Electronics Recycling: An Evolving Industry

http://americanrecycler.com
By: Maura Keller

Here’s one thing we know: The core tenet of a successful electronics recycling business is minimizing total sourcing and processing costs while improving backend efficiencies and vendor relationships.

Combine that with an ever-evolving industry, a constantly changing consumer base, and emerging recycling laws, and you can understand challenges that electronic recyclers are facing.

According to the Institute of Scrap Recycling Industries (ISRI) in 2011, the U.S. electronics recycling industry processed more than 4.4 million tons of used and end-of-life electronics equipment. More than 70 percent of the collected equipment is manufactured into specification grade commodities – including scrap steel, aluminum, copper, lead, circuit boards, plastics, and glass. These valuable  commodities are then sold to basic materials manufacturers in the U.S. and globally as raw material feedstock for new products, such as steel, copper, aluminum, plastic and glass.

At the International Electronics Recycling Congress 2015, Eric Harris, associate counsel for ISRI, discussed the issue of sustaining the U.S. electronics recycling industry. He indicated that the 2014 electronics study by ISRI showed that over 70 percent of the volume processed by the electronics recycling industry ultimately becomes commodity grade scrap. In the U.S. market alone, more than 4 million tons of electronics are processed annually in this $20 billion industry. And while the industry has experienced tremendous growth in the last 10 years, there are some short and long term challenges facing the industry.

Dr. Mike Biddle, a member of the board of directors at the Green Electronics Council (GEC) and founder of MBA Polymers, said that electronics recycling experienced rather spectacular growth for a number of reasons, such as a rapid rise in metal prices after their collapse in 2009; the proliferation of electronics worldwide; growing recognition globally of the need to handle end-of-life electronics responsibly; and relatively low barriers to entry in this business compared to many other recycling businesses.

“Today, most recyclers are still facing difficult times for a variety of reasons,” Biddle said. “These include significant drops in commodity prices of nearly all material classes over the past 12 to 18 months.”

Electronics recyclers also continue to suffer from “leakage” of some of their feedstocks, which are sometimes exported to developing world countries for “low cost” informal recycling.

“As we know, while the labor and byproduct and waste disposal can be ‘low cost’ in monetary terms, it is often not low cost in human, health and local-eco-system terms,” Biddle said. “Also, in a continuous drive to lower prices, electronics manufacturers have learned to use less expensive materials and lower amounts of expensive materials like precious metals.”

According to Jason Kehr, president of Valley City Electronic Recycling in Kentwood, Michigan, one of the biggest concerns facing the electronics recycling industry are cathode ray tube (CRT) disposal and the continuous decline in commodity pricing.

“First, will there continue to be a downstream solution for CRT disposal? Secondly, will that solution be cost effective?” Kehr said. “Commodity pricing continues to decline, making it harder and harder to be profitable from a pure recycling standpoint.”

The Consumer Electronics Association 2014 study of the U.S. CRT market showed that as of 2014, approximately 44 percent of households reported disposing a CRT TV within the past 5 years, 45 percent indicating they donated or gave it away, 41 percent reported they recycled it, and 20 percent threw it in the trash. As of 2014, 46 percent of households still have at least one CRT, which equals an estimated 7 billion pounds.

Resa Dimino, senior advisor for policy and programs at the Product Stewardship Institute, agrees that the safe and proper management of CRTs is one of the most significant concerns to the industry to date.

“While ample market outlets for CRTs exist, they are costly,” Dimino said. “Companies who hold on to CRTs hoping for a better, less expensive option risk violating federal rules on CRT storage. The high cost of CRT management, and the low scrap material values are impeding the growth of the electronics recycling industry.

In states with Extended Producer Responsibility Programs (EPR) for used electronics, recyclers need to be aware of the legislative framework and must understand the recycling financing schemes, and related risks and benefits.

Dimino was part of the team at the New York State environmental agency that developed that state’s electronics recycling law in 2010 and subsequently worked at an electronics recycling company implementing the programs established through New York’s and Connecticut’s electronics recycling laws. More recently, she’s been analyzing electronics recycling markets and issues with the implementation of state e-waste recycling laws for the Product Stewardship Institute.

“Electronics reuse is a current area of focus, since the value of reused electronics is high, and material scrap values through recycling are not,” Dimino said. 
Related to the increase of reuse programs, Kehr has seen growth in terms of asset management and data security opportunities.

“I attribute this to the continuing education of customers,” said Kehr. “More customers are realizing that while recycling comes at a cost, the benefits of protecting their company data and more importantly the environment, outweigh this cost. Data security breaches have been all over the news the last couple of years and I think more customers are in tune with the ramifications of these types of breaches and are taking all necessary precautions to avoid having their companies be the next headline.”

Indeed, Ashley Turner, director at Gadget Valuer, said the recycling industry is a lucrative business if done right, but there are some key issues recyclers must tackle.

“Offering secure data wiping is a must for any credible company,” Turner said. “Consumers need the reassurance that when they send off personal gadgets, their data will be completely erased so there can be no threat of fraud.”

Kehr said that electronics recyclers need to continuously evaluate their processes and look for areas where they can increase efficiency. Whether that is in shipping and receiving department, in their recycling process or their sales process, recyclers need to be constantly looking for that improvement that will give them that edge and increase their bottom line.

“A lot of times it might be a small detail, like removing a repetitive step in your processes or automating a certain function that leads to a big time savings, but these small details can make a huge difference,” Kehr said.

Embracing Change
Like the electronics industry in general, recycling companies are in a state of flux. Even if one takes commodity prices out of the equation, there are still numerous challenges posed by this fast-changing sector.

“For instance, miniaturized devices, converged products and the use of new materials all present hurdles to effective disassembly and recovery,” said GEC’s director of marketing, Jonas Allen. “But there’s definitely a bottom-line motivation to solve those challenges.”

According to research the Green Electronics Council commissioned with Trucost, if the recycling rates for gold, silver and platinum – which currently stand at about 15 percent, 15 percent and 5 percent, respectively – were all increased to 100 percent, the electronics sector could realize $12 billion in financial and natural capital benefits.

“Although the manufacturers certainly perk up at that figure, it also represents a huge opportunity for companies that develop and offer creative recycling and recovery methods,” Allen said.

Improving recovery and recycling has clear environmental benefits as well. For example, data shows that recycling one ton of used cell phones, which amounts to about 6,000 devices, can recover up to 340 grams of gold. By comparison, one ton of mined gold ore contains just six grams of gold.

“So while improving recovery and recycling certainly has financial benefits, there are also meaningful environmental gains to be realized,” Allen said.

In the electronics recycling industry, change is constantly afoot, with change occurring extremely quickly, so it is very important to stay on top of what is happening in the industry.

“This includes maintaining knowledge of your current state recycling laws and how they may affect the way you are conducting business and changes you may need to make to your operation,” Kehr said. “This is also true of your certifications, whether you are R2 or E-Stewards, it is important to know these standards inside and out so that you can operate your business appropriately.”

Dimino said that recyclers should also source carefully to ensure they get the highest value items, or obtain manufacturer or public sector support to cover the costs of collecting and recycling lower value items.

On the Horizon
While there is a continuous need for electronics recycling, the commodity market is depressed. And, as Biddle pointed out, the future is likely to see growth in factors that make this business challenging including the continued efforts to downsize (miniaturize) electronics and the growth in competition, particularly in lower-cost regions of the world.

“Cost reductions will continue to drive the use of less valuable materials and lower amounts of precious metals,” Biddle said.

To help offset these factors the industry is making improvements in recycling technologies – meaning better recovery and lower recycling costs.

“We are also growing consumer interest in green electronics and we are growing interest among manufacturers to embed circular-economy principles to strengthen their businesses and to help better secure their supply lines,” Biddle said. “This will lead to more closed-loop relationships between manufacturers and recyclers.”

It’s also important to remember that the market is cyclical and industry experts hope it is near or at the bottom.

“This makes managing your recycling process effectively extremely important,” Kehr said. “When you are dealing with razor thin margins there is a little room for error. It is important to monitor the markets as well as monitoring what your vendors are paying you for your material.”

Dimino agrees. “Closely watch trends in CRT generation and new potential end markets,” she said. “Keep an eye on the policy arena. Changes to state electronics recycling laws are on the horizon and those changes could benefit electronics recyclers.”

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