U.S. recycling infrastructure is expected to absorb more tungsten scrap and battery black mass under the new allocation order.
By Charles Pitts
The U.S. Commerce Department has ordered domestic sellers of tungsten waste and scrap and lithium-ion battery black mass to direct 100% of their monthly sales to U.S. buyers for one year, beginning Aug. 27, in a move designed to retain critical-mineral feedstock for national defense.
The Bureau of Industry and Security (BIS) issued the temporary final rule under the Defense Production Act and the Defense Priorities and Allocations System (DPAS). The order generally prevents covered materials from leaving the United States unless BIS grants an adjustment or exception.
The measure affects scrap dealers, battery recyclers, metals processors, exporters, trading companies and other U.S. persons engaged in selling the covered materials. It also applies to certain transfers between affiliates, subsidiaries, branches and divisions under common ownership or control.
BIS said the action responds to concerns over the availability of recoverable critical minerals and materials needed for defense and critical infrastructure supply chains.
What the order covers
The directive applies to tungsten waste and scrap classified under Schedule B code 8101.97.00.00.
It also covers certain electrical and electronic waste and scrap under Schedule B codes 8549.13.00.00, 8549.14.00.00 and 8549.19.00.00, but only when the material meets BIS’s definition of black mass.
Under the rule, black mass means shredded lithium-ion battery scrap containing cathode material, which may include lithium, cobalt, nickel, manganese, aluminum, copper and iron, as well as anode material such as graphite or silicon and other residual battery-cell materials.
That definition is important because not every material classified under the listed battery-scrap codes will automatically be subject to the domestic-sales requirement. The material must meet the technical definition of black mass set out in the directive.
Black mass is a shredded lithium-ion battery intermediate containing recoverable battery materials.
The order requires covered U.S. sellers to allocate 100% of their monthly sales to U.S. persons. The directive also states that covered material must remain physically located in the United States unless BIS provides authorization.
The rule applies to both rated and unrated orders. Companies must continue to fill valid DPAS-rated orders for covered black mass and tungsten scrap from U.S. persons in accordance with the DPAS regulations.
National-defense rationale
The Commerce Department’s action follows a July 30 presidential determination that certain recoverable critical minerals and materials are scarce, critical and essential to national defense.
The determination authorized Commerce to use its DPA authorities to address the inadequate supply of recoverable materials. BIS said the shortage creates a risk of sustained supply-chain disruption and requires immediate action to secure domestic feedstock.
The DPAS program is generally used to prioritize national-defense contracts and orders across the U.S. supply chain. Under Title I of the Defense Production Act, the government can also allocate materials, services and facilities to support approved defense, energy, emergency-preparedness and critical-infrastructure requirements.
BIS’s DPAS program guidance describes the broader framework and the agency’s authority to administer priorities and allocations under 15 CFR Part 700.
The new measure goes beyond the ordinary use of “DO” or “DX” rated orders. Instead of simply prioritizing a government-linked order, the directive controls how covered material is distributed by requiring all monthly sales to be allocated domestically unless relief is granted.
Relief remains possible, but not automatic
BIS can approve company-specific or generally applicable adjustments and exceptions. It may also issue interim relief while a request is under review.
Potential grounds for relief include:
- Undue or exceptional hardship;
- Irreparable harm;
- The need for additional time to comply;
- A transaction that would support, rather than reduce, domestic critical-mineral supply; and
- Foreign processing or refining followed by the return of the processed material to the United States.
Requests must be submitted in writing to DPASAllocations@bis.doc.gov with a complete explanation of the circumstances, the relief sought and supporting documents or data.
The submission of a request does not suspend the domestic-sales requirement. Companies must continue to comply unless BIS provides interim relief or another written authorization.
BIS said it intends to respond to adjustment and exception requests within 14 days, although the agency’s response will depend on the facts and documentation provided.
A DPAS authorization is also not the same as an export license under the Export Administration Regulations. Companies receiving relief must continue to meet any separate export-control, customs and trade requirements that apply to the shipment.
Implications for tungsten supply
Tungsten scrap has strategic importance for the United States because domestic primary production is limited. Recycled tungsten is used in hard metals, cutting tools, drilling equipment, wear-resistant components and defense-related applications.
Tungsten scrap provides feedstock for domestic hard-metal and specialty-alloy production.
By retaining scrap inside the country, the directive is intended to improve access for U.S. recyclers, powder producers, hard-metal manufacturers and defense suppliers.
The immediate operational challenge is matching domestic supply with available processing capacity. Sellers that previously relied on overseas buyers may need to revise contracts, identify qualifying U.S. customers and verify that transactions remain within the order’s definition of a domestic sale.
The policy could also change pricing relationships between domestic and international markets. Foreign processors that previously purchased U.S. tungsten scrap may face tighter feedstock availability, while U.S. recyclers could see greater demand for material and processing services.
The rule does not create new tungsten mining capacity. It instead seeks to capture more value from material already generated by manufacturing, fabrication, machining and industrial activity.
Battery recyclers face a similar shift
For battery recyclers, black mass is a critical intermediate between collection and refined battery chemicals.
Spent lithium-ion batteries are typically discharged, dismantled and shredded before producing black mass. That material is then processed through hydrometallurgical or pyrometallurgical systems to recover lithium, nickel, cobalt, manganese and other constituents.
A portion of that refining capacity is located outside the United States. The new directive therefore affects companies whose business models depend on shipping U.S.-generated black mass to foreign processors.
The domestic allocation requirement could redirect material toward U.S. recycling plants and planned refining projects. It may also increase pressure on domestic operators to qualify capacity, secure permits, expand logistics networks and demonstrate the ability to handle different battery chemistries.
The timing creates a potential bottleneck. If domestic processing capacity is not sufficient, black mass could accumulate at collection sites, warehouses and consolidation hubs. Companies may also face higher storage, transportation and compliance costs as established export routes are reassessed.
For battery manufacturers and automakers, the policy could improve visibility into the domestic recovery of strategic battery materials. However, the benefits will depend on whether U.S. processors can recover material at competitive costs and with consistent quality.
Key requirements at a glance
| Requirement | Detail |
|---|---|
| Effective date | Aug. 27, 2026 |
| Duration | One year, unless modified or extended by BIS |
| Covered materials | Tungsten waste and scrap; qualifying lithium-ion battery black mass |
| Domestic allocation | 100% of monthly sales to U.S. persons |
| Export status | Generally prohibited without explicit BIS authorization |
| Relief process | Written adjustment, exception or interim-relief request to BIS |
| Response target | BIS intends to respond within 14 days |
| Separate export rules | DPAS relief does not replace required EAR authorizations |
Compliance priorities before Aug. 27
Companies affected by the order will need to identify covered inventory, review Schedule B classifications and determine whether battery-scrap streams meet BIS’s definition of black mass.
They will also need to map customers and counterparties, including affiliates and related entities, because the directive defines “sale” broadly. Contractual arrangements involving foreign toll processing should receive particular attention because relief may be available where processed material is returned to the United States, but authorization must be obtained.
A practical compliance process is likely to include:
- Inventory review: Separate covered tungsten scrap and qualifying black mass from other materials.
- Classification check: Confirm applicable Schedule B codes and technical descriptions.
- Buyer verification: Document that buyers qualify as U.S. persons.
- Contract review: Identify export-linked sales, foreign processing arrangements and affiliate transfers.
- BIS engagement: Prepare adjustment or exception requests where domestic allocation could create hardship or reduce domestic supply.
- Recordkeeping: Maintain data on buyers, quantities, values and shipment destinations.
The Federal Register temporary final rule provides the operative definitions, covered codes and adjustment process. The rule was published Aug. 6, 2026, with the 21-day implementation period leading to the Aug. 27 effective date.
A test of U.S. processing capacity
The order gives the U.S. recycling and materials-processing sector a year of preferential access to two strategically important feedstocks. Whether that translates into stronger domestic supply chains will depend on infrastructure, permitting, logistics and the ability of processors to accept material at scale.
The measure also signals a broader policy shift: the United States is treating recoverable materials not only as commodities but as strategic industrial inputs. For operators and investors, the key question is whether domestic processing capacity can expand quickly enough to absorb material that previously moved through international markets.
The answer will shape the near-term economics of tungsten recycling, battery-material recovery and the wider effort to build more secure critical-mineral supply chains.
For additional context, see Skillings’ analysis of critical-mineral supply chains and onshoring pressures and North American lithium supply-chain consolidation.
