Quick answer: Shredding end-of-life batteries and leaching the resulting black mass on a documented flowsheet is generally unlikely to be a core R&D activity on those facts, subject to the activity's own facts and the statutory tests. The candidate core activity is usually narrower: developing and testing a separation process against purity and recovery thresholds fixed before the work, across a stated range of feed compositions, where the outcome cannot be known or determined in advance and the work is conducted as a systematic progression for the purpose of generating new knowledge. Each activity is assessed on its own facts, and the company self-assesses its own claim.
24 August 2026 — this article describes the current rules. The 2026-27 Federal Budget announced proposed changes to the R&DTI; the ATO states the measure is not yet law, and industry.gov.au states the changes will apply to income years starting on or after 1 July 2028 if enacted.
A refinery built on an ore body knows what it is treating. The deposit was drilled, assayed and modelled before the flowsheet was designed, and the head grade moves within a range someone forecast. A recycler has no such luxury. The feedstock is whatever arrived on the weighbridge — a bin of consumer cells, a decommissioned pack, a batch of scrap from a cathode plant — and its composition is decided by purchasing decisions made five to fifteen years ago by people who were not thinking about you.
That is the structural difference this article is about, and it is a metallurgical difference rather than a commercial one. It changes what can be known in advance about a separation process, and therefore where an experiment can honestly begin.
Two neighbouring subjects are deliberately out of scope. This is not primary extraction from an ore body. Prospecting, exploring and drilling for minerals are excluded from being core R&D activities by s 355-25(2)(b) where they are carried on for the purposes that paragraph names — discovering deposits, or determining more precisely their location, size or quality; metallurgical work downstream of extraction is not caught by that paragraph and is assessed on its own facts against the statutory tests. Both, in a mining setting, are treated in our Insight on mining, minerals processing and METS. Nor is it cell chemistry or electrochemical energy conversion: electrolyte formulation, cell degradation and grid-scale storage performance are treated in our Insight on green hydrogen and grid-scale batteries. Here the material has already failed as a battery, and the question is chemical recovery from a waste stream.
A boundary worth stating plainly
Whether a facility may lawfully receive, store, process or export this material, and how the fire, fluoride and dust hazards are controlled, are matters for licensed operators, the state environment regulator and work health and safety professionals — the export or import of hazardous e-waste is controlled under the Hazardous Waste (Regulation of Exports and Imports) Act 1989 (legislation.gov.au; dcceew.gov.au), and airborne fluoride exposure is governed by the workplace exposure standards (safeworkaustralia.gov.au). This article takes no position on any of those questions or on the safety or performance of any process. It addresses one narrow question: whether a technical outcome was knowable in advance.
What Black Mass Is, and Why Its Composition Is the Problem
After a pack is discharged, dismantled, shredded and screened, the coarse fractions — steel casing, copper and aluminium current collector foils, plastics — are separated magnetically, by eddy current and by air classification. What passes the fine screen is black mass: the cathode and anode active material, typically a sub-millimetre powder of lithiated transition-metal oxides mixed with graphite, plus residual foil fines, binder and fluorine from the fluorinated binder and the salt in the electrolyte.
Nickel, cobalt, lithium, manganese and graphite all appear on Australia's Critical Minerals List (industry.gov.au), which is why the material is worth chasing. But the assay of any given batch is a weighted average of whatever chemistries happened to arrive. A high-nickel layered oxide from an EV pack, a cobalt-rich oxide from a decade-old laptop cell, and an iron-phosphate cathode from a recent stationary product all reduce to a grey powder that looks identical on the conveyor. Their leach behaviour, reductant demand and impurity burden are not identical at all. Iron phosphate contributes no payable nickel or cobalt, and contributes iron and phosphate that the impurity-rejection train has to remove before separation can start.
A 2016 study published by the environment department projected roughly 20% annual growth in waste lithium-ion arisings, taking them beyond 136,000 tonnes by 2036 (dcceew.gov.au). The National Battery Strategy records that in 2021 Australia recycled 99% of lead-acid batteries but around 10% of lithium-ion, that most lithium-ion batteries are sent overseas for processing, and that the mixed metal dust produced domestically goes into cathode manufacture outside Australia (industry.gov.au). The gap between producing a mixed intermediate and producing a product a cell maker will buy is a hydrometallurgical gap, and that is where the technical questions live.
The Statutory Tests, Stated Once
Core R&D activities are experimental activities whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that is based on principles of established science and that proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and that are conducted for the purpose of generating new knowledge, including new knowledge in the form of new or improved materials, products, devices, processes or services (s 355-25(1), ITAA 1997; business.gov.au).
A supporting R&D activity is an activity directly related to core R&D activities. Where the activity is one referred to in s 355-25(2), or produces goods or services, or is directly related to producing goods or services, s 355-30(2) adds a further bar: it is a supporting R&D activity only if it is undertaken for the dominant purpose of supporting core R&D activities (business.gov.au). Each limb is tested against the particular activity, never against the project or the plant. The definitions are set out in full on business.gov.au and in what does not qualify; the rest of this article is about the metallurgy.
One exclusion should be read early. Section 355-25(2)(f) covers activities associated with complying with statutory requirements or standards, including routine testing and analysis of materials, components, products, processes and other things. Intake assay for payment, batch quality control of product against a purchase specification, and monitoring under an environmental licence may require consideration under this exclusion depending on the purpose and circumstances of the activity.
Recovery metallurgy supplies ample settled principle for the established-science limb. The limb that does the work in this industry is the first one — whether the outcome could be known or determined in advance. The unit operations are mature and publicly documented: reductive acid leaching, oxidation and hydrolytic precipitation for iron and aluminium, cementation or sulphide precipitation for copper, pH-controlled solvent extraction to split manganese, then cobalt, from nickel, and carbonate precipitation or crystallisation to recover lithium from the raffinate. ANSTO's published minerals capability lists this same vocabulary — leaching, purification and neutralisation, selective precipitation, impurity removal, solvent extraction, ion exchange, crystallisation and battery-grade product production (ansto.gov.au). Where a route is already documented for a liquor of known composition, published data and prior experience may well make the outcome determinable in advance — but that is a proposition a company has to test against its actual feed, its actual target and the knowledge search it actually ran. It does not follow from the maturity of the discipline.
Where the Feedstock Question Can Become the Experiment
Three conditions can create a genuinely unresolved technical question, depending on the prior-art search and the company's existing knowledge:
A moving input specification with a fixed output specification: A cathode precursor plant buys to a per-element impurity limit in the low tens of parts per million, and does not relax it because your feed changed. When the ratio of iron-phosphate to layered-oxide material in the incoming blend moves by a factor of three between months, the liquor entering the separation circuit is a different liquor each campaign, and whether a single set of operating conditions can hold the product inside the limits across that range may not be answerable from a bench test on one composite.
Impurities that are absent from ore-based flowsheets: Fluorine, from the fluorinated binder and the electrolyte salt, has no analogue in a nickel laterite circuit. Released as hydrogen fluoride it is a reported pollutant and a workplace exposure hazard (dcceew.gov.au; safeworkaustralia.gov.au); how it partitions through an acid circuit on a given black mass, and what it costs the separation stages, is not something published ore-based data answers for you. Graphite is the other. Whether unreacted fines report as interfacial crud in a solvent-extraction circuit, and at what rate of organic loss, is a question about your feed and your circuit rather than one with a published answer.
Recovery and purity pulling in opposite directions: Rejecting an impurity by precipitation commonly drags payable metal onto the floc. The question is not whether purity is achievable — it is whether purity and recovery are simultaneously achievable on this feed, at a stated pair of numbers set before the work.
In each case the target is fixed before the work, the measure is specified, and a negative result is a real and reportable possibility.
A Worked Hypothetical: Holding a Nickel Sulphate Spec on Mixed Feed
Hypothetical and illustrative. The figures are invented to show the shape of an experiment; nothing here indicates that any activity is eligible, and nothing here is a statement about any real facility or process.
An Adelaide recycler shreds consumer cells and light-EV packs into black mass. Assays of monthly composites show the iron-phosphate fraction of the blend swinging between 12% and 44% by mass, with no control over the mix.
Baseline: The existing circuit — sulphuric acid with peroxide as reductant, then staged hydroxide precipitation — recovers about 92% of the nickel and cobalt into a mixed hydroxide intermediate carrying 2.8 wt% manganese and 1,400 ppm fluorine. It sells at a discount because the buyer must re-refine it. Lithium reports to the raffinate at 4.1 g/L, of which 46% is recovered as a 98.4% carbonate that the offtaker rejects. The plant has never operated a separation circuit; producing a nickel sulphate liquor to a cathode precursor specification would be new to it.
Requirement, recorded 4 February before any test work: Produce a nickel sulphate liquor at Ni ≥ 95 g/L with Co < 20 ppm, Mn < 10 ppm, Fe < 5 ppm, Al < 5 ppm, Cu < 5 ppm and F < 20 ppm, at nickel recovery from leach liquor ≥ 93%, sustained across three consecutive campaigns on feed lots of materially different chemistry mix, with crud losses ≤ 1.5% of circulating organic per campaign. Every element in that list is to be assayed on every campaign; a campaign with an element unreported counts as not demonstrated.
The search, recorded the same week: Published black mass flowsheets, the phosphinic-acid extractant supplier data and two commercial process packages were reviewed. All assumed a layered-oxide feed of stated composition; none reported performance across a varying iron-phosphate fraction. Hypothesis: the loss of separation on high-phosphate feed is driven by aluminium and graphite loading of the aqueous feed rather than by the intrinsic cobalt–nickel selectivity of the extractant, so the fix lies upstream of the extraction stage. Established-science basis: pH-dependent metal–extractant equilibria, hydrolytic precipitation of trivalent iron and aluminium, and the solubility behaviour of calcium fluoride.
Held & varied: Held across trials: shred line and screen cut, leach conditions (1.8 M acid, 5 vol% peroxide, 75 °C, 1:8 solid-to-liquid, 3 h), extractant concentration and diluent, mixer-settler geometry, 1:1 organic-to-aqueous ratio, 45 °C, assay lab and method. Varied: only the impurity-rejection train ahead of extraction and the pH profile of the manganese and cobalt stages.
Trials & results:
• Trial 1 (Reference flowsheet from literature, run on 3 lots at 14%, 29%, 43% iron-phosphate): Ni recovery 88%, 84%, and 71%; Co in Ni raffinate 340, 1,100, and 2,100 ppm. Separation degraded monotonically with phosphate content.
• Trial 2 (Raise cobalt extraction set-point to pH 5.6, Failed): Co in raffinate fell to 60 ppm, but co-extracted Ni rose from 14% to 19% (Ni recovery dropped to 79%). After 4 cycles, 3.7% of organic volume reported as interfacial crud loaded with Al and graphite fines. Ruled out pH adjustment as the sole fix.
• Trial 3 (Two-stage upstream rejection — air sparge, goethite precipitation at pH 3.2/85 °C, lime to pH 4.6 for Al/F): Al fell to 8 ppm, F to 210 ppm (still above spec; most residual F was fine CaF2 carryover). 6.9% Co and 3.1% Ni co-precipitated onto floc (Ni recovery 81%).
• Trial 4 (Seeded goethite + 0.7 µm crossflow filtration polish + phosphoric acid extractant for Mn at pH 3.4 ahead of Co circuit at pH 5.0): Across 3 campaigns (16%, 31%, 44% iron-phosphate): Ni 96, 98, 99 g/L; Co 17, 14, 11 ppm; Mn < 5 ppm; Fe 2–4 ppm; Al 3–4 ppm; Cu < 2 ppm; F 9–14 ppm; Ni recovery 93.4%, 94.1%, 93.0%; crud 0.9%, 1.1%, 0.8%. All measures met.
Result reached & candidate boundary: Specification met across tested feed range without intake chemistry sorting, via seeded precipitation and fine filtration polish. Candidate boundary spans recorded hypothesis/spec through to evaluation of the 3rd campaign in Trial 4. Intake assay, commercial sales, e-waste export docs, EPA licence reporting, and routine QC sit outside.
What the Records Have to Carry in a Recycling Plant
The supporting-activity test bites hard here, because the trials consume a saleable feedstock and produce a saleable liquor. A campaign that both generates the experimental dataset and produces saleable material may require consideration of limbs (b) and (c) of s 355-30(2), depending on the particular activities involved. Assay work may also require separate consideration where it is associated with activities referred to in s 355-25(2)(f). What separates a pilot campaign from a production campaign with instrumentation bolted on is not the equipment. It is what the records show:
Why the run happened: A dated feed-lot selection rationale: which lots were taken, on what assay, and why those compositions test the hypothesis — rather than being simply what was in the yard that week.
What was fixed and what moved: The acceptance matrix written before the first trial, with every element and threshold in it, and a held-constant list against a varied list for each trial.
That the numbers are the numbers: Assay chain of custody from sampling point to laboratory report, and a mass-balance reconciliation closing each campaign — metal in, metal out, metal to residue — so a recovery figure can be traced rather than asserted.
What went wrong: A deviation log, and a recorded disposition for every failed run. Trials 2 and 3 above are worth more to the record than Trial 4, because they are what makes the negative results credible and the progression legible.
What happened to the saleable output: Whether liquor from an experimental campaign was sold, at what price and against which order, and whether that campaign would have run at all had there been no order to fill. That is the evidence the dominant-purpose limbs turn on.
Work of this kind is naturally registered against the manufacturing engineering research field, with the residue, emission and effluent questions falling to environmental engineering.
Where an RSP Fits
A Research Service Provider is a scientific or technical service provider registered in specific research fields, which a company can engage to conduct R&D activities on its behalf (business.gov.au). Eligible R&D expenditure incurred to a registered research service provider may be treated differently where the entity's total notional R&D deductions are below the usual $20,000 threshold, subject to the requirements in s 355-100(2) and the underlying activities satisfying the R&D eligibility tests. And using an RSP does not guarantee eligibility — you still self-assess. In mechanism, where a company's notional R&D deductions for an income year come to less than $20,000, s 355-100(2) works the offset out on a substituted base — expenditure incurred to a registered Research Service Provider that is not an associate, for services within a research field the provider is registered in — rather than on the under-threshold total. See claiming R&D under $20,000 and what an RSP is; offset rates and the conditions attaching to them are covered in refundable vs non-refundable offset.
Talk to Ignition Research before the first campaign runs. As a Registered Research Service Provider at Lot Fourteen in Adelaide we work upstream of any claim, helping fix the acceptance specification, the feed lots that will test it and the measurement design while a negative answer is still a real possibility. We are not a registered tax agent: your company self-assesses and remains responsible for its own claim, with advice and lodgement handled by your tax adviser. Get in touch.
Frequently Asked Questions
Q: Is lithium-ion battery recycling an eligible R&D activity in Australia?
A: Not by virtue of being recycling. Collecting, discharging, shredding and screening cells, and leaching the black mass on a documented flowsheet, is generally unlikely to be a core R&D activity on those facts, subject to the activity's own facts and the statutory tests. A core R&D activity may exist where it could not be determined in advance whether any separation route holds a stated purity and recovery pair across a feedstock of varying chemistry, and could only be determined by a systematic progression of work based on principles of established science, conducted to generate new knowledge. You self-assess.
Q: Does developing a black mass leaching process qualify for the R&DTI?
A: Where acid strength, reductant and temperature can be selected for a known feed from published data and prior experience, the outcome may well be determinable in advance — but that is a proposition to test against your actual feed, your actual target and the knowledge search you actually ran, not a conclusion that follows from the label "process development". The position can differ where the question is whether any set of conditions meets an efficiency or impurity condition fixed before the work, on a feed whose composition is not controlled — provided a negative result was a real possibility and the work proceeds from hypothesis to experiment, observation and evaluation to logical conclusions.
Q: Is producing battery-grade nickel sulphate from recycled feedstock core or supporting R&D?
A: It depends on the activity, not the product. Where the route has already been demonstrated on the feed in question, running it is generally unlikely to be a core R&D activity on those facts, subject to the activity's own facts and the statutory tests. Where the experimental question is whether the specification can be held across a defined range of feed compositions, the trials that answer it are considered against the core test, while the campaigns that produce saleable material are considered against the supporting-activity provision and its dominant-purpose limbs.
Q: Does feedstock variability by itself make the outcome unknown?
A: No. Variability is the ordinary condition of the industry, and known variability handled by known means is not an unknown outcome. What can be unknown is whether a specific measurable quantity — for example the nickel recovery achievable while holding a per-element impurity limit, across feed lots spanning a stated compositional range — falls inside a tolerance set in advance. The measure and the threshold are what make it a question rather than an observation.
Sources & Further Reading
industry.gov.au — National Battery Strategy, Priority 4: Sustainability, ESG and circular economy
industry.gov.au — Australia's Critical Minerals List and Strategic Materials List
dcceew.gov.au — Control of e-waste for export, import and transit through Australia
legislation.gov.au — Hazardous Waste (Regulation of Exports and Imports) Act 1989
dcceew.gov.au — Fluoride compounds: sources of emissions (National Pollutant Inventory)
safeworkaustralia.gov.au — Workplace exposure standards for airborne contaminants
legislation.gov.au — Income Tax Assessment Act 1997 — Div 355, incl. ss 355-25, 355-30 and 355-100
Related: manufacturing engineering research field · mining, minerals processing and METS · green hydrogen and grid-scale batteries · what does not qualify · what an RSP is · claiming R&D under $20,000 · refundable vs non-refundable offset · Insights
This article is general information from a Registered Research Service Provider about the R&D Tax Incentive. It is not tax, legal, financial, environmental or safety advice; eligibility depends on your circumstances and you should self-assess and seek your own advice.
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