E-Recycling In China

China is creating a national recycling system for scrap electronics and appliances, a move that will affect recyclers around the world.

By Adam Minter

Hangzhou Keyun Metal Manufacture Co. Ltd. is located about two and a half hours south of Shanghai. Inside the company’s iron gates, there is a wide, paved loading area that is mostly empty except for piles of large burlap bags. These bags are bursting with old computer circuitboards that are destined for recycling here. “We buy and process 900 metric tons of PC boards per month, and we have the capacity to process 30,000 metric tons per year,” explains Danny Wong, purchasing manager for Hangzhou Keyun.
   Wong leads the way across the loading area and stops outside a warehouse where boxes of defective circuitboards are piled next to other boxes of defective vacuum cleaner parts. Next to them are boxes of rejected computer laptop frames complete with circuitboards and wires still attached. “Of course,” Wong states, “most of this material is forbidden—unless you have a license and a method for processing it.”
   Behind one building, several water tanks and two large, inclined vibrating tables sit under a sheet metal roof. At one end, a worker pulls circuitboards from a burlap bag and feeds them individually into a granulator that can reportedly process 400 kg an hour of the material. The resulting fiberglass and metal granulate is flushed with water and poured onto one of the vibrating tables. As the surface shakes, the material slowly separates into its fiberglass and metal constituents. These different streams are then directed into separate catch basins.
   Wong kneels and scoops a handful from the basin that holds the metal granulate. The pieces, which measure less than 2 mm, are mostly metallic orange with flecks of blue and green fiberglass. “It’s ninety-five percent copper,” he says, adding that Hangzhou Keyun’s process recirculates all water and emits no pollution.
   Across from the separation table, a hose discharges the fiberglass granulate into a holding pond. “The problem with circuitboards isn’t the metal,” Wong explains. “It’s what to do with the fiberglass.” To show what Hangzhou Keyun is doing with the material, he walks over to several pieces of drywall leaning against the plant’s fence. “This is one of the best ways that we’ve been able to develop,” he says. “We’ve also developed ways to make manhole covers and bricks.”
   Welcome to the future of legal, government-licensed electronic scrap recycling in China.
   More than a decade after acquiring an unwanted reputation as an international dumping ground for electronic waste, China is on the verge of developing a national recycling system for end-of-life electronics as well as appliances. In the past year alone, the Chinese government has taken several steps to encourage innovations in e-scrap recycling, such as adopting preferential tax policies for licensed e-scrap recyclers and those who are developing new methods of e-scrap recycling, building pilot e-scrap and appliance recycling centers, and altering regulations to enable licensed, environmentally secure recycling.
   “This is a national priority for China, and it has generated interest from the very highest levels,” explains Ma Hongchang, former division head for solid waste at China’s State Environmental Protection Administration (SEPA) and now a vice secretary at the Metal Recycling Branch of the China Nonferrous Metals Industry Association (CNMIA) in Beijing.
   Over the next 12 months, policies developed by four major Chinese government agencies—SEPA, the National Development and Reform Commission, the Ministry of Industry Information, and the State Technology and Science Ministry—will be implemented to meet China’s growing need to recycle end-of-life electronics and appliances. The Shanghai Science and Technology Commission, for instance, estimates that 300,000 televisions and 160,000 computers are discarded annually in Shanghai alone.
   Thus far, a significant percentage of electronics and appliances in China have been recycled in small factories and home workshops, many of which operate illegally and most of which have little regard for health, safety, or environmental protection. As a result, towns where such practices were common—like Guiyu in southern Guangdong province and Taizhou in Zhejiang province—have suffered serious environmental degradation.
   Notably, China’s new laws and regulations are not primarily designed to eliminate illegal e-scrap and appliance recycling—laws already exist for that purpose. Instead, the new steps seek to create a market and regulatory environment in which such facilities are no longer necessary or feasible. Thus, Hangzhou Keyun represents a first step toward China’s goal of creating the world’s most advanced “recycling economy.”

The ‘Illegal’ Effect
Wang Weiping, founder and general manager of Hangzhou Keyun and inventor of its circuitboard recycling system, was in his early twenties when China began to open its economy to the outside world. To capture some of the action, Wang bought a camera and set up a photography station at a scenic spot on West Lake in the city of Hangzhou, the capital of wealthy Zhejiang province. This work soon introduced him to the value of scrap. As he explains, “There’s silver left after you’ve taken photos, and that’s worth money.”
   In the mid-1980s, Wang met some U.S. tourists who were interested in finding Chinese buyers for old circuitboards. On impulse, Wang agreed to buy a container, but when it arrived, he realized that he had no method for recycling the material. After due consideration, he came up with a solution: “I went to the top of a mountain and I burned it.” Initially, this was an efficient, low-cost means of handling e-scrap, but ultimately the local government took notice. “Even ten kilometers away you could smell it,” Wang admits. “So I had to ask myself: How do you revalue the scrap without pollution?”
   In 1993, Wang formed Hangzhou Keyun Metal Manufacture Co. with the city of Hangzhou as a 50-percent partner. The company soon became a successful importer and processor of aluminum and low-grade copper. 
   Wang had the idea for his now-patented circuitboard recycling system when he founded the firm, but he could not implement the system because there was no way to license it.
   Another obstacle was the illegal e-scrap trade in Zhejiang, which was thriving in the nearby port city of Taizhou. There, illegal processors burned circuitboards, rendering Wang’s zero-pollution recycling system uncompetitive. According to Wang, illegal ways of processing circuitboards are five times more profitable than his system. “So that means we need volume, but it is difficult to obtain volume when we are competing against the illegal trade,” he explains. “Hopefully, government policy will be able to help us.”

Government Lends a Hand
Good news for Wang—the Chinese government is indeed taking steps to encourage the legal, environmentally sound recycling of electronics and appliances (which can include circuitboards). A major step, for instance, is the creation of pilot facilities for e-scrap and appliance recycling.
   One such facility is the Tianjin Waste Home Appliance Recycling Yard, which is one of four large-scale appliance recycling demonstration sites established in the past year. This operation is expected to pioneer new technologies and processing methods while also demonstrating that appliance recycling can be profitable without subsidies.
   “Right now we are focused on televisions, washing machines, and refrigerators,” explains Zhang Xizhong, director of the Beijing Zhongse Metal Recycling Institute, vice secretary of CNMIA’s Metal Recycling Branch, and technical director of the Tianjin appliance demonstration facility. “We dismantle, recycle the parts, and recover the CFCs.” It is a straightforward process, though there are problems. “Washing machines—especially imported ones—are difficult because they contain circuitboards,” he says. “Actually, the technical issues are quite easy. The hard part is collecting enough machines to recycle.”
   With an annual capacity of 330,000 appliances, the Tianjin facility is struggling to secure domestic supply. The problem is that—like Hangzhou Keyun—the facility is competing against small-scale recyclers whose unsafe and environmentally unsound methods of recovery allow them to pay much higher prices for scrap. More significantly, China’s lower living standards mean that appliances tend to be repaired instead of recycled. Machines that are retired typically fall into the hands of neighborhood peddlers who have little access or incentive to sell to a large-scale processor like the Tianjin demonstration plant.
   Thus, SEPA and other Chinese agencies are trying to close the small-scale recyclers who are believed to be the worst environmental offenders. This policy approach is nothing new: Beijing has long sought to impose restrictions on small operators in heavy industries with a history of pollution, such as paper, steel, and aluminum. Currently small-scale battery recyclers are a prime target. “If they handle less than five thousand tons annually, they won’t have the capital to facilitate new technology, so then they must close,” says CNMIA’s Ma Hongchang. According to Ma, there are more than 300 Chinese companies currently involved in battery recycling, but only four have the correct equipment to process batteries in an environmentally sound manner.
   In the past 15 years, the western media have documented the abuses against workers and the environment in such places as Guiyu and Taizhou. Recently, even the Chinese media have begun covering the situation, with Xinhua, China’s state-owned news service, stating that Guiyu’s illegal recycling workshops employ more than 60,000 workers. Some 88 percent of Guiyu workers reportedly suffer from skin diseases, neurological disorders, and respiratory and digestive ailments, according to a study by the Medical College of Shantou University in Guangdong.
   Because the illegal handling of electronics and appliances is wildly profitable, however, local government officials have often protected illicit operations against Beijing’s wishes. Thus, even as Beijing and international authorities condemn such facilities, they continue to operate on a limited scale, supplied by small domestic peddlers and smuggled material from Japan, the United States, and Europe.
   Chinese government efforts to control the smuggling of electronic and appliance scrap have been progressively successful in the past 18 months. Still, with increasing amounts of domestic scrap available to illegal processors, SEPA and other government agencies have recently taken more proactive approaches to address the problem.
   “In Guiyu,” notes Ma Hongchang, “the government is helping the small companies control the pollution. They are helping the processors adopt safe practices.” In a massive policy shift, SEPA and other government agencies have begun providing technical assistance to Guiyu’s small processors in return for environmental upgrades. As a result, 800 furnaces in Guiyu that had previously burned scrap have been closed this year, improving the city’s notoriously bad air.
   In addition, the Ministry of Industry Information has announced plans to transform Guiyu into a $240-million national electronics recycling demonstration center. Likewise, in Taizhou, the government is building an industrial park where the city’s small e-recycling companies will be gathered and given technical assistance. “Consolidation of small recyclers into parks where they can be provided assistance and oversight is a long-term goal and one that is already proving successful,” Ma states.

License to Recycle
China, through SEPA, has also developed new, general guidelines for licensing e-scrap and appliance recyclers. “Usually, there are very few specifics, only general directions,” explains Zhang Xizhong of the Beijing Zhongse Metal Recycling Institute. As an example, he offers the recycling of air conditioners. “You must take care to recover the CFC content,” he says, “but how you do that is basically up to you.”
   The new rules also provide a great deal of autonomy to local governments in granting licenses for e-scrap and appliance recycling operations. Offering a firsthand story, Danny Wong recounts Hangzhou Keyun’s quest for a license:
   Two years ago, the central government said it would be possible for Hangzhou Keyun to receive a license for its circuitboard recycling system. So the firm began the process of applying to SEPA for an e-recycling license, which included submitting paperwork on its system. Soon thereafter, the company was subjected to a series of five half-day inspections—some of which were surprises—by town, city, and provincial officials. “They were checking our equipment, our methods, the land, the water, the air,” Wong recalls. In November 2004, two weeks after the last inspection, Hangzhou Keyun received its e-recycling license from the Zhejiang Provincial Environmental Protection Agency. The company had to pay a fee equivalent to $2,500 to cover the lab costs of analyzing environmental data from its facility.
   Since then, Danny Wong has used the license to market Hangzhou Keyun’s services to the many international electronics and appliance manufacturers located near Hangzhou. His goal? To show his company as the environmentally secure destination for e-scrap. As he explains, “The international companies don’t want to sell 
to somebody who doesn’t have a license.” Though Hangzhou Keyun still competes for material with illegal operators in Taizhou, the license has enabled the firm to build a client list that reads like the inventory of an electronics superstore.
   As Hangzhou Keyun builds its business, Chinese government officials and others involved in scrap technology question whether the company’s low-tech recycling system is the long-term solution for scrap circuitboards. The problem is the fiberglass granulate, sighs Zhang Xizhong. “Even if there is a new way to use it like drywall or bricks, that doesn’t mean the use will be popular on the market.”
   As a possible long-term solution, Zhang points to Japan, where circuitboards are incinerated in sealed containers at specific temperatures. This process, which reportedly has limited emissions, recovers metals (including precious metals) and converts the fiberglass into compounds that can be used in copper smelting. 
   “Then,” Zhang says, “you have a far more complete system of recycling”—and a system that doesn’t require new uses for the fiberglass fraction.
   Currently, this advanced Japanese method is not being used in China. Hangzhou Keyun tried, and its towering smokestack is a monument to its failed attempt. “At a small scale, it just wouldn’t work,” says Zhang. Danny Wong agrees, explaining that the company “couldn’t control the emissions in a cost-effective way at the level we were doing it.”
   Thus, Hangzhou Keyun is content to continue basing its profitability on low-tech—and relatively low-cost—methods of upgrading recyclable materials. Not counting its time, the company’s overall capital investment in its circuitboard recycling system was $100,000. Despite this modest price tag, the system yields environmental dividends that would not be significantly improved by adding a multimillion-dollar, Japanese-style, high-tech system, Wong notes.

Regulating the Future
After touring the circuitboard granulating area at Hangzhou Keyun’s plant, Danny Wong leads the way into a warehouse where workers stand on green carpet and hand-process copper-clad laminate (CCL), tearing the copper sheeting from the fiberglass base boards. 
   In an adjacent warehouse, women sort, weigh, and cut the recovered fiberglass, preparing it for remelting. Next to them is a larger warehouse that is warmed by the intense heat of thermal presses. There, the recovered fiberglass is remelted to make new CCL base boards. “In other scrapyards, that fiberglass would probably be burned,” Wong say. “You might be breathing it.”
   In the end, Hangzhou Keyun remanufactures the CCL scrap into new CCL, which Wong admits is “not perfect quality. It is eighty-percent good, but our customers know that when they buy it.” The company’s modest-grade CCL and drywall may very well represent the near-term future of Chinese e-scrap recycling—as long as other, higher-tech solutions remain expensive and as long as manufacturers are not required to take responsibility for recycling their products.
   In the next 12 months, though, the Chinese government plans to implement new regulations that will—in the long term—put the onus for electronics recycling on the manufacturers of those products. The regulations are inspired by, and partly in reaction to, two European Union directives—the Waste Electrical and Electronic Equipment (WEEE) directive and the related Restriction on the Use of Certain Hazardous Substances (RoHS). These directives restrict the use of hazardous substances in manufactured goods and require manufacturers and vendors of electronic products and appliances to pay deposits to cover the cost of recycling their products.
   Like these directives, an early draft of the Chinese regulations proposed to levy a fee on all appliances manufactured, imported, or sold in China. This tax would have then been used to defer costs related to the recycling of the products. Industry objections to the fee prompted the government to propose a different regulation that would require manufacturers and vendors to take direct responsibility for the recycling of their goods (though the regulation would allow producers to outsource this responsibility).
   Though the implementation date of this proposed regulation is uncertain, major domestic and international manufacturers are already preparing. Qingdao Haier, China’s leading appliance manufacturer, is operating one of the four national appliance recycling demonstration sites. Also, Philips Electronics has established a recycling center for television tubes in China, with the facility capable of handling 7 million units annually.
   In the end, it is these multinationals—spurred by government directives in Europe and China—that may be the final, most important source of innovation for cost-effective, environmentally sound electronic and appliance recycling in China. “China is setting the guidelines,” observes Zhang Xizhong, “but it will not stand in the way of innovation. If something new and better comes along for e-scrap and appliance recycling, China will support it. Of that, you
can be sure.” 

Adam Minter is a journalist based in Shanghai, where he writes about business and culture for U.S. and Chinese publications.

Publisher’s Note: Recognizing the growing importance of electronics recycling around the world, ISRI’s board of directors recently approved a policy statement on electronics recycling to guide ISRI’s efforts in this area. To review the new policy statement, see the ReMA News section in this issue or visit www.isri.org/epolicy. For more information on ISRI’s activities regarding electronics recycling, contact Eric Harris at 202/662-8514 or ericharris@isri.org.