May/June 2008
With more advanced processing facilities and new laws in the works, China is taking steps to end the unregulated, small-scale recycling of its electronic scrap and white goods.
By Adam Minter
On a frigid midwinter day, Wang Jinglian, the founder and president of Jinsheng Copper, stands at a desolate crossroads in the barren countryside outside of Linyi, in northern China's Shandong province. With him are several of his senior managers as well as a leading figure from Linyi's economic planning department. "We will process circuitboards over there," he says, pointing at an empty plot of land, "circuitboards from China."
Electronics recycling in China has long been associated with smuggling, environmental degradation, tax avoidance, and other unsavory activities. It's not the type of business endeavor you would expect from Jinsheng Copper, China's largest privately held secondary copper smelter. But sometimes stereotypes don't keep up with reality. In China, where industries and businesses evolve far more rapidly than the media that cover them, the e-scrap trade is in the early stages of a transformation. To be sure, illegal imports and environmentally harmful recovery methods are still common. But what is less reported—and, in many ways, more important—is the flood of domestically generated e-scrap and white goods now entering the recycling stream. For copper-hungry recyclers like Wang Jinglian, domestic electronics present an opportunity, and with the support and encouragement of the Chinese government, he and others are beginning to develop a new kind of e-scrap recycling system.
Of course, e-scrap isn't a problem just in northern China. In April 2007, Liu Fuzhong, deputy director general of the China Household Electrical Appliances Association, gave a speech in which he estimated that each year China generates 120 million individual end-of-life electronic appliances—defined as televisions, refrigerators, washing machines, personal computers, and air-conditioning units. Of those, Liu said, 90 percent are dismantled in small workshops lacking proper processing techniques and environmental protections. (Illegal burning and chemical leaching recovery techniques are still common.) Liu's dramatic statistics are reliable estimates that, though not definitive, reflect an evolving consensus on the scale of this new and globally important recycling stream—one that is driving innovation throughout the Chinese scrap industry.
China's approach to responsible electronics recycling differs from that taken by the United States and other developed countries, however. China is actively seeking low-tech, labor-intensive solutions that are both environmentally friendly and cheap enough to be deployed throughout the industry. From this perspective, perhaps the most notable and widespread advance in Chinese e-scrap recycling is the mass deployment of vibrating separation tables for recycling stripped circuitboards and insulated wires too small to strip manually or mechanically. The process is deceptively simple. A granulator reduces the wires and boards to small fragments and then dumps them onto a vibrating table washed with a steady stream of water. As the table shakes, the plastic, fiberglass, and copper separate on the basis of weight and flow into separate collecting channels. Unlike burning, this system allows processors to capture the value from two commodities—copper and plastic—giving them a profit-making incentive to invest in something more than a box of matches.
Though separation tables have become more prevalent in electronics processing in China, the cost of acquiring even this minimal amount of equipment can be prohibitive for small-scale peddlers and dismantlers. As a result, both the national and local governments are supporting efforts to concentrate those dismantlers in recycling parks—like the one that Jinsheng is building in Linyi—where a central administration can oversee processing techniques while creating an environment where better-capitalized vendors are in a position (geographically and financially) to buy copper-bearing materials from vendors who can't afford to process them correctly.
Preparing for Domestic Growth
The premier example of an integrated park devoted to electrical cable processing is the sprawling Qingyuan Huaqing facility in Guangdong province, which opened its doors to a tour of delegates attending the November 2007 International Metal Recycling Forum, hosted by the China Nonferrous Metals Industry Association's Metal Recycling Branch. There, in a three-phase development spread over 2 million square meters, 1,300 individual dismantling enterprises are relocating to individual stalls outfitted with a centralized water treatment system and the "advanced" recycling technologies represented by the water separation tables.
Previously, these 1,300 businesses were spread across two townships and operated largely without government regulation or oversight. The situation mirrored the one that had long existed in Linyi, prior to the establishment of Huadong Nonferrous Metals City (as described in the first half of this series, "Scrap Made in China," in the March/April issue), but with one significant difference: Huadong's vendors have always processed domestically generated nonferrous scrap, whereas Qingyuan's scrap industry has focused on imported material.
There's little question that, for most of the history of China's scrap industry, imported scrap has been the source of the most serious environmental problems. This is to some extent the nature of the legal, low-grade scrap that China has long imported and the methods available to process it; it's also a function of the volume of imported scrap compared with domestically generated material. Wang Jinglian—who's on the verge of becoming one of China's major copper importers—simply notes that "it's easier to control the quality with local dealers." In either case, farsighted officials in Beijing have long viewed imported scrap processing—in part—as a means of preparing China for the day when its own scrap supply equals, and then far surpasses, its imports.
The state-owned China Recycling Development Corp., established by order of China's powerful State Council in 1998, has played a key role—some might say the key role—in charting the course of the nonferrous scrap industry's development. In this capacity, CRDC partnered with Guangdong Shine Cables Co. to establish the Qingyuan Huaqing facility. The officials expect that, in three to five years, the facility will get half of its scrap from domestic sources.
The Evolution of Chinese E-recycling
Qingyuan is not the only CRDC-supported park with a stake in China's domestic recycling arena, though. On a cold day in early January, CRDC representatives drive me out of downtown Linyi to the barren plains of Meibu township. According to the representatives and others knowledgeable about Linyi's scrap history, the area's scrap trade originated in Meibu, and it continues to thrive there, with 15,000 people (out of a township population of 41,000) working in roughly 100 scrap dismantling businesses. We turn from the main highway and begin traversing a narrow country road that runs between small and large scrapyards and dismantling workshops devoted to what appears to be every possible variety of scrap.
Farther along, we pass a driveway lined on both sides by cathode-ray tubes awaiting dismantling. We speed toward the sprawling complex of warehouses that form the Linyi China Electronic Recycling Center. At the guarded gate, we leave our SUV behind and enter on foot. The local party secretary meets us for a tour guided by CRDC representatives and their partner in the project, the youthful Mr. Liu, a publicity-shy 30-year veteran of the Linyi scrap trade widely acknowledged to be one of its founders. ("Meibu is big because of Mr. Liu," a source informs me.) Later, in an aside, Mr. Liu tells me he began scrapping in 1978, collecting steel by hand and loading it onto the back of a bicycle. Today he has significant nonferrous and ferrous yards, but the e-scrap recycling business is perhaps the most important. "This will become China's biggest e-scrap dismantling yard," he says, "and also the best and cleanest."
Ahead of us is a pile of plastic television casings. A truck carrying another tall load of casings rumbles past the gate and speeds into the facility. I stop to examine the pile of televisions in front of me. On the ground—which is entirely hard-surfaced—are a few pieces of broken CRT glass and some fragmented circuitboards. Chinese and international law strictly prohibit the importation of these materials due to their high lead content and other potential hazards. But none of this material is imported—it is generated within China, and in increasing volumes. As I scan the landscape, I pause at the sight of a veritable field of old televisions that extends from a dock bay; it might be the largest inventory of scrap televisions in all of China. In fact, this factory dismantled 3 million individual pieces of electronic scrap—primarily televisions—in 2007 alone.
Buying, selling, and processing domestically generated televisions and other e-scrap are legal but unlicensed activities in China (so long as companies obey the relevant environmental and tax laws). But that will soon change. According to individuals close to relevant Chinese policy-making, China's State Council will release its long-awaited Rule for Supervising Waste Household Electrical Appliances in the first half of 2008. Though the council has yet to release the specifics, these sources say the legislation will establish clear requirements for dismantlers and processors and spell out the processes for proper e-scrap management. To receive a license, a company will need the appropriate technology, environmental protection standards, capitalization, and scale. Many—if not most—of China's small-scale dismantling enterprises will be rendered illegal under the new rules and will have to shut down. "The small companies will disappear as processors," says one source familiar with the legislation, "but they will remain as collectors for the larger, better enterprises."
At the same time, the legislation will impose producer and consumer responsibility for end-of-life electronics; specifically, it will require manufacturers to take responsibility for recycling what they manufacture. When they can't take responsibility or prefer not to take direct responsibility, the legislation will allow and encourage them to contract with a Chinese e-scrap recycler. The law's success will largely depend on the cooperation and enforcement efforts of local governments, and that cooperation is far from guaranteed. But at least in Linyi, where the legal, domestic trade in electronic scrap has been a serious boon to the town's economic development, the local government is on board.
Inside an Electronics Recycling Plant
In the warehouse closest to the gate at the Linyi China Electronic Recycling Center, workers are busy dismantling small black-and-white TVs on high tables surrounded by CRTs, piles of casings, and smaller pieces of electronics. To my left, two women are busy using electric screwdrivers to speed the process of removing orange plastic casings from televisions that look like they were taken from the set of The Brady Bunch. "Televisions last 20 years in China," says one CRDC representative. "After the first owner, they are repaired and then bought by a poorer owner," thus it takes longer for them to reach their end of life than it might in the West or Japan. The women pay no attention to us as we talk about their work, concentrating instead on separating electronics from the CRT and wires from the electronics, sorting the various plastics, and then moving on to the next television. The best workers—all of whom receive a month of training—can disassemble more than 100 televisions in a day.
In the next warehouse bay, a worker in gloves and safety glasses sits on a low bench next to a pile of television electronics from which he's removing the circuit boards. As he works, a truck arrives with a load of electrical cables for workers to strip clean. Finally, in the last bay, an informal disassembly line turns circuit boards into their constituent parts. It starts with workers who break and pull the last, difficult electronics from the circuit boards. They pass the boards along to the next set of workers, who remove the various chips—especially the gold-bearing ones. Finally, several women sort the various chips and capacitors into stainless steel mixing bowls and, eventually, into large bags shipped elsewhere for further processing. The gold-bearing materials go to Taizhou in Zhejiang province for further recovery, the guides tell me. The chips go to facilities in Guangzhou and Shenzhen, where workers will test them for reuse, and—if they fail—recycle them into constituent metals. "We do the dismantling here," a CRDC rep explains. "The utilization will happen elsewhere. But in time, it will happen in Linyi, too, in an environmentally safe manner."
Behind the last bay is a loading and unloading area where I find—among other items—bags of computer chips, stripped copper wire, and bags of broken CRT glass awaiting shipment to a remelting facility that will turn it into new CRT glass.
I climb a staircase behind the warehouse and look down upon workers removing the copper cores from CRTs, then breaking the glass for shipment.
As I descend, a truck leaves with a load of sorted TV casings, headed, the guides tell me, to a rerolling plant where they will be flattened and sent in "great quantities" to plastic recyclers in Zhejiang province. Mr. Liu points at a just-arrived truck stacked with hollow cases. "It's not economical to ship them so far like that," he says.
"If we reroll them, then we can afford to sell them somewhere else." Mindful of the costs of rerolling, CRDC plans to build two additional plastic rerolling plants in the Linyi area.
If there is one weakness in this system currently, it is the small profits the company can derive from recycling black-and-white TVs.
The company typically makes, at most, 1 RMB (US$0.14) of profit from each TV, CRDC representatives tell me, and that margin is shrinking because of direct competition. Today, a scrap black-and-white TV can cost up to 43 RMB (US$5.93) to purchase on the open market—up significantly from 2003, when Mr. Liu first began to recycle e-scrap, and the price was just 10 RMB (US$1.38).
With those tiny profit margins, how can the company compete with the smaller-scale recyclers who operate with few safety or environmental protections—and at a much lower cost? Large volumes, combined with the company's ability to "dig deeper" for resources in scrap electronics, give it an edge, the CRDC says. "If there is a small component in a television that has very little value, then a small recycler won't pay attention to it," one representative explains. "But if you have millions of those little components, then you can make money. That's why the small dealers sell to us."
The State Council's directive on e-waste should further level the playing field for companies processing electronic scrap in a safe and environmentally sound manner. The directive reportedly will include a subsidy for TV recycling based on the screen size.
We walk out of the warehouse and see a large-screen color TV that has just arrived at the plant—another sign of things to come. Currently, the Linyi China Electronic Recycling Center recovers an average of 450 grams of gold from every metric ton of e-scrap. "The color televisions have more gold in them," a CRDC representative notes. "So when they begin to be thrown away, that will change the business, too."
As we walk toward the SUV waiting for us at the gate, Mr. Liu points out another warehouse where water tables much like the ones used in Qingyuan are separating materials from shredded circuitboards and wires. The water is piped—at great expense—to the city's new, advanced wastewater treatment plant, he says.
Steps Toward Greater Sophistication
Despite the progress in evidence at the Linyi facility, much more could be done there and elsewhere in China to improve the handling of electronic scrap, a CRDC representative tells me, "but we are learning quickly." As if to prove it, we again drive past Meibu's small dismantlers and pull up to the security gate of a modern factory roughly 20 minutes away from the Linyi China Electronic Recycling Center. The sun has set, and the building's open bay doors cast a green glow on scrap televisions waiting to be recycled. They're stacked on a plot of land that, I am told, will soon hold a refrigerator dismantling plant.
Inside the building, masked workers in hard hats work quietly in a row beneath sodium lights, disassembling televisions moving past them on a conveyor belt. Another worker is loading the TVs onto the belt from a dump hopper. The space is vast and clean. Workers quickly sort the disassembled parts into their proper bins and shove them off to the side. Workers wear uniforms, and they work with an intensity hidden behind shaded safety glasses. This plant, which is almost certainly the most advanced e-scrap disassembly line in China, is a 2007 partnership between CRDC and E&E Recycling, a cooperative of Taiwan's 12 major appliance manufacturers formed in response to the island's development of strict electronics recycling standards in the late 1990s. CRDC's representatives assure me that the E&E process (partially developed in partnership with Adelmann, an environmental engineering firm based in Karlstadt, Germany) will set the benchmark for future Chinese e-scrap dismantling workshops.
Superficially, there's very little difference between how workers dismantle a television here and at the Linyi China Electronic Recycling Center. But this facility exhibits a much greater degree of organization, with each stage of the regimented process labeled—in English and Chinese. "Television Processing Line" leads to "CRT Removal," which leads to "Component Removal and Recovery." Perhaps the most unusual section of the line is unlabeled, devoted to cleaning CRT glass. There, a worker gently breaks already shattered CRTs with a hammer as they travel on a conveyor into a large dry washer. The washer violently shakes them to reduce their size and—more important—to remove adhesives, paint, and other contaminants.
At the other end of the machine, workers inspect the pieces as they emerge, hand-pick pieces that are still dirty, and send them back for reprocessing. The cleaned glass goes to a CRT glass recycler for remelting. Nobody says how many televisions this site processes, but I am assured that it runs three shifts and never lacks for material. It "always has people standing outside waiting in line with old TVs and fridges," I'm later told by someone associated with the factory.
The E&E plant in Linyi—like its plants in Taiwan—is designed to process washing machines, refrigerators, air conditioners, and PCs, but the other appliance lines were still being tested at the time I visited. A few refrigerators were waiting next to the "CFC Processing" sign, which is just down the line from the "Outer Shell Removal and Recovery" sign. Along the line were CFC removal equipment and a scale to weigh the refrigerators.
On the way out, we pass a dormant "Washing Machine Processing" line. In Taiwan, E&E shreds the washing machines for processing, but the Linyi facility might not replicate that process, a CRDC representative tells me. "Labor is cheap enough here that we can separate the machine components by hand," he says.
Driving back to downtown Linyi, we pass several of the multinational high-tech companies that are transforming the city into yet another thriving Chinese manufacturing town. Unlike Shanghai, Guangzhou, and the other Chinese boomtowns that preceded it, Linyi's high-tech manufacturing sector is growing alongside a high-tech recycling sector. To be sure, Linyi—and China—are far from matching the technological sophistication found in U.S., European, Japanese, and even Taiwanese e-scrap recycling plants. Then again, Japanese and European recyclers still send vast amounts of their e-scrap to other countries for processing. China is using its specific advantages—in particular, the prevalence of low-cost labor—to devise a distinctly Chinese method of handling the problem.
Indeed, viewed through the prism of just 20 years of industrial development, China's electronic scrap and other domestic recycling systems are receiving far more attention from a much higher level than those in the West and Japan did at a similar stage in their industrial development. To be sure, the electronics recycling systems are far from perfect. There are still electrical components that Linyi facilities can't use or process, many of which end up in the hands of the small-scale processors. But the same could have been said about CRTs, thin electrical wires, and stripped circuitboards before recent innovation and investment created these viable, profitable, more environmentally sound processing techniques. There's much to do, but much has already been accomplished as the future of e-scrap evolves in Linyi. •
Adam Minter is a journalist based in Shanghai, where he writes about business and culture for U.S. and Chinese publications and maintains a blog, www.shanghaiscrap.com. The first half of this article, "Scrap Made in China," ran in the March/April issue of Scrap.
With more advanced processing facilities and new laws in the works, China is taking steps to end the unregulated, small-scale recycling of its electronic scrap and white goods.