(Yicai) March 14 -- More than 80 percent of Chinese companies engaged in battery recycling were in the red last year because of plunging lithium carbonate prices, thus throwing the once profitable business into a loss-making crisis.

About 1,417 power battery recyclers in China closed down this year as of yesterday, up nearly 97 percent from a year earlier, according to data from corporate information platform Qichacha. Meanwhile, the number of such companies shutting down last year soared 142 percent to 6,984.

Lithium carbonate prices plunged over 80 percent to CNY113,000 (USD15,715) per ton yesterday from the peak of CNY600,000 per ton last year.

The more companies recycle, the more they lose, said Yang Lin, secretary general of the battery recycling committee under the China Electronics Energy Saving Technology Association.

Many recyclers have either gone bankrupt because the prices of expensive goods they earlier purchased plunged or they have been scraping a living by limiting their business scale, Li Ya said at a lithium battery summit in the Yangtze River Delta region. Firms with decent business performance are funded by their parent companies, have a steady supply of goods, or use cheaper recycling methods, he added.

Precious metal materials, such as nickel, cobalt, manganese, and lithium, can be extracted from recycled power batteries to make new ones. But as only a few companies have mastered advanced extracting technologies, recycling costs are high, an industry analyst said, adding that it is cheaper to directly buy lithium carbonate at the current price, rather than getting the recycled material.

Recycled lithium carbonate costs around CNY100,000 per ton, Yang Yanqiu, a senior researcher at Shanghai Iccsino Data Technology, told Yicai. The price of lithium carbonate will likely fluctuate between CNY80,000 and CNY130,000 (USD11,125 and USD18,080) per ton this year, so recyclers are expected to achieve very narrow profits or even losses this year because of the price fluctuations.

If lithium carbonate prices fall below CNY60,000 per ton, no company can recycle batteries without subsidies, which would result in an ecological disaster, Yang Lin noted.

China should implement laws and regulations on battery recycling and disposal, enhance the supervision of the industry, speed up the creation of related national standards, establish emergency funds, and improve the battery recycling and disposal process, Zhang Zhentao, a researcher at the Technical Institute of Physics and Chemistry of the Chinese Academy of Sciences and member of the National Committee of the Chinese People’s Political Consultative Conference, proposed at the Two Sessions, the country’s key annual policy setting meetings.

Editor: Futura Costaglione