LG Energy Solution’s Strategic Battery Recycling Venture in France: A Pillar of Circular Economy Leadership

The rapid growth of electric vehicles (EVs) has thrust battery recycling into the spotlight as a critical component of sustainable energy systems. Nowhere is this more evident than in Europe, where regulatory mandates and soaring EV adoption are driving a race to secure raw materials. LG Energy Solution (LGES), a global battery manufacturing powerhouse, has taken a decisive step forward with its new battery recycling joint venture (JV) in France—a move that could redefine its supply chain resilience and investment appeal.

The JV: Bridging Production and Recycling in Europe
LGES and French scrap recycler Derichebourg SA have formed a 50:50 joint venture to build a state-of-the-art battery recycling plant in Bruyères-sur-Oise, France. Scheduled to begin operations in 2027, the facility will process over 20,000 tons of end-of-life EV batteries and production scrap annually, extracting critical metals like lithium, nickel, and cobalt into reusable “black mass.” This material will directly feed into LGES’s EV battery production lines, including its plant in Wroclaw, Poland.

The partnership combines LGES’s production expertise with Derichebourg’s extensive collection network—200+ sites in France and 285 globally—to secure a steady supply of used batteries. This localized approach reduces logistics costs and aligns with the EU’s stringent recycling targets, which require 16% cobalt and 6% lithium recovery by 2031, rising to 26% and 12%, respectively, by 2036.

Why France? Why Now?
France represents a strategic hub for LGES’s European ambitions. Accounting for 15% of EU EV sales in 2024, it is a market where battery waste volumes are projected to surge as EV adoption accelerates. The JV’s location near Paris also positions LGES to serve neighboring countries, leveraging Derichebourg’s pan-European logistics.

Investors should note that the EU’s regulatory push for recycled material content is not just an environmental imperative but a cost-containment strategy. By securing a domestic recycling source, LGES reduces its reliance on volatile global commodity markets—critical as lithium prices remain volatile and cobalt supply chains face geopolitical risks.

Implications for Investors
1. Supply Chain Dominance: The JV strengthens LGES’s control over its raw material supply chain. Recycling could lower production costs by 10–20% for key metals, according to industry estimates.
2. Regulatory Compliance: Meeting EU mandates ensures access to the bloc’s EV market, which could exclude non-compliant battery producers post-2030.
3. Market Leadership: With EV battery demand expected to grow at a 14% CAGR through 2030, LGES’s early move into recycling positions it to capitalize on a $42 billion global battery recycling market by 2030 (BloombergNEF).

LGES’s Chief Strategy Officer, Chang Beom Kang, emphasized the venture’s dual benefits: “This closed-loop system secures cost-competitive materials while meeting customer demands for sustainability.”

Conclusion: A Blueprint for Circular Success
LGES’s French recycling JV is a masterstroke in a sector where recycling infrastructure is the next battleground. By 2036, the EU’s cobalt recycling target alone—26%—will require processing over 100,000 tons of batteries annually, ensuring robust demand for facilities like the Bruyères-sur-Oise plant.

The 20,000-ton capacity represents just 20% of France’s projected battery waste in 2030, suggesting ample room for expansion. Meanwhile, Derichebourg’s collection network reduces the risk of supply bottlenecks, a common pitfall for recyclers.

For investors, LGES’s move underscores its transition from a battery manufacturer to an end-to-end energy solutions provider—a narrative that could lift its valuation. With EV adoption rates climbing and regulatory tailwinds firming, this JV is not just a cost play but a growth catalyst. In a market where battery producers are increasingly valued on their circular economy credentials, LGES is now among the sector’s most compelling stories.

Final Take: LGES’s French venture is a strategic win with long-term moats. Investors should watch for operational milestones post-2026 and track its progress toward EU recycling targets—a litmus test for its future profitability and relevance.