertical.

We began by creating small products like power banks, lanterns, and torches for areas with limited connectivity. Today, we are scaling up and have recently developed battery packs of up to 10 kilowatt-hours for use as power backups in hotels and hospitals.

The biggest shift I’ve seen is the transition from informal to formal sourcing of raw materials. Policy and regulatory emphasis have also increased significantly since 2021. The Battery Waste Management Rules,2022 are well-designed and appreciated globally, but implementation remains challenging due to India’s size and the varied approaches of State Pollution Control Boards. We constantly engage with CPCB (Central Pollution Control Board) and MOEFCC (Ministry of Environment, Forest and Climate Change of India)to address these issues.

Q: Between recycling and repurposing, the latter seems to have greater business potential. What’s your take on this?

Gaurav Dolwani: That’s exactly what we’re focusing on. We’ve already developed a 36-kilowatt-hour energy storage system using a used MG battery, connecting it to a charger and a solar application, and then using it to charge a smaller Comet (MG brand EV). This progress is remarkable. Two years ago, we wouldn’t have imagined being in this business.

There is a significant demand for energy storage. We see tenders every day. However, acceptance of used cells is still met with some hesitation. Earlier, used cells often went into the informal sector, where safety and quality standards were not adhered to. In my opinion, it’s not about whether cells are new or used; it’s about capacity, price, and warranty. For instance, if you have a home and currently use a diesel generator set connected to a lead-acid battery, it’s not ideal. Diesel is polluting and imported, which burdens the country. Lead-acid batteries have a warranty of only 1.5 years. Our products can compete with three-year warranties at a similar price point. The challenge lies in acceptance. 

We’re making strides to change this perception by demonstrating reliability and branding. We aim to change that, though we need support and understanding that these batteries are as good as new.

Q: How do you change this perception? Is it by offering better value for money?

Gaurav Dolwani: Compared to the informal sector, our costs may be higher because we adhere to safety compliances and GST. Informal sectors don’t follow such regulations. But would you trust a battery pack from the informal sector? 

Q: Between 2021 and 2024, lithium prices have dropped significantly. How has that impacted your plans and profitability?

Gaurav Dolwani: The drop in lithium prices has affected revenue substantially. When prices drop from $80-$83 per kg to $10 per kg, revenues decline drastically despite recycling the same quantity. It’s not just lithium; cobalt and nickel prices have also fallen. We’re at a point where lithium prices are at mining costs. If they drop further, mines might shut down, which seems unlikely. While we can’t predict drastic changes, the next 18-24 months are expected to remain stable.

Q: Is nickel and cobalt crucial, given India is moving towards an LFP (Lithium iron phosphate)-dominated market?

Gaurav Dolwani: NMC (Lithium Nickel Manganese Cobalt Oxide) batteries still play a significant role. Batteries coming to us are predominantly NMC batteries, especially in the two-wheeler segment. Major manufacturers like Ola and TVS still use NMC. While LFP will dominate in India due to its suitability for shorter distances and moderate performance requirements, NMC remains relevant, particularly for vehicles requiring higher performance.

Q: Explain the economics of LFP recycling versus NMC recycling.

Gaurav Dolwani: At our facility, we can recycle all types of lithium-ion batteries, including LFP and NMC. However, LFP recycling is challenging because it’s dependent solely on lithium. NMC is more viable economically due to the presence of multiple valuable metals. Globally, recyclers are paid to recycle; in India, cultural norms resist paying for recycling. At minimum, we’d prefer batteries be given to us for free, but customers often expect compensation.

Q: You mentioned hydrometallurgy. Is it the standard technology for recycling? Does India have an advantage in this sector?

Gaurav Dolwani: Hydrometallurgy is one approach, but scaling it is complex. While we’ve developed lab-level technology for battery-grade purity, commercializing it is challenging. Our strategy is to adopt proven technologies from outside. India’s advantage lies in processing for global needs, not just domestic ones. Our facility has a capacity of 17,000 tons, but material access remains a challenge. To grow, we need to import batteries.

Q: What is your zero water discharge facility, and why is it important?

Gaurav Dolwani: Our process involves water for discharging batteries, mixed with a solution for complete discharge. For EV batteries, we’ve introduced electrical discharge methods, minimizing water use as sustainability is central to our operations. 

Q: How big can this industry grow by 2025 or 2030?

Gaurav Dolwani: According to NITI Aayog, India’s recycling capacity could reach 160 GWh by 2030. Our facility is 4 GWh, with plans to expand to 10 GWh by 2027. Even with such growth, the industry will need more capacity. India’s reliance on two- and three-wheelers is an advantage, as their batteries return for recycling faster than cars, which take longer in regions like Europe or America.

Q.: How competitive are Indian recyclers compared to Chinese and European recyclers?

Gaurav Dolwani: China is far ahead of us and has been for a long time. However, we are ahead of Europe and America in some respects.

China has a significant head start, but they face challenges like overcapacity. For instance, in India, a single plant with a capacity of 17,000 tons is considered large. In China, plants with capacities of 150,000–200,000 tons are common.

Despite their scale, they also have limitations, such as dependency on domestic resources like black mass. This raises questions about how long they can remain self-sufficient.

India has an opportunity to position itself as a processing hub for the world. Our unit economic costs are lower than China’s. Labor here is half as expensive, and we have a mature metallurgy, chemical, and electronics industry. Recycling in Europe and America is expensive due to high labor costs, making India a viable solution. While we’re not yet leaders, we have the potential to be competitive globally.

Q.: Every industry faces risks from China. What is the China risk for your industry?

Gaurav Dolwani: For batteries in Europe, North America, or South America, most materials are sent to China and Korea. When we try to import batteries, we’re restricted to small quantities like 100–500 tons due to permissions and approvals. Meanwhile, Chinese companies are buying 5,000 tons at a time.

Even though we may be more cost-efficient, these small permissions make it impossible to compete globally.

Another concern is that China could start dumping cheap cobalt sulfate and nickel sulfate into India. Without developing our industry and having incentives in place, we’ll be unable to compete. Hydrometallurgy can help build this industry, but it requires raw materials and support, especially in the initial phases where losses are inevitable.

China and the U.S. have government support for their industries. For instance, U.S. recyclers receive funding, and recycling activities in Korea qualify for IRA benefits. India needs similar government-to-government partnerships with countries like the U.S., Europe, Japan, and Australia to develop our sector.

Additionally, being a non-OECD country limits us. Starting in February, Europe will only export materials to OECD countries, which will make sourcing even more challenging for us.

Q.: How is the new EPR mechanism working?

Gaurav Dolwani: In India, we have battery waste management rules with an Extended Producer Responsibility (EPR) mechanism. EPR is beneficial for recyclers, but there’s always a tug of war between recyclers and producers.

Recyclers argue for higher EPR rates, while producers push for lower ones. The Central Pollution Control Board (CPCB) has set EPR rates for different metals. For instance, lithium is priced at ₹2,400 per kilogram, with about 30%—or ₹800 per kilogram—being the EPR.

However, the current EPR system doesn’t sufficiently incentivize compliance. Producers may find it cheaper to pay the EPR charges rather than recycle. For example, in a two-wheeler battery costing ₹40,000, the impact of EPR might only be ₹100–200, which producers can easily pass on to consumers.

If the impact isn’t significant, batteries could end up in the informal sector, as we’ve seen with lead-acid batteries and personal devices.

India has taken a proactive approach with battery waste management rules for lithium-ion batteries. To maintain this momentum, we need to continue making proactive decisions.

Q.: Who do you sell the extracted material to right now?

Gaurav Dolwani: We currently work with our partners in Korea, where we export the black mass because they have the capability to extract battery-grade materials. We don’t sell it in India because no one here seems to have the capacity to process it at scale. So, we sell it to our partners in Korea, and they reintegrate it into the battery supply chain.

The next logical step for us is to bring that technology here. In two years, we plan to extract battery-grade material locally. However, we’ll still need to export it because there are no precursor manufacturers or anode-cathode manufacturers in India yet.

Q.: Do you expect this to change in the next two years?

Gaurav Dolwani: I’d say it will take four to five years. Setting up cathode and anode manufacturing facilities requires significant capital investment. For example, Epsilon is building a facility in Karnataka, but we’re aware of only one or two other companies that have announced plans—and none have started construction.

Currently, there are no cathode plants in India. These facilities typically take about three years to build and require investments of ₹5,000–9,000 crore. At present, there is no Production-Linked Incentive (PLI) scheme for them, although discussions are ongoing.

No OEMs (Original Equipment Manufacturers) are committing to cathode-anode manufacturers for long-term supply agreements, which are standard in other parts of the world. Such commitments enable manufacturers to secure financing through debt or equity. Without these agreements and government incentives, it’s challenging for anyone to take the financial risk required to kick-start this industry.