Definitely for upgrades, whether that's for badges or weapons or both. They mentioned before that you can fuse and upgrade weapons, and we've seen them pick up weapon drops in the gameplay stream. Considering the already large variety of drops we saw just in that first map alone, I feel like there's too many materials for them to only be used for badges, plus with the previous mention of fusing/upgrading weapons... We might be looking at some kind of smithing system.