The Chinese government is considering setting up a fund to subsidise lead producers using recycled lead-acid batteries.
Zhang Weiqian, analyst at research firm Antaike, said the government is likely to give the subsidies to large companies and well-equipped processors that are not running at full capacity.
According to the sources, the fund would be financed by tax on lead-acid battery makers that intergrate their products in electric bicycles and vehicles. The start of the funding is unclear.
Recycled lead accounts for almost 30% of the country’s refined output in 2013.
The demand for lead is decreasing at the moment, which forced several lead plants to close. Although the production of electric bicycles using lead-acid batteries has risen in the past years, the demand is expected to fall in 2015, said Zhang.
The China Battery Industry Association asked the government to give more information about how other countries handle used lead-acid batteries and how the fund would work.
China aims to reduce environmental damage caused by recycling the toxic metal at smaller firms. Earlier this year, the government announced to close down 39 lead-acid battery makers that are on the list of China’s 2014 Inefficient Capacity Elimination Plan.