Batteries for electric cars are packed with costly critical minerals and recycling these to lower costs and make them more sustainable is a key challenge.
Eramet was looking to build a facility that would have been able to separate the minerals out from the black powder that used batteries are initially transformed into.
While the sale of new internal combustion engine cars is supposed to end in Europe in just over a decade, the shift towards electric vehicles has seen a setback recently with consumer demand flagging.
Battery manufacturers have since put expansion plans on hold, with firms that aim to recycle used batteries now following suit.
"Due to the lack of ramp-up in Europe of battery factories and their components... there are currently major uncertainties about the supply of raw materials to the plant, and about recycling opportunities for the metallic salts," Eramet said in a statement.
"The required conditions for pursuing a hydro- metallurgical battery recycling plant project in France are therefore not met, and the Group has decided to suspend the project," it added.
Company officials said if the project went forward it would likely have to export the minerals to Asia, which would not make economic sense.
Eramet's partner Suez said it would go forward with building a plant outside Paris to break down used car batteries.
Last month carmaker Stellantis and mining group Orano similarly shelved plans to develop a battery recycling facility in France.
im-ngu/rl/sbk
