Supply and Demand in the International Marketplace

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Supply and Demand in the International
Marketplace Navigating the Export Issue
Economic, Environmental and Ethical
Considerations Robin Ingenthron American
Retroworks Inc. Middlebury, Vermont www.retrowork
s.com
An NRC Training Program sponsored by Dell Inc.,
October 2003
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Session Goals

• Understanding the basics behind
• domestic and foreign demand for
• used electronics and scrap
• 2) Understanding how supply and demand affect
  your costs
• 3) Understanding your own supply, and what
  could or should happen to it
• 4) Considerations for evaluating bids (ie
  demand) from multiple recycling vendors

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Chapter 1 Understanding the basics behind
domestic and foreign demand for used electronics
and scrap
REALITY If USA exports everything, we send 1/3
reusables, 1/3 recyclables, and 1/3 Toxics Along
for the Ride. REALITY if USA exports nothing,
we destroy reuseables (and they cannot afford
new) they mine to replace the recycled metals,
and mining produces even more toxic harm than
recycling. SOLUTION Setting a Higher Standard.
USA processing, limited exports (tested
equipment, copper scrap), simple tests (like CRT
Glass Test) market development to promote best
practices (funded) state processing contracts
with restrictions and incentives etc.
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Q Why should we know the basics behind
international demand? A Youll be asked
several times a week, Do you export this stuff?
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Market Forces
Low wages, better repair
Manufacturing Demand, Free market mining
CD, Floppy Drives Cords, cables Video cards,
Monitors, ATX cases
Gold Copper Aluminum Steel Plastic
Leaded glass (TVs and bad monitors) Gold process
waste Mercury batteries
Lax environmental standards
Contraband camouflage
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Understanding World metals demand

• Example World Copper Production 2001
• 1. Mined refined (blister copper) 13,570,000
  tons
• Primary Smelter Recycling 1,234,000
• (copper mixed in with concentrates)
• Secondary Smelter Recycling 802,000
• (copper derived from clean scrap)
• This is after 98 ore waste is removed! A huge
  industry.

Average recycled to virgin (mined) sources for
non-ferrous metals 1/3 Growing Copper demand is
forcing more mining, at higher environmental
cost. Mercury and Lead are the models, with
recycling rates above 75.
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Understanding USA demand

• Anti-Reuse Forces
• 1. Technical Labor cost
• 2. Affluence
• 3. Software rules
• Parts, manuals costs

• Anti-Recycling Forces
• 1. Mining preferences
• Labor cost
• Population-based env. standards
• Loss of manufacturing demand

TAR under control. We are the best at throwing
things away.
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Understanding USA demand Good News for Jobs is
bad news for cost
USA Electronics Recycling Repair Employment
Recycling Creates Jobs at USA labor rates.
Even in the USA, with lower repair/reuse rates,
repair dwarfs recycling, mining, and disposal
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Understanding Export Forces to Asia

• Reuse Forces
• 1. High tolerance/demand for used
• 2. Free software
• Cheap parts
• Good, cheap tech. labor

• Recycling Forces
• 1. Metal demand
• 2. Balance of Trade
• Cheap labor
• Cheap env. Laws

Giant Sucking Sound Growth in Chinese demand for
copper (ore and scrap) 20 per year 1999-2002
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Chinese demand in particular drives both
recycling and mining

• 1. Electric and electronic appliances made in
  China
• 2. Chinese New Deal scale infrastructure
  development
• Asia 1 in per capita consumption of gold
  platinum
• (the only materials which the West does not
  consume most of)

Mining nightmares in Borneo, Chile, Congo,
Philippines, Turkey, etc.
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Better to meet demand than not to?

• E-Scrap is 300 richer in copper and other metals
  than mined ore
• Recycling produces a fraction of the pollution
  from mining.
• Gorilla and orangutan extinction is arguably
  driven by electrics metal mining.
• One Copper mine in Papua New Guinea (feeding
  China) dumped 80,000 Tons Per Day of Cyanide
  tailings into the OK Tedi River from 1990-2000
• USGS At 1990 rate of consumption, all known
  copper reserves will be exhausted this century
  Ocean mining will be the primary source of copper
  in our lifetimes.
• USA Model? 95 from federal lands, 5/acre,
  14/15 largest Superfund sites
• Hard rock mining produces 45 of all toxics
  produced by all USA industries.

Gold mining releases more mercury into the
environment than mercury production and disposal
combined!!!
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Other complicating factors behind export demand
Reuse in Asia so huge, it competes head to
head with OEMs. Software is practically free for
refurbishers (an OS costs 70 to USA refurb)
Singapore is a World Model 65 of all
employment is in high tech parts and equipment
trade. R O (Repair and Overhaul) is tracked
by Bureau of Labor statistics. Environmental
costs of extraction or recycling are equally
weighted. China Equal environmental standards
for mining or recycling (equally lousy) arguably
China is a free market, compared to USA. Hiding
high tech goods is contraband camouflage the
primary use of electronic scrap? Chinas 1
concern is collecting tariffs on working parts.
(Last years E-waste ban enforcement? The
intercepted toner cartridges were burned,
intercepted computers crushed with a forktruck).

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Chapter 2 Cost Implications

• Understanding the basics behind
• domestic and foreign demand for
• used electronics and scrap
• 2) Understanding how supply and demand affect
  your costs
• 3) Understanding your own supply, and what
  could or should happen to it
• 4) Considerations for evaluating bids (ie
  demand) from multiple recycling vendors

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How the market forces affect your Recycling Costs

• Next 3 Slides
• USA costs currently (1000 monitors)
• USA costs with 1900 copper prices
• USA costs with Chinese labor rates

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Overall USA Monitor Management spent and earned
per 1000 monitors
Most demand for used is overseas
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Possible USA Monitor Management spent and
earned per 1000 monitors
If copper and lead returned to 1900 prices, and
monitors were repaired at 75 rate
Countries with high reuse and no mining subsidies
have the advantage
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Overseas Monitor Management spent and earned
per 1000 monitors
No mining subsidies, and 10 technical and
handling labor cost
Countries with high reuse, no mining subsidies,
and low wages are the winners
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Chapter 3 Knowing your supply

• Understanding the basics behind
• domestic and foreign demand for
• used electronics and scrap
• Understanding how supply and demand affect your
  costs
• 3) Understanding your own supply, and what could
  or should happen to it
• 4) Considerations for evaluating bids (ie
  demand) from multiple recycling vendors

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Understanding your own supply

• 1) Pristine takeouts for auction, clean scrap
• - you can deal with anyone directly
• 2) Toxic Junk, Contraband, leftovers
• - you should insist on domestic processing
• 3) I dunnoMix of good, bad and ugly
• - you should deal with USA company with capacity
  to separate, process and market, and get
  documentation

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Understanding your own supply

• 1) Pristine takeouts, off-lease equipment (Reuse
  material)
• Highly Sorted Working and repairable monitors,
  P2s, cords, peripherals, cartridges
• positive revenue
• dollars per item (not pennies per pound)
• high overseas demand, with incentives to hide it
  from tariff collectors and anti-gray-market
  enforcers

• Working monitors
• No screen damage
• No VGA
• No Apple
• Make, Model, COM,
• Year, other tech details

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Understanding your own supply

• 2) The Dregs
• Cherry-picked material, TVs, obsolete equipment,
  residue, shredded or baled material.
• Damaged CRTs
• Pennies per pound
• Overseas demand based on copper, gold and
  aluminum content

One USA company sold good stuff to one export
market, and (misrepresented) bad stuff to another
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Understanding your own supply

• I dont know Then make sure the company you
  select has capacity to handle either type of
  E-Scrap.

Working monitors
Crapple
Were switching to flat screens
One fellow insisted his 1990 public school Stuff
works as good as when it was new.
Another commercial client insisted that working
monitors, replaced by flat screens, should be
recycled/destroyed here in the USA.
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Chapter 4 Evaluating Bids

• Understanding the basics behind domestic and
  foreign demand for used electronics and scrap
• Understanding how supply and demand affect your
  costs
• Understanding your own supply
• 3) Suggested Considerations for evaluating bids
  from multiple recycling vendors

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4 Simple Due Diligence Tests

• Glass recycling records
• Gold bearing scrap records
• Sample manifests (declared reuse items)
• Employees or capital investment per ton

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1. CRT Glass Test - no known market in Asia for
screen burned, scratched or busted tubes.
Legitimate USA recyclers must be able to show
where the non-repairable glass goes. Guidance
document at retroworks.com, several other sites
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2. Printed Circuit Board (PCB) Gold Test -
Nasty recycling (and nastier mining) practices.
We do all Printed Circuit Boards
domestically. Q Will this lead to more
mining? A Gold mining is maxed out already
Reuters chinese miner
BAN chinese circuit board / gold recycler
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3. Truth in Exporting Test - Ask for shipping
manifests (sensitive market info can be blocked
out). Legitimate bill of lading shows
make/model/voltage/COO/condition. DHS will
enforce existing high tech export rules, customs
declarations. How picky ? Picky is good
If for repair, is it wrapped, tested, sorted
and manifested?
One export market included a carton of cigs in
every sample photo of e-scrap they are soliciting
at high prices. Hmmmm.
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• 4. Employment / Capacity Test
• How many tons did the company handle last year?
• How many employees per ton?
• If fewer employees, how much automated processing
  equipment is in place?
• One NE company has 2 employees and ships 1000
  containerloads per year

This container certainly has several hundred
cords, power supplies, and hard drives which
could be reused - but its TAR, an abuse of reuse.
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Heres half a solution

• The Good News In MA, state contract was issued
  with strict criteria for export and recycling,
  insurance, closure plans, etc. Violating your
  bid terms is enforceable (as fraud) by fines and
  prison sentences.
• The Bad News State funding for the contract was
  cut. Now most cities use low bidders. For the
  vendor, the blessing of the state contract
  becomes a curse in the unregulated marketplace...
• Moral if you are going to drive up the costs
  with higher standards, you need to buy off the
  contract.

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• mineralpolicy.org
• mpi.org.au
• USGS.gov
• moles.org
• ban.org
• copper.org
• www.antigraymarket.org
• these and other links www.retroworks.com