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★Mark us as a preferred sourceThe American black mass export restriction takes effect on 27 August 2026, and within weeks it may redraw the global material flows of lithium-ion battery recycling. The substance of the Washington decision is simple, but its legal construction is unprecedented: the United States is not invoking trade policy but national defence law to prevent black mass and tungsten scrap leaving its territory. With this move, a material that waste legislation treated for years as ordinary hazardous waste has been elevated to the category of strategic raw materials.
What the new US rule actually requires
The measure rests on two official documents published within days of each other. The first is President Donald Trump’s determination of 30 July 2026 (Presidential Determination No. 2026–19), which appeared in the Federal Register on 4 August 2026. The second is the temporary final rule issued on 6 August 2026 by the Bureau of Industry and Security (BIS) of the Department of Commerce, which amends the Defense Priorities and Allocations System (DPAS, 15 CFR 700).
Under the rule, from 27 August 2026 every US person – by definition any individual, corporation, partnership or association located in the United States – must allocate one hundred percent of monthly sales of black mass and tungsten waste and scrap to US buyers. In practice this is an export ban: the covered materials must remain physically located within the United States unless BIS grants an individual exception or adjustment in advance. The black mass export restriction runs for one year, until 27 August 2027, although the agency may amend or extend it at any time.
Four Schedule B tariff codes are affected. Tungsten waste and scrap under code 8101.97.00.00 falls entirely within scope. Codes 8549.13.00.00, 8549.14.00.00 and 8549.19.00.00, which cover the waste and scrap of primary cells, batteries and electric accumulators, are caught only where the material meets the rule’s definition of black mass. That definition is remarkably permissive: it captures any shredded lithium-ion battery scrap containing cathode material, anode material (graphite, silicon) or other residual battery cell materials. The provision sets no concentration threshold, draws no distinction between production scrap and end-of-life batteries, and recognises no de minimis quantity.
Why a defence statute became an instrument of waste policy
For the industry, the legal architecture is the genuinely novel development. The United States did not reach for the classic export control toolkit of the Export Administration Regulations, but for section 101 of the Defense Production Act of 1950, which empowers the President to allocate materials that are scarce from a defence perspective.
The presidential determination states that recoverable critical minerals and materials are scarce and critical materials essential to the national defence, and that defence requirements cannot otherwise be met without creating a dislocation of the normal distribution of such material in the civilian market severe enough to cause appreciable hardship. That formula is what opens the door to an allocation order.
BIS then issued a so-called Directive Allocation Order within the DPAS framework, and to do so it had to reshape the regulatory framework itself: a new paragraph (d) in § 700.34 now permits such an order to be issued through a temporary final rule published in the Federal Register. This matters, because it allowed the agency to bypass prior public consultation. Relying on section 709(b)(2) of the DPA, BIS found that urgent and compelling circumstances made compliance with notice-and-comment requirements impracticable. Public consultation was opened afterwards, for ninety days: comments may be submitted until 4 November 2026 under docket identifier BIS–2026–0364.
The pace is the most contested feature of the measure. Two business days elapsed between the presidential determination and public release of the implementing rule, and barely three weeks separate publication from entry into force. Traces of that haste are visible in the text: the preamble lists lithium, cobalt, nickel and manganese among the cathode materials of black mass, while the legally operative Supplement No. 1 adds aluminium, copper and iron to the list, and even the date of Executive Order 13603 appears differently in the two documents. From a compliance perspective this is no trifle – companies would be well advised to apply the broader definition in the supplement.
For corporate compliance, the furthest-reaching provision is the definition of “sale”. The rule extends it to deliveries to other persons, including deliveries to affiliates and subsidiaries, and even to movements of material from one branch, division or section of a single legal entity to another under common ownership or control. A global battery recycling group therefore cannot resolve the problem by routing black mass from its American site to its own Asian or European hydrometallurgical plant: such internal transfers are equally subject to authorisation.
Enforcement is built out accordingly. BIS states that it will work with US Customs and Border Protection (CBP), and that covered materials intended for export may be detained by CBP while the agency reviews the shipment. If detained goods are subsequently made subject to a DPAS rated order, they will be consigned to BIS pending further distribution or agency direction.
The agency may open investigations, issue requests for information and seek injunctions, and non-compliance is punishable under the DPA’s penalty regime. At the same time the framework contains a liability shield: a person acting or failing to act in order to comply with the DPAS may not be held liable for damages, even if the relevant provision is later declared invalid.
What exemptions are available to affected companies?
The regime is not a closed system. From 6 August 2026 BIS accepts adjustment and exception requests on a rolling basis, may grant both company-specific and generally applicable authorisations, and may issue a DPAS temporary licence as interim relief while a request is pending. The rule names five typical grounds: undue or exceptional hardship not suffered generally by others in similar circumstances; the case where compliance would run contrary to the intent of the statute because it would reduce the domestic supply of critical minerals; shipment abroad for processing or refining where the processed material returns to the United States; irreparable harm; and the need for additional time to comply.
The third ground is the most important safety valve in the whole construction, since it legalises the tolling model: American black mass is processed on foreign hydrometallurgical capacity and the recovered metal salts are shipped back. How generous the agency will be here remains the open question. BIS undertakes to respond within fourteen days, and decisions may be appealed to the Assistant Secretary for Export Administration. One distinction is essential: a DPAS authorisation is not an export licence and does not replace one – a company granted an exception must still comply with general US export control rules.
The black mass export restriction: market logic and its limits
There is a real security-of-supply problem behind the black mass export restriction. Shredding and pre-treatment capacity in the United States is expanding quickly, while the refining side has not kept pace, so much of the black mass generated there has until now travelled to Asian refineries, primarily in South Korea and Japan.
The rule poses a particular challenge for lithium-ion battery recycling precisely because US capacity to process black mass and recover critical minerals is very limited, while the overwhelming majority of the world’s refining capacity sits in Asia. The logic, then, is that artificially confined supply will force domestic investment.
This mechanism is vulnerable at two points. First, investment cycles are considerably longer than the rule’s one-year term: permitting and building a hydrometallurgical plant takes years, and a one-year measure that can be withdrawn at any moment is a weak foundation for such a decision.
Second, in the short run the measure hurts exactly those it aims to strengthen: American pre-processors lose their best-paying export markets, while domestic supply is funnelled to a narrow buyer pool, which pushes payable metal percentages downward. The economics of collection and shredding deteriorate, and processing nickel- and cobalt-free LFP-derived mass was never profitable to begin with. Stockpiling is a realistic risk too: the material stays in the country, but instead of being recovered it simply accumulates.
European and Hungarian implications: where will the material go?
For European operators this is not a distant American domestic affair but a direct market effect. In March 2025 the European Union classified black mass, along with end-of-life lithium-, nickel- and zinc-based batteries, as hazardous waste, which prohibits export to non-OECD countries and requires prior notification and the consent of the exporting, importing and transit countries for shipments within the EU and the OECD. The European Union is therefore using waste law and the United States national defence law to pursue the same objective: retaining secondary raw material within their own value chains.
The two measures are not equally strong, however. Because of its OECD membership, South Korea remains a lawful destination for European black mass, and a significant share of Europe’s pre-treated material still heads there. If American supply now drops out of feeding Korean and Japanese refineries, those players will very likely make up the shortfall in Europe and other OECD regions – and at better prices than before.
The measure may thus paradoxically intensify the drain of European secondary raw material at precisely the moment when EU legislation is trying to retain it. Europe’s pre-treatment capacity is substantially larger than its post-treatment capacity for recovering metals from black mass, and the persistent gap between European and Korean payable levels illustrates that imbalance well.
Hungary is not an observer in this equation but an affected participant. As domestic cell manufacturing ramps up, production scrap and the associated waste streams are growing by orders of magnitude, and the black mass generated is typically not recovered locally: the material arises in Hungary but is generally exported for further processing, characteristically to South Korea.
If Korean refiners bid more aggressively for European material because of the American shortfall, Hungarian pre-processors will see better offtake prices in the short term – but in the medium term this makes riskier exactly those domestic and European refining investments that will be needed to meet the recycling efficiency and recycled content requirements of EU Battery Regulation 2023/1542.
The Hungarian lesson of the black mass export restriction is that pre-treatment capacity alone does not amount to a value chain: whoever only shreds is exporting raw material and handing the added value to someone else.
What affected parties should prepare for
The measure directly concerns companies that sell black mass or tungsten scrap as US legal entities or from US establishments – including the American subsidiaries of European groups, which qualify as US persons under the rule. For them the shortest deadline is contract review: export contracts due for performance after 27 August may become impossible to fulfil, and it must be clarified whether regulatory compulsion constitutes force majeure under the agreement in question. Anyone with an interest in a tolling arrangement or another exemption route should not wait, since the agency accepts requests continuously and has committed to a two-week turnaround.
European and Hungarian players should watch two things. One is the comment window running until 4 November, which is open to foreign stakeholders through regulations.gov and provides a forum for arguing in favour of a broader tolling exemption. The other is the future widening of scope: the presidential determination designates a far broader class than black mass and tungsten, namely end-of-life rare-earth permanent magnets, swarf and all other waste and scrap containing critical minerals, with the exception of copper, which is governed by a separate presidential proclamation.
BIS has expressly signalled that it may bring additional materials under the allocation order at any time through a notice in the Federal Register. This black mass export restriction is therefore not an endpoint but the first step in a sequence – and every sign suggests that over the coming years the regulatory environment for secondary raw material trade will migrate decisively out of waste law and into the logic of supply security and national security.
Sources:
- Presidential Determination No. 2026–19 (Federal Register, Vol. 91, No. 148, 4 August 2026, pp. 50465–50466);
- Bureau of Industry and Security, DPAS Directive Allocation Order and Additional Requirements for Recoverable Critical Minerals and Materials, temporary final rule (Federal Register, Vol. 91, No. 150, 6 August 2026, pp. 50701–50706, Docket No. 260804–0143, RIN 0694–AK51);
- Beveridge & Diamond; Ifri, Europe’s Black Mass Evasion; ECFR; Fastmarkets; Benchmark Mineral Intelligence; Hungarian Battery Association (HuBA) working paper.
