Aqua Metals, American Battery Factory Explore U.S. Battery Recycling Partnership

Aqua Metals and lithium iron phosphate battery maker American Battery Factory have signed a non-binding memorandum of understanding to explore a strategic collaboration aimed at strengthening a domestic, circular supply of battery materials, the companies said in an official announcement, as U.S. manufacturers seek to reduce reliance on overseas recycling and refining. 

Under the proposed arrangement, the companies would evaluate co-locating a commercial Aqua Metals lithium-ion battery recycling facility next to American Battery Factory’s planned battery cell manufacturing site in Tucson, Arizona. The concept centers on recycling battery manufacturing scrap generated on-site and returning battery-grade lithium carbonate directly into U.S.-based battery production, potentially shortening supply chains and lowering costs.

The discussions come as the U.S. battery industry grapples with limited domestic capacity to process manufacturing scrap and black mass. Much of this material is currently shipped to Asia for hydrometallurgical processing, a practice analysts say exposes manufacturers to logistics risk, price volatility and geopolitical uncertainty. Policymakers have increasingly highlighted recycling as a way to secure critical minerals while supporting domestic manufacturing.

Aqua Metals plans to deploy its AquaRefining™ technology, an electricity-powered, closed-loop process designed to replace high-temperature smelting and chemical-intensive hydrometallurgy. The company says the system is better suited to U.S. labor, safety and environmental requirements and can produce battery-grade materials for reuse. Industry observers note that economic viability, rather than technical feasibility alone, has been the main barrier to scaling battery recycling in the United States.

American Battery Factory is developing large-scale LFP battery cell manufacturing capacity, supported by federal and state initiatives designed to localize battery production, according to reports. Under the contemplated model, recycled lithium carbonate could be fed back into ABF’s operations or supplied to downstream partners, creating a tighter loop between manufacturing and recycling.

The MOU also outlines plans to assess a commercial-scale recycling facility capable of processing up to 10,000 metric tons of lithium-ion battery materials per year, including both in-house scrap and third-party feedstock. Co-location is expected to reduce transportation costs and improve operational efficiency, factors analysts say will be critical if U.S. recyclers are to compete with established overseas processors.

The companies said they will also evaluate how U.S. manufacturing incentives, including the Section 45X Advanced Manufacturing Production Tax Credit, could improve the economics of domestic battery materials production. Observers note that such incentives are increasingly shaping investment decisions across the battery and clean energy sectors.

Any definitive agreement would depend on financing, permitting and regulatory approvals, with a potential start of commercial operations targeted for 2028. Aqua Metals said the proposed collaboration builds on its broader strategy to commercialize domestic recycling of lithium and other battery metals, while advancing early-stage work on rare earth element recovery.

Source: Aqua Metals

SUNSHINE Spotlight: Aqua Metals and American Battery Factory are exploring a co-located recycling and manufacturing model that could keep battery materials in U.S. circulation and reduce dependence on overseas processing.