Highlights

• Ellen MacArthur Foundation's January 2026 report reveals that circular economy strategies can reduce EV battery material demand and environmental harm.
• The strategies cannot dismantle China's near-monopoly over critical mineral processing without deliberate investments in ex-China refining capacity.
• The study identifies a critical gap: recycling helps in the long-term but won't meaningfully offset primary supply dependence before 2035.
• Batteries recycled in Europe or North America may still rely on Chinese processing infrastructure.
• The report challenges the narrative that recycling alone equals supply-chain security.
• Resilience requires coordinated industrial policy, including regional processing hubs, standardized battery passports, and allied capital alignment.

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A major January 2026 report led by Wen-Yu Weng (opens in a new tab), Executive Lead for Critical Minerals at the Ellen MacArthur Foundation, delivers a sweeping diagnosis of the electric-vehicle (EV) battery supply chain—and an uncomfortable conclusion for policymakers. Titled Leading the Charge: Turning Risk into Reward with a Circular Economy for EV Batteries and Critical Minerals (opens in a new tab), the study argues that while circular economy strategies can dramatically reduce risk, cost, and environmental harm, they do not by themselves dismantle China’s near-monopoly over rare earth and critical mineral processing.

Drawing on 15 years of research and collaboration with automakers, battery manufacturers, recyclers, logistics providers, policymakers, and investors, the report reframes EV batteries as strategic material assets and calls for system-level redesign rather than incremental fixes. Leading the Charge - Jan 2026

Study Scope and Methods

The Foundation did not conduct new mineral surveys or market forecasts. Instead, it synthesized existing global data from the IEA, UNEP, World Bank, and industry case studies, combined with direct engagement across the EV battery value chain. The framework centers on five “circular loops” (intensive use, life extension, second life, high-quality recycling, and data governance) and three decision layers (product design, business models, and system-level policy). The goal: identify where value leaks, where risks accumulate, and where interventions actually scale.

Key Findings

The report confirms several realities that REEx readers will recognize:

• Material intensity is exploding. A typical EV contains over 200 kg of critical minerals—six times more than a combustion vehicle. Demand for lithium, nickel, cobalt, graphite, and rare earth-adjacent inputs is rising far faster than new supply can be responsibly developed.
• Processing, not mining, is the choke point. Mining occurs across dozens of countries, but refining and chemical processing remain geographically concentrated—overwhelmingly in China. Circularity reduces how much material is needed, but it does not automatically relocate where that material is refined.
• Recycling helps—but later. Before 2035, most recycled feedstock comes from manufacturing scrap, not end-of-life EVs. This creates a timing gap: recycling cannot meaningfully offset primary supply or processing dominance in the near term.
• Design decisions lock in dependence. Battery architectures optimized for performance (cell-to-pack, cell-to-chassis) often sacrifice repairability and recyclability, reinforcing reliance on centralized processing hubs.

The China Processing Question

The most consequential implication is what the report does not overclaim. Circular economy strategies can cut mineral demand, dampen price volatility, and reduce environmental harm—but they do not inherently break China’s control over midstream processing, especially for rare earths and battery-grade materials. Without deliberate investment in ex-China refining, separation, and chemical conversion capacity, circular flows risk being “re-routed” back through the same dominant processors.

In plain terms: a battery recycled in Europe or North America may still rely on Chinese processing expertise, equipment, or intermediate chemicals.

Implications for Investors and Policymakers

The study quietly challenges a popular Western narrative—that recycling alone equals supply-chain security. Instead, it suggests resilience requires coordinated industrial policy, including regional processing hubs, standardized battery passports, long-term offtake contracts, and capital alignment across allies. Circularity lowers risk; it does not substitute for strategy.

Limitations and Contested Ground

The report is intentionally non-quantitative and avoids scenario modeling. Critics may argue it underplays geopolitical coercion risks or overestimates the speed at which circular business models can scale. Others will note that rare earth elements, while adjacent to EV supply chains, are less directly addressed than lithium-ion battery metals. These gaps matter—but they do not invalidate the central warning.

REEx Takeaway

Leading the Charge is not anti-China, nor is it naïve about markets. Its core message aligns with REEx analysis: material efficiency without processing sovereignty is a half-solution. Circularity is necessary. It is not sufficient.

Citation

Ellen MacArthur Foundation (2026). Leading the Charge: Turning Risk into Reward with a Circular Economy for EV Batteries and Critical Minerals

Leading the Charge - Jan 20