The Business Case for Recycling Rare Earths and Critical Minerals Strengthens

Rising prices will increase economic attractiveness.

Taiwan is grappling with growing risks to its supply of rare earth elements (REEs) and other critical minerals. Recycling is emerging as a potential tool to reduce dependence on imported materials, and several Taiwanese companies are already developing technologies to recover high-purity metals from battery waste and industrial scrap — an effort that could help strengthen supply chain resilience in the face of rising geopolitical and economic pressures.

Judging from a presentation by New Taipei City-based rare-earths and critical-metals-recycler UWin Nanotech, the recycling process is fairly straightforward. “Using solution-based extraction, we recover cobalt, nickel, and lithium and convert them into compounds that match the purity of virgin mined materials and can be reused in battery manufacturing,” says Leo Chang, cofounder of UWin. “The full flow turns waste batteries into raw materials equivalent to virgin sources, enabling a circular supply chain and reducing reliance on mining.”

Since China announced a restriction on critical metals and rare earths exports in April last year in retaliation for wide-ranging U.S. import tariffs, depleted inventories have drawn headlines, accompanied by warnings that millions of jobs depend on the sector.

The developments also pose risks for Taiwan. The island’s high-tech economy is acutely vulnerable to disruptions in critical mineral supply chains, relying overwhelmingly on imported resources, often from a single market with which it maintains a particularly uneasy relationship: China.

Several industrialized countries, including the United States, Japan, France, and Germany, have also taken steps to expand the recycling of critical minerals and rare earths as part of efforts to reduce dependence on China. Recycling projects led by Taiwanese pioneers could offer domestic industries some relief as well, stakeholders say, provided the government and local companies are able to deliver sufficient support.

“Taiwan subsidizes recycling of electronic waste and lithium-ion batteries, with six licensed companies handling batteries, but current practice often involves exporting collected batteries, highlighting a gap between licensing and domestic processing capabilities,” says Chang.

He adds that by 2030, new batteries sold in Europe must include specified percentages of recycled materials, with noncompliant imports subject to higher taxes. “Due to regulatory requirements and potential tariffs, recycled materials are expected to be priced higher than virgin materials, driving demand for compliant supply,” he says.

Chang explains that while Taiwan’s electric vehicle market remains small, limiting the domestic supply of end-of-life batteries, significant volumes of industrial scrap are already available from manufacturers across Taiwan’s battery supply chain. “This provides sufficient quantities and high value today, while consumer battery scrap will ramp up in the coming years when the first electric vehicles will end their life cycles,” he says. 

Local pioneers

So how can high-purity recycled lithium carbonate be extracted from the so-called “black mass” left behind when lithium-ion batteries are shredded for disposal? The answer lies in eco-friendly hydrometallurgy, a family of relatively new, environmentally friendlier techniques that use aqueous solutions to separate and recover metals. A barrel of black mass is mixed to the consistency of fluid concrete, then fed through a series of stages, including automatic leaching, air treatment, and carbon-capture systems, before undergoing solid-liquid separation.

The remaining solids still resemble black sludge, but the greenish liquid is transferred to a laboratory vessel. After further shaking and stirring, it yields a fine white powder: lithium carbonate. Destined for use in new lithium-ion batteries — from electric vehicles to consumer electronics — the material completes the recycling loop.

For its part, UWin has developed a comprehensive, patent-backed lithium-ion battery recycling process that safely discharges, separates, and converts battery waste into battery-grade compounds. Batteries must be discharged before shredding to avoid immediate fire risk.

Conventional methods of discharging batteries, such as connecting them to a motor or soaking them in a sodium chloride solution, either consume large amounts of water or result in the loss of valuable metals. UWin’s patented discharging agent, by contrast, is designed to neutralize batteries with minimal water use and without significant metal loss. Once discharged, the batteries can be safely shredded and ground into powder, allowing for downstream sorting.

The company claims that its technologies can be applied to 37 different metals, including precious metals, REEs, and industrial metals. It became a qualified supplier of Apple in 2020, and plans to set up a new factory in central or northern Taiwan by 2027, leveraging government subsidies and serving as an Asian demonstration site.

“We will export our technology to regions lacking hydrometallurgy capabilities, positioning recycled materials as a premium, compliant alternative to virgin supplies often controlled by China,” Chang says.

Another local player to watch is Lianyou Metals, a Pingtung-based recycler specializing in tungsten, a silvery-white metal known for its exceptionally high melting point, strength, and conductivity. Those properties make it essential for high-heat and high-stress applications, including light bulb filaments, cutting tools, and armor.

Lianyou’s core technology replaces the traditional molten-salt process with wet metallurgy and oxidation, enabling tungsten recovery through a lower-carbon method that the company says can cut emissions by roughly half.

Finally, there is Chung Tai Resources, a Taoyuan-based recycler that extracts REEs, such as yttrium and lanthanum, from the phosphor powder found in fluorescent lamps. The company says it uses a non-toxic peeling technology to separate and recover the materials.

However, the path to large-scale industrial deployment remains long. One observer questions whether recycling can realistically serve as an alternative to rare earth supplies from China in the foreseeable future.

“While material is being recovered, for example from magnets or electronic waste, the available quantities are still small, and the magnets are embedded deep within the systems,” says Jan Giese, senior manager at German rare-earths importer Tradium. “Furthermore, scrap containing rare earths is now just as sought after as the metals themselves, with a significant portion going directly to China, which is specifically seeking to control this part of the value chain from mining to recycling.”

Giese notes that primary materials have long life cycles and must first pass through the value chain before they can be recovered and recycled.

“Since the ramp-up of future technologies such as e-mobility and renewable energies is only just beginning, there is currently not enough material available for recycling to meet the projected demand in the short term,” Giese says. “In the long term, however, we anticipate that rising prices for critical metals will increase the economic attractiveness of recycling projects.”

Entering the dilemma

Taiwan has no time to lose. Transitioning to a circular critical mineral supply chain is no longer an environmental luxury, but a geopolitical and economic necessity, says Kei Hasegawa, partner and office manager for Hong Kong & Taiwan at YCP Group, a management consulting firm.

“Critical metals like gallium and indium are vital for chip fabrication and optoelectronics, while REEs are essential for the manufacturing equipment itself,” says Hasegawa. “A disruption in supply would not merely affect a single sector — it could paralyze the ecosystem that positions Taiwan as a key node in the global economy.”

When it comes to Taiwan’s goal to reach net-zero carbon emissions by 2050, Hasegawa points out that the government’s pathway relies heavily on electrification and renewable energy, both of which are REE-intensive.

“An average offshore wind turbine requires roughly 600 kg of rare earth materials for its generator,” he says. “Without a stable supply, Taiwan’s green energy infrastructure build-out faces severe bottlenecks.”

Hasegawa adds that REEs are strategic commodities for national defense. They are integral to guidance systems in missiles, jet engines, radar absorption capabilities, and night-vision systems. “As geopolitical tensions rise, the ability to maintain defense readiness depends on the uninterrupted flow of these critical inputs,” he says.

Access to rare earth minerals becomes an even more critical issue in hypothetical risk scenarios. Although Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, maintains 12- to 24-month inventories of critical materials, analysts have warned that the stockpile assumes normal consumption patterns and does not account for the surge in demand that could accompany accelerated military production during a potential conflict.

Precariously, though the company has diversified sourcing through European and Japanese intermediaries, these suppliers ultimately depend on Chinese-refined feedstock for their operations.

“This creates an illusion of supply chain independence while maintaining structural dependence on Chinese processing capabilities,” wrote Muflih Hidayat, an analyst focusing on the mining sector, in a December post on the Australia-based Discovery Alert website.

In early December, the Australia New Zealand Chamber of Commerce (ANZCham) released its ANZCham Taiwan 2025 White Paper, drawing attention to the island’s rare earths and critical metals dilemma and urging an expansion of so-called “urban mines” and recycling programs. Taiwan’s existing recycling efforts, the report notes, are growing but remain at an early stage.

“The government can learn from international examples, such as Japan and France’s joint rare earth recycling plant, which will supply 15% of global rare earth elements demand from recycled magnets, to create a domestic recycling industry,” ANZCham writes. The report cites a 2025 investment by the Japan Organization for Metals and Energy Security and the Japanese liquefied petroleum gas company Iwatani in a rare earth recycling and refining project led by the French processor Caremag in southern France. The facility is expected to become operational by late 2026.

“Policy support — in the form of R&D funding, subsidies for recyclers, and setting recycling content targets for industry — will be crucial,” according to the White Paper. “Over time, a robust recycling and processing sector in Taiwan will provide an autonomous buffer against external supply shocks, complementing raw material imports from Australia and the supply of highly refined mineral products from nations like Japan.”

The decision to invest in rare earth recycling is a trade-off between economic viability and national strategic interest, at least if you ask Armin Ibitz, an associate professor at Wenzao Ursuline University of Languages in Kaohsiung, who has written about e-waste recycling.

“If these metals are considered crucial for maintaining the economies for wind power, electric vehicles, and drones, the defense industry could become a secondary consideration,” he says.

Ibitz adds that Taiwan recognized the risk of dependence on critical materials earlier than many other countries. The government enacted the Resource Recycling Act as early as 2002 and later introduced a range of other domestic legislative changes to promote the circular economy, including amendments to the Waste Disposal Act.

“Taiwan has a very efficient collection system,” says Ibitz. “For waste electrical and electronic equipment, the collection rate is around 80%, and unlike in Europe, citizens receive a small financial compensation for disposing of old devices at numerous private resource recovery centers, which provides a strong incentive.”