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Asaka Riken: The SME realizing a LiB to LiB recycling scheme

Interview - March 17, 2023

Former Asaka Riken CEO and Circular Economist Yusaku Yukita breaks down the key challenges for a achieving a legitimate recycling scheme for End of Life EV batteries, and the role Japan can play overcoming them.

YUSAKU YUKITA, CIRCULAR ECONOMIST AND ADVISER TO ASAKA RIKEN CO., LTD.
YUSAKU YUKITA | CIRCULAR ECONOMIST AND ADVISER TO ASAKA RIKEN CO., LTD.

We understand you were at Mitsubishi for over 30 years before coming to Asaka Riken in 2019. Could you just give us a little introduction to your background and what advantages it's brought to your position while you were the CEO of ASK?

Yes, I was in the Mitsubishi Corporation, which is a trading company. The Mitsubishi name is given to so many companies that it’s a bit confusing, but Mitsubishi Corporation is a trading company, so for over 30 years I was in the trading business, but recently the trading company became an investment company which sometimes purchased manufacturers in the sector, so through that experience I did a lot of things - not only trading but investing in some companies also.

For example, I was in London for about 6 years. At that time I was a director of LME related company, a futures trading company. It was for hedging the financial sector’s money.  And then I was in Brazil as well, involved in natural resources investments like iron ore and bauxite, those very typical natural resources.

Finally, I was in Singapore where we set up a metal trading company as a subsidiary of Mitsubishi. You may be wondering, ‘why Singapore? It’s such a tiny area!’ However, it’s a very unique area for buying and selling. It’s very easy to talk to people about that in Singapore. It was a very unique experience.

I've learned a lot of things having been in a rich company with huge amounts of capital, but I was missing something as I entered the twilight of my career. What was I working for? It just seemed to be about making more and more money. Even My salary was increasing  steadily, but I felt I was missing something.

Asaka Riken is not a big company. Compared to Mitsubishi it’s very small, but it was the same reason why you selected this company for this interview. It was a unique regenerating company.

I was in Mitsubishi Corporation, which if I use the metaphor of a human body, was like an artery. Asaka Riken is more like a vein. Mitsubishi was on the primary side and Asaka Riken on the secondary. Historically, and for a long time, the primary side was regarded superior to the secondary side. I mean those companies on the artery side were the kings. The vein side is made up of second, third and fourth tier companies.

When people want to expand something, they normally pay attention to the primaries more. Dig more, get more, pay more, get more. I was there. I was doing that, but  I moved and became the CEO at Asaka Riken, it was completely different. It was a very, very interesting change.

When I joined ASK In 2019 the circular economy was less popular, especially in Japan. Few people paid attention to this circular economy. In the last few years there have been big changes. People started to pay attention to SDG’s and circular economy. People’s perception has greatly changed.

 

In Japan, it seems there is a very strong vision for recycling and sustainability. Despite the Suga administration announcing a target of carbon neutrality by 2050, we’ve heard many recycling company leaders express frustration at the lack of a solid framework or scheme between manufacturers, the government and recycling companies to realize that vision. For example, we learned in a recent interview that there's no Japan Industrial Standard (JIS) for products made from recycled materials…

How about other countries? Europe, America? Do they have national standards for recycled products? In Japan, the reason why we don't have standards for recycled material is because standards are only applied to the primary side, not to recycling, so as far as  there are standards for primaries,  regenerators just follow that. “Once you regenerate, make it like that”. We call them guidelines, but to answer your question, better JIS will be introduced soon, without a doubt.

 

Compared to say, the European Union or North America, what do you see as being the strengths of Japan’s recycling sector, or some other areas for improvement? What's your analysis of the current situation?

It's a very simple but a very good question because if I talked about it then it would take about one hour, but in Japan, the word ‘recycler’ has two meanings. One is ‘collector’ and the other is ‘regenerator’, which is what we are. There are many collectors, but not so many regenerators. The collectors will go around picking up recyclable trash and then conduct a cursory treatment of it by burning or crushing it. It’s not complicated treatment.

They put it into bags and it all takes quite a long time. Historically, Japan doesn't have a keen interest in dealing with things of inferior quality like garbage and that’s why we put it in a bag and export it to Southeast Asia, China or India. That's happening in the collection sector.

Regenerators such as ASK and some other companies prefer not to touch the scrap in market circulation because it's unstable. We get it directly from factories, so our business is B2B. Our customers are, for example, semiconductor companies or makers of crystal oscillators or electrical components like connectors. Very big companies, publicly listed companies.



They have some waste-to-production ratio. Some people say it’s wasteful production. It’s actually not so low – not a single digit percentage – so they would like to regenerate their waste, and that’s our business. It’s completely different from scrap collecting and the price haggling involved in that. Negotiating scrap prices is something we rarely engage in.

As you mentioned, we still have some frustrations. For example  Europe is like one big government, and once they realized that it’s important to have SDG’s to stop the disruption of nature and our economic security, they knew that we need to recycle because resources aren’t so abundant now.

Once governments in the EU and US realized this, they took strong  leadership, but in Japan the government is only involved at the initial stage of funding. I don't know why. Maybe it’s because after the Second World War, nationalized or semi-nationalized  companies were not looked upon favorably in Japan. Big companies like Mitsubishi and Mitsui were divided into very small pieces.

Since then in Japan it was thought that business should be led by a private system. In other words, in general, the government shouldn't take strong leadership, but under global warming, “this” situation is different.

To stop global warming, whether you like it or not, we need to prevent the temperature going up by 1.5 centigrade, so we need to stop CO2 but that's very difficult. Then what we can do? Well, we need wind power or solar power, but that is very instant energy, so we need ways of storing it such as batteries. So far so good.

However, the Japanese government have only realized this over the past 6 months or so, and announced an increase in subsidies up from ¥50 trillion to ¥80 trillion by 2030. That recently passed. Since then, regenerator’s stock has been described by Nikkei as being a “national celebrity stock”. That’s too much to say, but the Japanese government finally understood and took action, so our frustration lowered a little bit.

Those are the key points. The concept of recycling itself, as I said historically, and also the Japanese government’s attitude, and also, people didn’t  like to use recycled things. For example, with iron ore and steel, I think Europe has already started  using recycled steel from electric furnaces, but in Japan there is still a kind of worship for integrated furnaces like at Nippon Steel, using iron ore and coke in the traditional way. The steel from such treatment is pure and fine. Now, electric furnaces are becoming very popular in Tokyo and recycled items are graded.

 Now we have a lot of pilot areas in Europe like Belgium, or some other area, where we collect high quality scrap, like mining. Once we start we always need more and more, better and better, even if it’s scrap that we’re talking about.

 

You have a proprietary solvent extraction method which is used to gain the best quality and the most yield of raw materials. Can you tell us more about that method, and yours or other initiatives that could combat this problem of the quality of scrap and making a level playing field?

I'm not saying that we can make good quality items from low grade scrap and only Japanese solvent extraction is not proprietary. That’s not correct. Europe and U.S. can also do so. The point is, scrap grade. If we pay attention to LiBs (lithium ion batteries), there are two types. One is for consumer use, small ones for computers and so on. To be honest, those are difficult, but what we are talking about are the other type, end of life car LIBs.

We’re paying a lot of attention to those, but EOL (end-of-life) consumer-use small batteries are difficult to collect because people tend to keep them, and even when they put them in recycling boxes, it’s only in small quantities that are less practical  to regenerate.

That's why we normally talk about automotive batteries. Journalists tend to focus on the recycling of consumer electronics, but still there doesn’t exist completed way of regeneration but that’s a very rough way of doing it. That's why sometimes explosions happen, because people don’t do the recycling properly.

Car LiBs are very important because one part of the price of EV’s comes from the batteries, so the point now is how we regenerate these end-of-life car LiBs. Theoretically, end-of-life car LiBs don’t even exist yet, because we are now in a war to see which company produces more batteries in their mega-factories.

With cars like the Nissan Leaf which has the longest EV experience, we may be able to expect some EOLs, but very little, so now we are at the first stage, which is to make more LiBs for cars. That’s why at moment  when we talk about recycling, it doesn't necessarily mean end-of-life car LiBs, it frequently means the waste from processes. The waste from the production of car LiBs comes partly from the large size of the batteries and battery modules.

Making LiBs does involve making waste, as I said, and we’re interested mainly in larger quantities. Normally, people talk about black sand (burnt scrap ). “Can you use black sand?”, “No, sorry”. If the black sand comes from the consumer-use side, I’d probably say “no thank you”, but if it’s directly from a battery factory, then we’d give it a try as we wouldn’t need to collect it by ourselves.

The point is that in order to realize LiB to LiB schemes, we need to have a completely new scheme. Meanwhile, on the combustion engine side, there are no specific regulations for recycling because maybe we could have a chance to set up something for catalysts, but the catalyst was not a crucial problem. Each car has just 5 or 6 grams of precious metals like rhodium, platinum and palladium. It’s not much against the total cost of cars.



People talk about the supply of precious metals and Russia and South Africa, but with only needing 5 or 6 grams of it per car, people can get it. It’s available. However, when it comes to LIBs, they’re not easily available. Resources like cobalt and lithium are finite, so they are available, but it’s not so easy.

The question is how to secure those. It's very difficult theme. That's why recycling is very important. First of all, we need to get contracts with the primary side, meaning good contracts with Peru, Chile, Argentina and Australia.

Then the big companies start to produce the big LiBs, but they emit waste to be regenerated, so now we regenerators are trying to be a member of this consortium which is like a vertical integration of companies engaged in car making such as the car companies, battery manufacturers, materials companies and recyclers. We should get together because it's not only a problem for each of our companies, but for us all.

This sudden and big change happened due to the Europeans. They started making regulations. That's amazing. There is no definite timing but maybe soon, recycled material, lithium 6%, nickel 6%, cobalt 16%, should be loaded in new LiBs, according to updated EU committee.

My first question is where can we find the recyclable material? The scrap must be sourced from the factory, after all. This is not like a conventional type of scrap business. We source the scrap directly from manufacturing companies.

Actually, what we are doing is still limited in Europe, China, Korea and Japan. In the US, I don't know. Normally, I would have said that Americans aren’t the type of people to use EV’s, but that outlook has completely changed. It’s such a huge country and they have cars with 4-5,000 cc engines, but the situation changed because Biden said that “EV’s should be processed here. Even Toyota and Nissan should be present here”. Therefore, Nissan & Toyota are  now busy there in US trying to find a location for a plant. They’ve given the plan a two-year timeframe so please come back after two years.

 

To follow on from your artery-vein analogy, until very recently we were still in the artery dominate phase – with the market concerned with bigger and stronger batteries…

Yes, the situation has changed.

It was all thanks to the European regulations. Without European regulations, I think they wouldn’t care about the secondary side of things, just buy from wherever they could.

 

Do you believe that at a time when EOL EV batteries become more easily available, people would be able to recycle them easily in that kind of scheme?

Sorry, I forgot to explain that part. Batteries should belong to the battery company or car OEM company. In other words, the car will not belong to individuals. Up to now, when we buy a car, we are the owner. We can own and control it, and then after the end of its life we can resell it to the dealers, but with EV’s, after the end of their life at 10-15 years, I'm talking about the good class, or high class because there are so many types, to be honest - high class like Lexus or Mercedes or a very expensive one - on a full charge they can run more than 500 kilometers. That’s with Li, nickel, cobalt, and manganese. The good quality are expensive, the bad types are cheap, and now China and India are trying to buy LFP (Lithium Iron Phosphate) batteries, which yield 120 kilometers on a full charge. It’s a lower grade battery.

Now let’s go back to this higher-grade battery since now people normally talk about this. It’s very expensive and accounts for one third of the total cost of the car. Even at EOL, people still said they can reuse this, so some companies tried to use them after the EOL of the car, and they tried to reuse it, but the majority of people recycle it.

This battery requires a big charge, and people have died from getting shocked if not treated properly. It's a very high voltage, so now people say that the best thing is for the car not to belong to each person, but to have a subscription model. Production liability will be extended to recycling liability as well.

To this end, I think liability will be extended because who will handle this battery? It's difficult to cut out only the battery side.  Meanwhile, the Nobel Prize Doctor Yoshino-San said that cars should be owned by many people.

A car should be shared because it's a vehicle, but it's also a method of storing electricity. Hs idea is like that, and it’s also expensive.   EOL car battery tracing system like block chain can be used to trade it. For example Mitsubishi Corporation is quite good at that. It's not so difficult to trace back.

Car companies  still determine some things because they’re trying to do something in line with the government’s announcement or Biden's announcement, so they are now running but trying to think about “what we should do”, so until they have a clear picture, it's quite difficult to know when regenerators  should start the plant because we won’t know how much they will want of which products.

We have mining companies, materials companies come, and then the precursor makers and the electrode company. So, four different types of companies must come together in our consortium so that we can regenerate, and we need the highest quality chemicals.

 

In an interview last year you spoke about wanting to cooperate, with co-creation being a keyword for developing this 100% recycling technology. You talked about your ideal business model as being invited, rather than competing…

I remember that . Good point. We, not only ASK but regenerators all, want to be invited, but at first we want to be invited by a battery manufacturer so in that sense still, yes, we're trying to be invited. At that time, one year ago, I said that if we are invited overseas maybe we would go but since that interview many things have happened - Ukraine, Russia,  China issue, U.S. issue,  – so we should think about national security or economic security. To be honest, we can not just try to look good.

Japan has poor energy and natural resources, so we need to import things like rare, precious metals at first anyway, from friendly countries in peacetime. Then we’d store it and produce something and export it. Then, after export, if we don't re-collect it, then how we can realize circular growth?

That's why now I'm honestly thinking about what we should do. We should think of at least a few things. Global warming is the biggest issue, so we need to not just try, but actually achieve environmental goals. We need to make more batteries together worldwide.



The second thing to think about is national security, so we need to secure the source. Also, we need to prevent the primary side from destroying too much of the environment, but even if we count everything on the table, there’s another problem.

In peacetime we contractually import natural resources and then we make batteries and then we export them, either as individual batteries or inside EVs. Then, at the end of life of those batteries, somebody should recycle them, so now my idea is to go there and collect them, or set up a facility to process them to some product., but the point is that they would end up coming back to Japan at some point for circulation.

In many cases, the countries that we are importing the natural resources from are the same ones that we export the finished products to, but if we do more recycling there, then exports would be reduced, so I think we should do something like compensation awards to them.

When we import EOL batteries or some materials, we should pay compensation to them for collaborating in the import of our products whilst having to decrease their primary production rate. Somebody should take care of that. It’s not just an opinion, it’s balanced and fair, which leads to the idea of “ Doughnut Economy”.

They should use this compensation for their infrastructure or for gaining production know-how. I learned this through my life with Mitsubishi. Do you know why Australian people aren’t good at producing things? They’re quite happy with their natural resources of iron ore, coal and gas, so they are not as interested in production.

However, in the past time Japanese car companies tried to make a factory there. Also The Japanese steel industry tried to set up foundries there as well, but they were never realized because resource rich country people  said “We don't have to do that but  it’s up to you. Please help us”. The same thing is happening in Brazil and South Africa. Very resource rich places.

That's why I was thinking why this would happen. This is not only one side’s problem, it’s both sides’ problem, isn’t it? That's why I know that I’m too polite to say this thing is not so easy, but I think theoretically maybe with this type of doughnut economics, we could do something.

I believe  battery companies should reduce the velocity of gaining market share – an  adequate share is enough - and then people of natural resource rich areas  try to do something by themselves, Hopefully,then in the end they can achieve local production, and local consumption. However, I’m not talking about in five or 10 years’ time. It might not be in my lifetime, but I think it should be realized otherwise people will always talk about the disparity between northern and southern hemispheres. It’s a global problem, and I'm not a politician, but this is quite an important thing for everybody.

 

In the previous interview, you mentioned your vision to expand into these localities as a preliminary step in setting up the scheme you mentioned. Can you tell us more about how that vision has evolved? Are there particular markets you have in mind, or how do you foresee the action you can take now to realize that vision in the future?

Compared to last year, I think a lot of things became more realistic and some Japanese regenerators  are good company but a small company compared to a big car company or battery company, so we, regenerators,  need more assistance.

And EU, U.S. other Asia, people are independently developing each technologies for recycling. So cross country joint movement will be further delayed.

At the moment, the Europeans are saying that by 2025 they will decide what the regulations will be, starting from 2030. Suddenly, in three years’ time, they’ll decide. We need more time, and now the big companies - Toyota, Nissan, Volkswagen - everyone has already scheduled the inclusion of some recycled material in their new batteries. In two or three years’ from now, I’m not sure if we’ll be ready with enough batteries made with recycled material. At least we can say We don’t have time.

 

You’ve asked some very interesting rhetorical questions like who will be the leader, who will set up the consortium, and who will make such big decisions? What do you anticipate will be the answer?

Car OEMs or battery companies. My biggest concern is that although I’ve said a lot of beautiful words, we are still just competing. “Who will be the number one?” I think from the car manufacturers or OEM point of view, that is the key question: who will be the champion? Toyota, Volkswagen? And then who will be the mega-manufacturer of LIB’s? It’s confusing, isn’t it? Those things are not what I am concerned with.

Something should be corrected, but this is the reality, just competition. People talk about clean energy but what we are doing is just competition. When  “ Who will make the cleanest energy” becomes the winning choice, then it will become the ideal situation.

On that point, I respect the Europeans. Dutch and Swedish people especially. I respect them because when they decide to do something, they do it even if it’s at a high cost. On the contrary,  Japan is a very conservative country, so that's why they’re slow to accommodate the rising energy costs.

Now a lot of economists ask, “Why is there low inflation in Japan?”. It’s because in Japan prices are controlled and salaries don’t often increase. The point is that people don’t like big change , so people don't like energy charges going up. They won’t agree with that.

70% of the energy in Japan still comes from fossil fuel, so we decided to bring back some portion to nuclear power. We should be braver in our pursuit of these things. Japanese people are sensitive about those things.  European people often don’t mind the price if the quality is good,  but there are many other countries who cannot accommodate it.

That's why I think once again, we should think about a lot of things. Economics as well. Some countries have affordability  but others don’t. I think that  we, people all over the world,  need to have not just a single policy but a double or triple policy for 10 or 20 more years. We need to try to be like we step down and they go up, otherwise I think nothing will be improved or solved.

 

Let's say we come back to interview you again in two years' time .

We’ll try our best to realize our goals.

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