MELBOURNE Aug 23 (Reuters) - Australia's Neometals Ltd said on Wednesday that its battery recycling joint venture will build a battery shredding plant in southern Germany for Mercedes-Benz.

The deal by Primobius, which is 50% owned by Neometals and 50% by German engineering firm SMS Group, represents its first commercial recycling plant supply agreement to a global automaker, it said in a statement to the ASX.

Using Primobius technology, the plant will provide shredded battery material to the Mercedes LIB Recycling Plant, which will recover materials including lithium, cobalt, nickel and manganese.

This will be fed back into production of a targeted 50,000 battery modules for installation into new Mercedes vehicles.

Primobius will be responsible for the engineering, equipment supply and installation of the plant, the company said in a statement. (Reporting by Nausheen Thusoo in Bengaluru and Melanie Burton in Melbourne; Editing by Shailesh Kuber and Muralikumar Anantharaman)