A July 2026 GAO report identifies battery recycling as one of the fastest near-term levers available to reduce U.S. dependence on imported critical minerals, with meaningful results possible within two to three years. But two of the country's largest battery recyclers have already gone bankrupt, federal grants have been canceled, and China controls the overwhelming majority of global recycling capacity. The gap between policy ambition and commercial reality has rarely looked wider.
Introduction
Here is the essential tension in U.S. critical minerals policy right now: the federal government's own auditors say battery recycling could meaningfully reduce import dependence within two to three years, faster than almost any other supply-chain intervention available. Yet the two largest American companies attempting to do exactly that have filed for bankruptcy in the past fourteen months.
The Government Accountability Office published its technology assessment, 'Critical Minerals: Reducing U.S. Import Reliance with Substitution and Recycling Technologies,' on July 22, 2026. The 39-page report, submitted to the House Committee on Energy and Commerce, examines what recycling and substitution technologies can realistically achieve, over what timeframe, and what policy levers could accelerate that process. Its conclusions are genuinely useful for anyone trying to understand where critical minerals policy goes next, precisely because the GAO is careful to distinguish between what the technology can do and what the infrastructure actually allows.
The report matters to a wide audience: defense procurement officials staring down a January 2027 deadline to stop buying certain materials from China, automakers and battery manufacturers trying to plan capital expenditure, investors assessing whether domestic recycling companies are viable, and policymakers at every level of government who are searching for faster solutions than new mine permitting allows. The GAO is a nonpartisan federal agency that reports to Congress, so its assessments carry institutional credibility even when the findings are uncomfortable.
What the Report Actually Says
The U.S. currently designates 60 minerals as critical, a list that was expanded from 50 in 2022 and updated again in 2025 to reflect new economic and security assessments. The designation means a mineral is considered both essential to the economy or national security and vulnerable to supply disruption. The GAO focused its analysis on 11 of those 60 minerals that are particularly important to batteries and semiconductors: the industries that power electric vehicles, stationary grid storage, consumer electronics, and defense systems.
The numbers are striking. For each of the 11 minerals examined, the U.S. imports at least 41 percent of its supply. For five of them, arsenic, gallium, graphite, indium, and manganese, the import reliance is 100 percent: the United States produces none of its domestic requirement. Since 2021, the country has reduced its import share for exactly one mineral on the list: aluminum, which edged down from 61 percent to 60 percent. That is the sum of five years of supply-chain diversification effort on paper.
The GAO distinguishes carefully between the battery and semiconductor sectors, because the policy options and timelines differ significantly between them. For batteries, the core finding is encouraging: recycling technologies are mature. Chemical leaching and smelting processes can already recover copper, cobalt, lithium, and nickel from spent batteries at commercially viable rates. The report defines 'near-term' as two to three years, and it places battery recycling squarely in that window. For semiconductors, the picture is far more difficult, and the report is candid about why.
Why Batteries and Semiconductors Are Not the Same Problem
The distinction between these two sectors is more than technical. It has direct implications for where investment and policy attention should be concentrated in the near term.
In a battery, the valuable minerals are present in substantial, recoverable quantities. A lithium-ion battery pack contains meaningful amounts of lithium, cobalt, nickel, and copper in forms that chemical processing can extract efficiently. When that battery reaches end of life, the material is recoverable and, under the right conditions, economically attractive to recycle. The technology to do this is not experimental; it is industrial.
Semiconductors are a fundamentally different challenge. Gallium, for example, is used in the thin films that give semiconductors their electrical properties. A typical electronic device contains only a tiny quantity of gallium, bonded to other materials in ways that make extraction technically difficult and, at current prices and scales, economically marginal. China controls roughly 99 percent of global gallium production, and its export controls, which began with licensing requirements in 2023 and escalated to a full ban on gallium exports to the United States in December 2024, have caused gallium prices in Europe to reach approximately five times the Chinese domestic price. That price divergence reflects just how difficult it is to source gallium outside the dominant producer.
The GAO is clear that semiconductor recycling and substitution technologies are not mature. Technologies to recover minerals from discarded electronics are largely in pilot-stage development. Using manufacturing scrap from semiconductor fabs is not yet standard practice in the United States. The report does not dismiss these approaches, but it places them firmly in the medium-to-long-term category, meaning at least three to ten years before meaningful import reduction is likely. For policymakers looking for near-term wins, the semiconductor sector offers limited options beyond domestic mining and allied-nation supply agreements.
The Infrastructure Gap: Where the Promise Meets the Problem
The GAO's battery recycling finding comes with a significant qualifier that is easy to overlook in the headline numbers. The technology is mature. The infrastructure is not. Those are two very different statements, and conflating them is where policy discussions often go wrong.
Recycling a battery at industrial scale requires a system: consumers and businesses must surrender batteries rather than discard them, collection points must be accessible and financially incentivized, batteries must be sorted, transported, and stored safely (a genuine challenge given their flammability), and then processed at facilities with sufficient throughput to be economically viable. The United States currently lacks this system at the scale the GAO envisions. Most battery recycling that does occur is sent overseas, which is precisely the dynamic the report is trying to change.
The commercial history of the past fourteen months illustrates how difficult the buildout has been. Li-Cycle, once the most prominent U.S.-based battery recycler, filed for creditor protection in May 2025 after cost overruns and operational failures, despite having secured a $475 million Department of Energy loan commitment that it was ultimately unable to draw down. Glencore subsequently acquired the company. Ascend Elements followed in April 2026, filing for Chapter 11 bankruptcy after raising more than $1.1 billion in capital and receiving a $316 million DOE grant, of which the unspent portion was withdrawn before the company's collapse. CEO Linh Austin described the financial difficulties as 'insurmountable,' citing the capital intensity of the sector, the slowdown in U.S. electric vehicle demand, and competition from cheaper battery materials produced in China.
Redwood Materials, the third major player, has so far avoided bankruptcy but laid off 135 employees in 2026. In 2024 it processed 20 gigawatt-hours of batteries and earned $200 million from recycled materials, which offers a benchmark for what the sector looks like when it is functioning. The structural problem is that declining prices for new batteries and battery materials, driven in part by Chinese overcapacity, have reduced the market value of recycled materials at exactly the moment when domestic recyclers need strong prices to justify their capital costs. A 2025 analysis in Nature Communications described lithium-ion battery recycling as constrained by technical, economic, and regulatory challenges, with global recycling rates still well below the standards achieved by more established systems like lead-acid batteries.
The Policy Response: GAO Options and Executive Action
The GAO report identifies four policy options for reducing critical mineral import reliance through recycling and substitution. The first is establishing domestic manufacturing capacity for viable substitutes, which in the battery context includes scaling up lithium iron phosphate (LFP) batteries for stationary grid storage, where their lower energy density is less of a disadvantage than it is in long-haul electric vehicles. LFP batteries use no cobalt or nickel, which would reduce import exposure for those minerals within the two-to-three-year window if adoption accelerates. Sodium-ion batteries, which eliminate lithium as well, are also identified as promising but are not yet commercially mature.
The second option is establishing domestic recycling capacity directly: building the collection, sorting, transport, and storage infrastructure that currently does not exist at scale. The third focuses on securing the inputs for recycling, particularly manufacturing scrap from battery production, which represents a cleaner and more predictable feedstock than end-of-life consumer devices. The fourth is funding research, development, and testing to improve both the performance of substitute technologies and the efficiency of recycling processes.
The Trump administration has moved on at least part of this agenda through executive action. On July 30, 2026, President Trump signed an executive order delegating authority under the Defense Production Act to the Secretary of Commerce to restrict exports of industrial waste and scrap containing recoverable critical minerals. Covered materials include used lithium-ion batteries, battery 'black mass' (the residue left after initial processing), end-of-life permanent magnets, tungsten scrap, and other recyclable products containing strategic minerals. Copper scrap was excluded because it is already covered under a separate presidential proclamation. The stated rationale is to keep these materials inside the United States, where they can feed domestic recycling rather than overseas processing facilities.
The administration has also set aside $5 billion under the Defense Production Act for minerals, authorized $100 billion in loan authority through the Department of Defense, and allocated $2 billion for the National Defense Stockpile. A January 2026 executive order directed negotiations with trading partners on processed critical minerals and their derivative products. Whether these commitments translate into stable, bankable support for domestic recyclers, after the DOE grant cancellations that contributed to Ascend Elements' collapse, will determine whether private capital re-enters the sector. Building on my analysis of the structural blind spots in critical minerals midstream policy in August 2026, the recurring pattern is that Washington identifies the right problem and then fails to maintain consistent support long enough for commercial solutions to reach viability.
The Broader Supply Picture and What This Changes
The GAO report sits within a larger and increasingly alarming statistical context. As of December 2025, the USGS reported that 12 critical minerals had a net import reliance of 100 percent, with a further 34 at 50 percent or above. Mineral-reliant industries contributed $4.09 trillion to the U.S. economy in 2025, representing more than one-eighth of GDP. China remains a dominant supply source for 14 of the 33 critical minerals for which the U.S. is most import-dependent, including 70 percent of rare earths, 55 percent of antimony, and nearly half of all arsenic and graphite imports.
Chinese export controls have been escalating steadily. The initial gallium and germanium licensing requirements introduced in August 2023 were followed by expanded controls in early 2026 covering bismuth, indium, molybdenum, tellurium, and tungsten. In April 2026, Beijing added dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium. Defense contractors are now facing a January 2027 statutory deadline to stop purchasing certain critical materials from China, Russia, Iran, and North Korea, a timeline that industry experts widely describe as impossible to meet given current domestic production capacity.
The IEA's Global Critical Minerals Outlook, published in July 2026, provides a useful global benchmark for the recycling trajectory. Under current policy settings, average recycling rates across key energy minerals are expected to rise from roughly 10 percent today to close to 20 percent by 2040. That is meaningful progress, but it is gradual and it assumes sustained investment in collection and processing infrastructure. Critically, China accounts for over three-quarters of global battery pre-treatment capacity and 90 percent of material recovery capacity. Outside China, South Korea is the next largest player. The United States is largely absent from that global infrastructure picture, which is precisely the gap the GAO report is urging policymakers to close.
USGS National Minerals Information Center Director Braden Harker captured the asymmetry well when he told reporters: 'We're not likely to see changes in the mining sector because it just moves a lot slower in the interim. Where you'll see those capacity improvements the soonest is in the processing.' That framing aligns exactly with the GAO's near-term emphasis on recycling over new mine development.
What Happens Next
The GAO report is a technology assessment, not a legislative directive. It does not bind any agency to act, and it does not appropriate money. Its value is in giving Congress and the executive branch a shared analytical foundation as several critical minerals bills work their way through committee. Rich Nolan, president and CEO of the National Mining Association, was candid about the scale of the challenge: 'This report underscores just how hard it is to put a dent in China's decades-long strategy to dominate the world's minerals markets.' That is a fair summary of the structural difficulty, even if it understates the near-term leverage that battery recycling could provide if the infrastructure challenge is addressed seriously.
The most important question for the next twelve to eighteen months is whether the July 30 executive order restricting critical mineral scrap exports changes the economics for domestic recyclers enough to attract new investment, and whether that investment arrives before more companies follow Li-Cycle and Ascend Elements into bankruptcy. The export restriction increases domestic supply of recyclable feedstock, which could improve unit economics; but if the collection and processing infrastructure does not expand to absorb that feedstock, the policy effect will be limited. Consistent federal support, without the grant cancellations that undermined confidence in the sector over the past two years, will likely be more important than any single executive action.
On the semiconductor side, the realistic outlook is one of sustained import dependence for the foreseeable future, managed through allied-nation supply agreements, strategic stockpiling, and gradual investment in pilot-scale recycling programs rather than near-term domestic self-sufficiency. For batteries, the GAO's two-to-three-year timeline is achievable in principle; the technology exists and the policy tools are identified. Whether the commercial and political conditions align to make it happen is a different question, and on current evidence, the answer is not yet clearly yes.