Glencore PLC (LSE:GLEN) could quadruple its earnings from battery recycling over the next five years, according to a note from UBS.
Analysts from the Swiss bank have come to that conclusion after they visited Glencore’s e-waste sampling plant at East Providence (Rhode Island) and then Li-Cycle's Rochester black mass processing hub (under construction).
Recycling currently produces 40,000t annually of mainly copper and generates US $200-250 million of underlying profit (EBITDA) but UBS sees potential for this to rise four to fivefold to around US$1 billion.
This will involve doubling scrap processing at the Horne smelter (alongside a C$500 million environmental upgrade) and by investing at Portovesme with joint venture partner Li-Cycle.
Horne is already sourcing 15% of feedstock from e-waste while the Li-Cycle JV in Europe will process black mass at the mothballed Portovesme Zn/Pb smelter.
Growth is likely to accelerate rapidly in the 2030s as end-of-life battery scrap soars.
Glencore estimates 1mt of nickel, 200,000t of cobalt and 1.5mt of lithium could be recoverable from scrap by 2040, while UBS adds the metals group already has the infrastructure to take advantage through its global hubs.
'Buy' with a 12-month price target of 520p is UBS’s view on Glencore shares.