While lithium-ion batteries are currently a hot topic in the battery space, lead-acid batteries are still in high demand. In fact, according to a recent report, the global lead-acid battery market is expected to reach US$84.46 billion by 2025.
That’s a huge increase from the market’s 2015 valuation of US$46.6 billion, and Grand View Research, the firm that authored the report, says that growth will be driven by expansion of the automotive industries in China, India, Brazil, Mexico, South Africa, Indonesia and Germany. Cars are one of the main places that lead-acid batteries are used, and as demand for them increases lead-acid battery use will rise in tandem. Higher e-bike sales across the globe will also contribute to rising demand.
As lead-acid battery use increases, recycled lead is expected to account for a larger portion of global lead supply. Lead is one of the world’s most recycled metals, and recent International Lead and Zinc Study Group figures show that production of refined lead metal from recycled raw material accounted for 58.1 percent of global output compared to 57.8 percent in 2015.
Lead is recycled at such a high rate in large part because it’s “straightforward and cost-effective” to recycle lead-acid batteries. Indeed, a 2016 Alt Energy Stocks article notes that 97 percent of all lead-acid batteries in the US and Europe are recycled.
The process involves breaking exhausted batteries into pieces and immersing them in water; after that, the lead in the batteries sinks to the bottom and the plastic rises to the top. The lead is then melted and poured into ingot molds. Impurities are removed, and the lead is sent to manufacturing plants to be incorporated into new batteries. Battery acid can also be converted into water and treated, or can be turned into sodium sulfate, which is used in laundry detergent, as well as glass and textile manufacturing.
One way for investors to tap into the rising demand for lead-acid batteries is to invest in stocks that both make and recycle such batteries. Here’s a look at three of the major players in the market and how they’ve fared recently.
Johnson Controls (NYSE:JCI)
Through its Power Solutions division, Johnson Controls is the world’s leading supplier of lead-acid batteries. The company’s other divisions are Building Efficiency, which makes heating, cooling, refrigeration and security systems, and Automotive Experience, which makes components and electronics for car interiors.
Johnson Controls operates more than 50 manufacturing, distribution and recycling facilities around the world. The company released its latest results on November 1, 2016, noting that during the year’s fourth fiscal quarter Power Solutions sales came in at $1.8 billion, up 7 percent year-on-year. Excluding the impact of foreign exchange and lower lead pass-through costs, sales increased 8 percent, with higher volumes in all regions. Building Efficiency sales also increased, while Automotive Experience sales fell.
Johnson Controls’ share price has risen 13.11 percent in the past year and is currently trading at $41.94.
Aqua Metals (NASDAQ:AQMS)
Aqua Metals is reinventing lead recycling with its patent-pending AquaRefining technology. The AquaRefining process takes place at room temperature and is water based; it’s also non-polluting. Aqua Metals expects the system to allow the lead-acid battery industry to simultaneously reduce its negative environmental impacts and increase production. The company is based in California and built its first recycling facility in Nevada’s Tahoe-Reno Industrial Center.
The company said in its results release for the fourth quarter of 2016 that moving forward it will continue to expand its Nevada-based recycling facility, and will look to build additional facilities. More recently, Aqua Metals announced a strategic partnership with Johnson Controls; under the partnership Johnson Controls will become the first licensee for the AquaRefining process and will supply Aqua Metals with batteries to recycle.
Aqua Metals’ share price has gained 214.39 percent in the past year and is currently at $17.04.
EnerSys is a leading maker of industrial batteries for applications including motive power (batteries for lift trucks and material-handling equipment) and reserve power (for such electricity-generation facilities and data centers), as well as for aerospace and defense uses. The company has manufacturing and assembly facilities in 20 countries. It also makes chargers and other related equipment and recycles batteries for clients around the world.
In the third fiscal quarter of 2017, EnerSys’ revenue fell 2 percent, to $563.7 million, while its net income fell 4.65 percent, to $0.82 a share. Even so, year-on-year EnerSys’ share price has gained 50.78 percent and is currently at $76.73.
This is an updated version of an article first published by the Investing News Network on March 13, 2013.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.