May/June 2011
ISRI’s convention made a triumphant return to Los Angeles after a 22-year hiatus, posting its second-largest turnout ever while drawing attendees from around the world.
If the success of ISRI’s 2011 convention and exposition is any guide, ReMA members agree with singer-songwriter Randy Newman: They love L.A. The convention’s return to Los Angeles after a more than two-decade absence—along with strong commodity markets, a growing global economy, and a lineup of can’t-miss speakers, sessions, and entertainment at an exciting new venue—drew near-record numbers of scrap industry participants to the Los Angeles Convention Center. The final tally of 4,830 attendees—second only to the 2008 convention in Las Vegas—included participants from 47 countries, 49 U.S. states, and the District of Columbia.
The airy, light-filled convention center gave attendees ample space to peruse the exhibit hall, bid on silent auction items, use the Cyber Café, visit the ReMA booth, and meet with friends and business associates in the ReMA Café. Just down the street, between the convention center and the J.W. Marriott headquarters hotel, was L.A. Live, the city’s new dining and entertainment complex. After hours, conference participants went there to attend sporting events or concerts, drink and dine at more than a dozen different restaurants and cafes, or even catch a movie or go bowling.
One highlight of the convention was the closing gala, “A Night at the Hotel California,” held at Club Nokia at L.A. Live. Don Felder, former guitarist of 1970s rock ‘n’ roll supergroup the Eagles, put on a high-energy show of Eagles classic tunes and a few other well-known hits. The audience could dance and watch the performance from a spot right in front of the stage, hang out at cocktail tables and the bar behind the dance floor, or enjoy the show from stadium seating on the upper level. In between the two stage-viewing areas was a swanky lounge with mood lighting and semi-enclosed seating areas. Before the show, guests enjoyed a buffet dinner catered by Wolfgang Puck.
The convention also featured keynote speakers Scott Waddle, former retired commander of the USS Greeneville submarine, and Stanley McChrystal, the retired four-star general who served as commander of U.S. and international forces in Afghanistan and led the Joint Special Operations Command. For the first time, ReMA provided simultaneous translation into Mandarin Chinese and Spanish of the keynote speakers and the spotlight sessions on the economy and several commodities.
Popular convention elements that returned this year included the Electronics Recycling Summit, a meeting of the Paper Stock Industries Chapter, and the Recycling Research Foundation’s third annual silent auction. The exhibit hall, with more than 45,000 square feet of large-equipment space and 265 exhibitors, had the array of companies showcasing cutting-edge equipment, services, and products that ReMA convention attendees have come to expect.
Here’s a look at highlights from some of the best-attended sessions at this year’s convention.
Mapping the Economic Landscape
This year’s ReMA spotlight on the economy gave both a domestic and international outlook, exploring how the latest economic trends could affect commodity markets. “The global economy is expanding, with emerging markets growing at a pace two to two-and-a-half times that of industrial countries, a trend likely to persist during the next decade,” said Lynn Reaser of the Fermian Business and Economic Institute at Point Loma Nazarene University (San Diego). As for the U.S. economy, she noted, better job growth, improving profits, and a lower dollar—which helps exports—will lead industrial production to rise about 5 percent this year.
Interest rates are undergoing a major diversion, with the Fed holding the line on them to date and emerging markets such as China, Brazil, and India fighting inflation. By the end of this year, “the Fed will be slowly taking the punchbowl away from this economy and hiking rates a quarter of a percentage point,” Reaser predicted. As various banks in the United States and worldwide start to boost their interest rates accordingly, Reaser expected that commodity prices—which soared last year—“will increase more slowly … and level off by the end of this year or early 2012.”
After noting recent unpredictable events such as the Japanese earthquake and unrest in the Middle East and North Africa, Jason Schenker of Prestige Economics (Austin, Texas) offered this opinion: “I think the dollar is on a one-way trend—downward.” The dollar did not get a “bounce” upward in the wake of the Middle East crises, which signified to Schenker that “the dollar’s role as [the destination of investors’] flight to quality is under severe threat, and that [the dollar] will never again be as strong as it is right now.” Metal markets responded equally irrationally to the Japan tragedy, he said. Usually metals prices rise after natural disasters, so “why should metal prices collapse when you see major devastation across major areas that need to be rebuilt?”
As for China, Shanghai-based journalist Adam Minter suggested that the central government’s authority might be much less than meets the eye. “It’s very hard for Beijing to make anything happen outside a 100-mile radius, especially farther south in the areas of Shanghai and Guangzhou,” he said. The government’s tightening on credit and lending, however, has transformed copper from commodity to collateral. Chinese traders now “can buy copper scrap as capital on some degree of credit from the United States,” he said, then immediately collateralize it. “Here’s a situation where the government is saying it’s controlling the lending,” Minter said, “but the Chinese businessmen are essentially creating a black market that could be very destabilizing for the local economy.” Minter counseled an adjusted view of China: “Audiences tend to overestimate and underestimate China, but I suggest keeping it in realistic terms,” he said. “Treat China as more of a very wealthy European country than as an Asian behemoth.”
Going forward, Reaser prescribed confidence mingled with caution. “The U.S. economy will continue to be very important, but you’ve got to monitor everything that’s going on in the world, connect the global dots, and bring them back to what they mean to your own company,” she said. “Interest rates are going to move higher, so obtain long-term financing, and—news flash—uncertainty and volatility aren’t going away.” Schenker also advised scrap recyclers to proceed with caution. “This industry has changed a lot in the last 10 years. There’s a lot of competition, a lot of consolidation, and people need to be aware of the risks in their own supply chain and where they can be mitigating those risks,” he said.
The Spotlight Spectrum
The L.A. convention continued ISRI’s tradition of providing spotlights on key commodity sectors, with the goal of keeping attendees up to date on market trends.
Aluminum. The aluminum market is seeing “exciting times again,” said Stephen Moss of Stanton A. Moss (Bryn Mawr, Pa.) at the aluminum spotlight. Prices are up from their February 2009 “abyss” of about 60 cents a pound, he said, and they’ve increased or held steady—declining no more than 1 percent—over the past nine months. But is the recent exuberance rational? The aluminum price pendulum has swung too far in both directions, said William Adams of BaseMetals.com (London). 2009 saw an excessive price correction, but the market’s fundamentals don’t support the current highs.
Adams attributed the recent aluminum prices to several factors other than supply and demand. First, investors wary of a falling dollar have sought alternatives, such as aluminum, that have an intrinsic value. Those investments—boosted by low interest rates—have “soaked up” much of the surplus, keeping it from reaching the market, Adams said. Such deals are a “distortion” of the market, he cautioned, and they might have serious consequences as quantitative easing comes to an end and interest rates begin to rise. That said, another factor, bottlenecks in getting aluminum out of London Metal Exchange warehouses, has the potential to slow a drop in prices when the money supply tightens.
Aluminum today is all about supply, Adams said. The cumulative surplus reached an estimated 3.7 million mt between 2007 and 2010, and both production and production capacity continue to rise, resulting in 7.4 million mt in visible stocks and an additional 3 million to 4 million mt held privately. “When you have high stocks and continuing surpluses, it’s hard to justify high and rising prices,” he said.
On the demand side, “demand prospects are good, but they’re unlikely to be good enough to account for the whole surplus before the whole surplus becomes readily available,” Adams said. Considering the relatively low per-capita aluminum consumption in the developing world, “there’s plenty of room for [continued] growth,” he noted. This year’s demand is estimated to grow 7.5 percent, which is well below last year’s 14-percent rate, but he attributed the high 2010 number to restocking, increased substitution, and a lag in scrap generation. Adams noted one demand caveat: China is working to curb rampant inflation, but if it “applies the economic brakes too hard,” the slowdown in production could damage world economic growth, with consequences for aluminum.
All told, from 2000 to 2010 supply grew at a compound rate of 5.3 percent compared with consumption at 4.8 percent. Adams said he expects supply to continue to outpace demand this year, resulting in another rise in LME stocks. Investor demand for commodities, cheap money, and an LME bottleneck can’t erase the oversupply problem—and if those factors continue to boost prices, they could encourage even more supply. Ultimately, if investors leave the aluminum market and metal availability increases, “prices are likely to fall to levels that prompt a supply correction,” he said. Thus, given the supply situation, he predicted aluminum prices would not rise much past levels seen in early April, potentially falling to around $2,200 a mt by year’s end.
Also participating in the aluminum spotlight was Maury Zimring of Coca-Cola Enterprises (Atlanta), who described the company’s sustainability goals. Coca-Cola aims to reduce its packaging impact both via new packaging designs (including a new aluminum bottle) and by recovering 100 percent of the volume of plastic and aluminum it puts into the marketplace. To boost recycling rates it has partnered with several companies and nonprofits to install more collection bins, increase awareness of recycling, and create opportunities and nonmonetary incentives for consumers to recycle. The company intends to use the existing recycling infrastructure to reach its goal, she noted.
Copper. As copper prices surpassed $10,100 a mt in mid-February, some market participants saw the red metal going higher, to $11,000; others viewed the high prices with concern, however, wondering whether the market had run ahead of itself. Such was the scene set at the copper spotlight, which examined key issues affecting the global copper and copper scrap markets. To frame the discussion, Joe Pickard, ISRI’s chief economist and director of commodities, noted that demand for refined copper exceeded global supply by more than 300,000 mt in 2010, even though copper production rose 4 percent, to a record 19 million mt. “Expectations for continued deficits are perhaps the key feature underlying the general bullish outlook for copper,” he said. “Demand is outpacing [supply] growth, and existing market conditions also attract investor demand.”
Pickard gave more detail about some of the factors boosting copper prices, such as increased demand from Asia in general and China in particular, ultra-low interest rates, constraints on new supply, increased urbanization in developing countries, and industrial recovery in the United States. Other factors that might hold down prices include China’s attempts to cool inflation by raising interest rates, rising energy prices, the end of economic stimulus packages, unforeseen geopolitical and economic crises, and the risk of substitution. Despite these uncertainties, the consensus is “generally bullish, with the Reuters average forecast for 2011 prices up to $9,844 a mt,” Pickard said.
Adding a consumer’s viewpoint, Gerd Hoffmann of Aurubis (Lünen, Germany), Europe’s largest copper producer, asserted that “there are short-term effects of high copper pricing, some of them positive, others not really.” On the plus side, high prices bring more copper scrap to market and increase profit margins, whereas the challenges of high prices for copper market participants include greater risk of material theft and steeper financial commitments. We see “competitors and business partners having financing difficulties, with high amounts of funds tied up in inventory or in business in general,” he said.
Long-term consequences of high copper prices include a shift in applications, more rapid substitution, and increased efforts to design out copper by miniaturizing products—“all of which will make scrap recovery more difficult,” Hoffmann said. “In the end there will be challenges not only for market people, but for metallurgists to design the recycling of the future, and that will be induced or speeded up by the high price for copper now and as high as it may get in the future.”
Sal Davi of PTP Consulting (Avon Lake, Ohio) added to the copper discussion by reviewing how bismuth could potentially affect the copper market. Manufacturers started using bismuth to replace lead in their products in an effort to head off regulations that might ban the use of lead in their products, he explained. Bismuth presents some challenges, however, including that it’s “expensive—about 10 times what lead costs; it’s hard to alloy; and, ironically, it’s mined as a byproduct of lead.” The main drawback, however, is that bismuth alloys “are made from scratch using virgin stock, which means materials bearing bismuth cannot enter the red metal recycling stream as it currently functions.” Bismuth isn’t going away, Davi maintained. It “will continue to be seen as the future, as we phase lead out, but what to do with the scrap? What will all of you do to answer this challenge?”
Ferrous. Randy Ehret of The Timken Co. (Canton, Ohio) began the ferrous spotlight by answering four questions about the ferrous scrap and steel industries.
Are scrap prices a leading indicator of steel prices? “In constrained steel markets, scrap determines how low prices can go,” he explained. “When steel markets are robust, mills order scrap in larger quantities, therefore driving up prices. So, yes, scrap prices are a leading indicator.”
Are steel imports a threat as steel prices rise? “In the main, the U.S. steel industry is vulnerable to imports,” Ehret said. “We have the scrap in our country, which gives us a cost advantage, and domestic markets are rebounding. I see a bright future for the steel industry, even with competitive global markets.”
Will scrap industry consolidation continue? Though new scrap companies continue to form, Ehret expects even more consolidation, predicting that “the top 10 scrap companies will continue to grow their market share.”
Will and should steel mills continue to integrate backward into the scrap industry? Ehret cited the natural synergies of such arrangements, including the ability for mills to process internally generated scrap, transportation and inventory savings, and the flexibility to better address potential scrap scarcities and price hikes. That said, “Timken would prefer to invest its capital in its core competencies,” he said, noting that “the attractiveness of backward integration lessens” when scrap processors support local mills with good service, reliable supply, and competitive prices. “If any of those three aspects is threatened,” he said, “mills will invest in scrapyards.”
Turning to steel market trends, Patrick McCormick of World Steel Exchange Marketing (Englewood Cliffs, N.J.) maintained that all players along the steel supply chain are “concerned about price volatility. … With the change of iron ore benchmark pricing to shorter terms—such as quarterly and, in some cases, monthly—price volatility is likely to get worse before it gets better.”
U.S. steel shipments rebounded 35 percent in 2010, but this country now accounts for only 6 percent of global steel production, McCormick said. The United States retained its position as the leading ferrous scrap exporter for the fourth consecutive year, with Turkey, South Korea, and China the leading importers. In terms of global steel production, China is on track to produce 700 million mt a year, McCormick said. The question is whether China will continue producing 90 percent of its steel in basic oxygen furnaces or install more electric-arc furnaces, which would increase its demand for ferrous scrap. If China boosts its EAF production, “we’re going to be very close to the obsolete [ferrous scrap] capacity line,” he said. John Harris of ArcelorMittal Canada (Hamilton, Ontario) said China now is performing “a sort of a stutter step. They’ve got some financial issues, they’re tightening up their credit dynamics, and they’re changing their platform again. They used to sell their steel direct to the market, but now they’re going back to selling through traders.”
Looking at the NAFTA market, Harris noted that steelmakers in Canada, Mexico, and the United States had operating rates of 70 percent in 2010 and produced 86 million mt of steel, well under their operating capacity of 113 million mt.
Nickel and Stainless Steel. Signs point to continued demand growth for nickel and stainless steel, which should bode well for scrap processors and traders, according to the panelists at the nickel and stainless spotlight. Concerns about substitution and excess U.S. mill capacity paled in comparison with the presenters’ overwhelmingly positive outlook regarding the essential role of nickel and stainless steel in future economic development.
Forecasting a 2011 average nickel price of $30,725 a mt and a 2012 price of $37,500 a mt, Jason Schenker of Prestige Economics gave the rationale for his firm’s “very bullish” outlook. Demand for nickel is reducing inventories, he said, and that demand will continue to grow along with the global economy, which should expand at a healthy 4.5-percent rate this year. The central banks’ gradual increase in interest rates won’t seriously dent liquidity for some time, he added. A weak U.S. dollar that carries the burden of $17 trillion in federal, state, and municipal debt is likely to get even weaker, which also will boost commodity prices, he said.
The ongoing unrest in Arab countries and the Japanese earthquake, tsunami, and nuclear crisis are likely to keep oil and natural gas prices high, Schenker said, creating incentives for more oil exploration and investment in alternative energy, both of which should increase demand for nickel. The metal is essential to the stainless steel used in offshore drilling facilities, pipelines for oil and natural gas, solar panels, hybrids of lithium-iron and nickel-metal-hydride batteries, and more, he pointed out.
On the supply side, no new sources of primary nickel are in the works, Schenker said. With total global nickel reserves estimated at 74 million mt, “at current rates of consumption, we have less than 50 years of [primary] nickel left. That’s not a lot.” Further, some Japanese scrap might be removed from the supply chain due to radioactive contamination. Considering those factors, “I have trouble being bearish and seeing $2,000 nickel ever again,” he said.
As nickel prices rise and supplies shrink, will manufacturers substitute low-nickel grades of stainless for high-nickel grades? In the United States, where substitution was possible, such as in consumer products, it has already happened, suggested George Komporlis of Millenia Metals (Rochelle Park, N.J.). India, which has a much higher per-capita use of stainless, can use 200-series and 400-series grades for many of its applications, Komporlis said, but that’s less likely in the high-temperature, high-pressure applications more prevalent in the United States and Europe. Alasdair Gledhill of ELG Metals (McKeesport, Pa.) said he expects to see more substitution, which is a challenge for stainless scrap processors. Companies such as ELG must compensate by finding better, high-nickel scrap units to “bleed out” those high residual elements, such as manganese and sulfur.
Driving the nickel market today are not just supply and demand fundamentals but also what happens on the commodities markets, the panelists said. With exchange-traded funds, ordinary investors can buy nickel without taking physical delivery. They might be a new type of speculator, but “this market has long seen people who buy when [prices are] down and sell when up,” Schenker said. Processors mitigate their price risk by hedging, Gledhill said, whereas domestic mills do so via a surcharge. The result can be more volume volatility, he said, “to the point where it’s harder and harder to plan on business—on purchases and sales.” Though commodity investors affect the nickel market, Komporlis and Schenker said they still believe the buyer sets the price—that scrap is “bought, not sold.” Gledhill had a different perspective, pointing out that scrap is not only sold, “it can be sold twice: It’s usually sold at the moment it’s bought to minimize the price risk … [then] eventually you’ll sell your pile to the consumer.” Moderator Barry Hunter of Hunter Alloys (Boonton, N.J.) emphasized the role of the wholesaler, which is always a viable market despite the volatility of the mills, he said.
With four major domestic stainless mills now operating, Hunter wondered whether the United States will become a net importer of stainless scrap. The panelists suggested that could happen if U.S. per-capita consumption of stainless products increases or if China becomes a net importer of finished goods. If Asian countries continue their rapid economic growth and demand increases in the United States, West Coast scrap processors might see a “tug of war between exporting [scrap] in a container to Asia and sending it in a railcar over the Rocky Mountains,” Gledhill said.
Paper. The paper industry has faced stiff competition in recent years from new electronic media devices, prompting Roman Hohol of AMEC Americas (Oakville, Ontario) to ask at the paper spotlight whether such devices signify the “beginning of the end” for graphic paper demand. From 1950 to 2000, graphic paper demand in North America quadrupled despite the introduction of the Internet and the growth in electronic devices such as personal and business computers, televisions, and mobile phones, Hohol noted. From 2000 to 2010, however, graphic paper demand dropped 34 percent against tremendous growth in electronics—especially Apple products—and households with broadband Internet, he reported.
Paper recyclers should worry about the impact of new technology on their industry, Hohol said, citing a report in the Economist that the iPad could bring about a wholesale switch to digital delivery for magazines, newspapers, and books, allowing publishers to cut costs by eliminating their printed products. Newspaper and magazine advertising revenue and circulation generally are declining, in part because “advertisers have many more places to put their money,” he stated. “The glory days of the paper industry are essentially over.”
Looking at the U.S. scrap paper market from 2000 to 2010, Greg Rudder of PPI Pulp and Paper Week (San Francisco) noted that mill consumption declined 12 percent, or 4.5 million tons, due to industry restructuring and machine shutdowns. In that same period, new demand for U.S. recovered fiber rose 5.5 million tons, from 46.7 million to 52.2 million tons, thanks mainly to the export market, which doubled to reach 20 million tons, he said.
Regarding U.S. production of paper and paperboard from 2000 to 2010, the packaging sector declined 7 percent, while graphic paper—including newsprint, uncoated freesheet, and coated printing/writing paper—fell 22 percent, Rudder said. Tissue, uncoated mechanical, and bleached paperboard were the only U.S. sectors to grow in the past 10 years.
Looking at U.S. paper and paperboard output, which includes production and shipments, most grades improved in 2010 from the lows of 2009, but they still were down from their 2008 levels, Rudder said. Compared with 2008 figures, U.S. output in 2010 was down for newsprint 25.8 percent; uncoated mechanical, 8.8 percent; coated papers, 8.9 percent; uncoated freesheet, 13.5 percent; tissue, 0.7 percent; kraft linerboard, 2.7 percent; super-calendered medium, 6.5 percent; and bleached paperboard, 3.7 percent, he reported. Recycled paperboard was the only grade that remained the same in 2008 and 2010.
In the past four years, China’s overall scrap paper consumption grew 26 percent, from 50.7 million mt in 2007 to 63.8 million mt in 2010, and its demand is expected to continue rising. “The big question, though, is how much of that recovered paper will China import, and how much will it gain from its own infrastructure?” Rudder asked. While two out of every three tons of U.S. recovered paper goes to China, he noted, about 86 percent of the increase in China’s scrap paper consumption from 2007 to 2010 came from its domestic recovered paper collection, he noted.
Plastics. Since the 1960s, plastics production has grown 6 percent a year, compared with 2 percent for steel and 3 percent for paper. That rapid growth led plastics production to pass steel production on a volume basis in 1989, said Mike Biddle of MBA Polymers (Richmond, Calif.) at the plastics spotlight. The plastics recycling industry began with low-quality applications and steadily has moved up the value chain to provide feedstock for home and garden products, automotive components, and “appearance parts” in computers, consumer electronics, and appliances.
The recycling rate of durable plastics—those commonly used in electronic products and automobiles—lags behind rates of other materials due to a lack of sufficient recovered quantities, Biddle said. Though the United States has large “above-ground mines” of recyclable durable plastics, the lack of an adequate collection and aggregation infrastructure is preventing the recycling of plastics from the majority of end-of-life electronics, while regulatory barriers are hindering the recovery of plastics from shredded vehicles, Biddle noted. ReMA is addressing both issues, he said, expressing hope that these challenges will be resolved soon, thus facilitating the recycling of billions of pounds of durable plastics each year.
On the technical front, “it’s not easy” to process durable plastics, Biddle noted, especially when such plastics are in mixed streams. “The first part is separating the plastics from all the non-plastic materials, but the real hard part is separating the different plastics, not only by type but by grade,” he said. Despite those challenges, the durable plastics recycling industry is “poised to take off on a very grand and global scale,” Biddle said.
Turning to thermoplastics, Chase Willett of Chemical Market Associates (Houston) noted that all thermoplastics—such as PET, HDPE, PP, PS, LDPE, and PVC—are recyclable, but some—such as PET, HDPE, and PP—“are recycled far more than others.” PET and HDPE go into many blow-molded packages, including bottles for detergent and milk and other beverages, and they’re easy to recycle. “That’s because they’re relatively identifiable and relatively easy to separate,” Willett said, adding that “it’s easy to educate consumers and workers in the plant about them.”
Though Biddle spoke of the potential of recycling durable plastics from automobiles, Willett envisions that source as the next frontier for recovering non-durable plastics, too. “An automobile has almost every type of plastic you can imagine in one way, shape, or form,” he said. “There’s a lot of PP in body parts and interior panels; a lot of nylon in products that go under the hood and carpets; PET in carpets, head liners, and truck monitors; expanded PS foam for insulation—and the percentage of plastics will increase as crude oil prices go up.”
Electronics. The electronics recycling industry faces several challenges, including a lack of public understanding about the business, confusing commodity definitions, at-capacity smelters, and inconsistent electronics recycling standards and regulations, said Graham Davy of Sims Metal Management/Sims Recycling Solutions (Stratford-upon-Avon, England) at the spotlight on electronics.
The United States is the largest single market that doesn’t have a nationwide approach to electronics recycling, Davy noted. Currently, state take-back laws cover 61 percent of the U.S. population, and they’ll cover 74 percent by 2013, he said. That’s an inefficient approach, he asserted, and a sign of the lack of leadership on this issue on the federal level. The United States should embrace a nationwide public policy for electronics recycling, he said. “Good regulations and robust enforcement is the only solution for a level playing field for fair competition. That’s all the responsible recycling sector wants.” Consumers also must accept their part in supporting the growth of e-recycling, Davy said. To him, that acceptance includes a recycling fee that manu-facturers collect and manage as required. “The reality is we’re paying for this stuff to be recycled,” he said.
In addition to lacking a sustainability agenda and an overarching processing standard, the United States has no best-practice mandate and no real downstream accountability, Davy said. Sustainable recycling creates long-term employment growth, drives innovation for local solutions regarding waste, improves processes, and maximizes resource recovery and reuse. Davy cautioned, however, that “sustainable recycling doesn’t come cheaply. It all comes down to how sustainable a recycling structure you want.” For now, he sees legislation continuing to evolve and frustrate recyclers, and he expects the e-recycling industry to consolidate further.
Tires and Rubber. Recycled rubber from scrap tires continues to find success in a variety of applications as described by panelists on the spotlight on tires and rubber. In the past 13 years, California has recycled about 4 million scrap tires into tire-derived aggregate for 13 civil engineering projects such as covering embankments, drainage, landfill projects, landslide repair, and vibration-dampening barriers, noted Stacey Patenaude of CalRecycle (Sacramento, Calif.). TDA solves engineering problems and “it’s cheaper than many of the alternatives,” she said.
ACI Plastics (Flint, Mich.) makes products that combine plastics with powdered scrap rubber, even though doing so is “problematic” because the two materials “don’t really like each other,” said the company’s Scott Melton. Why do it, then? Because the rubber reduces the amount of plastics needed. “You can still find PP and PET pretty easily out there, but world production has declined and prices are going up, while rubber powder is still relatively inexpensive,” Melton said. “If you can add [the rubber] in at 20 percent or higher, you make a lower-cost product and get more out of your plastics.” PP, the best match for rubber, goes into flower pots, floor tiles, industrial mats, and vehicle grilles, he noted, while PET is used with rubber mostly for smaller packaging products and some automotive aftermarket components. Ethylene-vinyl acetate, or EVA, can be mixed with powdered rubber to create industrial tires, and thermoplastic elastomers—which already include some rubber—go into floor tiles and anti-fatigue mats.
Scrap rubber also is the raw material for Eco-Bloks. These 20-pound to 30-pound blocks, which measure 2 feet by 1 foot by 6 inches, address “two pretty significant problems—they use up lots of tires, and they replace sandbags, which break, create pollution, and eventually must be replaced,” said Patrick Horan of Eco-Blok (Newbury Park, Calif.). In the beginning, Eco-Bloks had to overcome the perception of being a low-tech, low-value product, but the original “stackable, replaceable, reusable” Eco-Bloks succeeded enough to spawn several successful spinoffs for the company: Filter-Bloks, which back up dirt and debris but allow water to pass through, and the Ballistic Absorption Barrier System, which is used for blast-absorption barriers at checkpoints, embassies, and other places with security risks, Horan said.
E-Recycling at Home and Abroad
ISRI conventiongoers didn’t have to leave their seats to examine the electronics recycling industries of China, India, and Malaysia, thanks to the U.S.-Asian Electronics Recycling Summit. Jinhui Li of Tsinghua University (Beijing) reviewed the state of end-of-life electronics regulation in China. The country began regulating e-scrap in 2003, and its “old for new” program took effect in 2009, offering citizens a 10-percent rebate when they trade in old electronic products for new ones. Beginning Jan. 1, 2011, the country’s Regulations for the Administration of Recycling and Treatment of Waste Electric and Electronic Products took effect. Those rules regulate the recovery and disposal of electric and electronic products, facilitate the comprehensive use of resources and development of China’s recycling economy, protect the environment, and safeguard human health, Li said. The regulations also established a fund to support recycling and provide treatment-fee subsidies and require the provinces to develop plans for handling end-of-life electronics.
China generated about 3 million tons of domestic electronic scrap in 2010—in addition to the e-scrap that entered the country illegally, Li said—and it expects to generate about 3.5 million tons in 2011. The country’s ongoing e-recycling challenges include how to recycle CRT glass and expand the number of trained workers, he said. The country has a range of facilities—small, midsized, and large—that dismantle end-of-life electronics, including demonstration projects at the national level, he noted. “Official and non-official enterprises co-exist.” Going forward, China seeks to move away from small, informal dismantling workshops to professional dismantling facilities. Opportunities exist for operators who obtain permits and use best practices and technology to receive financial support from China’s electronics recycling fund, he said.
India is still in its infancy regarding e-recycling, said Shubhra of the Indian Ministry of Commerce & Industry (New Delhi). The country generates about 140,000 mt of e-scrap annually, though that amount could rise significantly due to a recent surge in the purchase of domestic household electrical and electronic appliances, she said. India regulates end-of-life electronics through its foreign trade policy, hazardous waste rules, and new rules for managing and handling e-scrap. Indian companies can only import used electronic consumer items with specific authorization, she noted. Under India’s hazardous waste rules, electronic scrap entities must register with the pollution control board. Though most Indian enterprises just dismantle the equipment, more sophisticated operations are emerging, spurred in part by a 25-percent government subsidy for new plants. On the downside, India lacks a system for collecting and tracking end-of-life electronics, and it is learning slowly about e-scrap hazards, she noted. Support and technology expertise from developed countries will help India move forward, she added.
Malaysia generated about 700,000 mt of e-scrap in 2008, and it expects that figure to reach 1.1 million mt by 2020, said Rahman Awang with Malaysia’s Department of Environment (Putrajaya, Malaysia). Malaysia has regulated electronic scrap since 2005 through its environmental quality regulations. At the national level, generators of electronic scrap must notify the DOE of the tonnage they generate. To recycle the material, recovery facilities must obtain licenses and dispose of residues at DOE-approved sites. In 2008, the country published its Guidelines for the Classification of Used Electrical and Electronic Equipment in Malaysia to facilitate the management of end-of-life electronics. The guidelines categorize and characterize e-scrap, and they outline requirements for importing used electronics for direct reuse. Malaysian companies can’t import equipment for refurbishment and reuse that was manufactured more than three years ago or any electronic scrap destined for recovery or disposal, Awang noted. The country is finalizing its electronics take-back law and is working to encourage industries to implement reduce, reuse, and recycle practices to reach a recovery/reuse rate of 50 percent by 2015 and 70 percent by 2020.
On the processing side, Malaysia currently has 152 DOE-licensed e-scrap recovery facilities: 132 for partial recovery, which includes crushing, segregating, and picking the material, and 20 for full recovery of material, Awang said. Because Malaysia labels the products from partial recovery facilities “scheduled waste,” those products must go to full recovery facilities, which mostly use chemical processes such as electrolysis to extract metals, including precious metals.
Assessing the State of Electronics Recycling. This spring ReMA conducted a comprehensive survey of the U.S. electronics recycling industry, and it shared preliminary results of the survey at the convention to provide a snapshot of the industry. The initial report contained information from 174 participants, encompassing electronics recyclers (59 percent); scrap recyclers (16 percent); and original equipment manufacturers, nonprofits, and others. The majority of the companies surveyed have been in the e-recycling business fewer than 15 years, most employ 10 or fewer employees, and most said they collect and manually demanufacture electronics, provide recycling services, and/or sell equipment or parts for reuse. About half of their sales come from selling commodity-grade scrap, the survey notes. The smaller companies process less than 500 tons of electronics a year, while the larger companies process 5,000 to 10,000 tons, of which the majority is computer equipment. Most of the companies surveyed receive the lion’s share of their material from the business and commercial sector. About 45 percent of the responding companies have some type of certification, of which ISO 14001 tops the list (64 percent), followed by ISO 9001 (44 percent), R2 (38 percent), and R2/RIOS (22 percent). Challenges for companies include the cost of operations, certification, and markets for their products, while industry challenges include CRT glass markets, legislation and regulations, and illegal operations. In 2010, the industry, which consists of fewer than 2,000 facilities, processed an estimated 3 million to 4 million tons of electronics, earned $5 billion, and employed 30,000 full-time workers. ReMA expects the final survey results to be available in the coming months.
Also speaking at the state of the industry session was Jeremy Gregory of the Materials Systems Laboratory at the Massachusetts Institute of Technology (Cambridge, Mass.), who provided information on his research-based projects for tracking the flow of electronics worldwide. This approach would help regional policymakers and regulators understand which products and materials are most challenging to process domestically and which countries need help to foster responsible processing industries, he said. The information also would help recyclers and original equipment manufacturers understand regulatory constraints, material flows, economic incentives within the system, and the overall market. Barriers to such research include inconsistent definitions for categorizing and labeling used electronics and components as well as inconsistent definitions of downstream processing and uses.
Exploring New Niches
The ReMA convention offered a series of workshops on how scrap recyclers can diversify their operations beyond the commodities they traditionally handle. At “How to Make Money in Paper,” Bret Ewer of Pacific Steel & Recycling (Great Falls, Mont.) and Marty Davis of Midland Davis Corp. (Moline, Ill.) told attendees they most likely have the basic equipment—such as a two-ram baler, forklifts, and trucks—and the warehouse space to get started in paper recycling. Recyclers new to the paper niche should expect to encounter common scrap paper grades such as old newspapers, old corrugated containers, and sorted office paper, Ewer said. Potential supply sources include municipal curbside collection programs, industrial accounts, and the public. Davis advised recyclers to pay attention to materials their current customers are discarding or have lying around their facilities because those materials—such as paper—could become profitable new commodity streams. “This is one more item they can bring to you,” Ewer said.
One company that has expanded beyond scrap metal to recycle paper is Tri-State Iron & Metal Co. (Texarkana, Ark.). The company started recycling paper in 1991 by purchasing OCC to keep its two-ram baler busy, said the company’s Haley Glick. As that side of the business grew, the company constructed a warehouse for paper, which it now processes with a single-ram Harris baler. The company focuses on a basic grades such as OCC, ONP, SOP, sorted white ledger, and mixed paper. Glick also described how her company collects scrap paper, such as by providing a bin with separate slots for newspapers, magazines, office paper, and other grades that encourages customers to pre-sort the material.
Another workshop—“Electronics Recycling for Scrap Processors”—provided basic information about handling electronics. Joe Clayton of Synergy Recycling (Madison, N.C.) described how traditional metal recyclers can collect, sort, stack, and transport electronics they receive so they maximize the material’s value and minimize their risk. He reviewed the storage and transportation requirements under the R2 standards, stressing the importance of handling electronics differently than traditional scrap. If possible, recyclers should segregate the electronics material they receive, stack it neatly and shrink-wrap it on pallets, and store it in a separate vehicle or trailer prior to shipment, he said. “One of the most important things you can do is to use enough shrink-wrap” because the wrap holds the material tightly and provides extra protection if the pallet is dropped, he noted.
Tracey Blaszak of Arrow-Intechra (Ridgeland, Miss.) addressed downstream due diligence for electronics recycling, focusing on regulated materials such as CRT monitors and mercury-containing devices. Recyclers must handle such materials carefully because of the risk for fines, compromised data, and employee safety, among other concerns. They should begin by reviewing local, state, and federal e-recycling regulations to protect themselves and their downstream partners, Blaszak said. She also recommended achieving certification to ISRI’s Recycling Industry Operating Standard to reduce risk and promote best practices.
Ben Harvey of E.L. Harvey & Sons (Westborough, Mass.) closed the session by providing a scrap processor’s perspective. When Massachusetts banned CRTs from land disposal in 2000, E.L. Harvey began collecting them, Harvey said, reasoning that if another recycling firm collected the electronics, it might encroach on his company’s customers and existing commodities. “Make your customers aware that you will take this material—whether they bring it to you or whether you pick it up,” he said. “It protects your customer base.” E.L. Harvey provides an electronics drop-off area for customers to keep the material separate from its other materials. The company sends the electronics to a specialized recycler it audited for quality assurance.
—Theodore Fischer, Kent Kiser, Diana Mota, and Rachel H. Pollack
Lessons in Leadership
ISRI called on two military leaders to headline the general sessions at itsLos Angeles convention, leading off with Scott Waddle, retired commander of the USS Greeneville nuclear-powered submarine. Waddle was directing the submarine on Feb. 9, 2001, when it rose from the water off the coast of Oahu, Hawaii, and collided with the Ehime Maru, a Japanese fishing trawler. Nine people on that boat died in the accident, leading to Waddle’s discharge and thrusting him into a media hailstorm. Instead of running from the incident, he accepted responsibility for the tragedy. Everyone suffers setbacks in life, he told the ReMA audience, but it’s how you respond to them that defines your character. Being accountable for one’s actions is one key tenet of good leadership, he stated. Sharing other lessons about leadership, Waddle maintained that the best leaders lead by example, invoke exacting standards, listen, communicate effectively with a sense of purpose and meaning, foster a climate of trust, and improve the quality of life for their subordinates.
ISRI’s other general session speaker—retired four-star general Stanley McChrystal—continued the leadership theme, sharing stories and lessons from his 34-year military career, which included serving as commander of U.S. and international forces in Afghanistan. “Leadership is at the core of everything we do,” he said, comparing a team with good leadership to a piece of plywood. Plywood consists of thin layers of wood that are weak by themselves but strong when bonded together. In the same way, people can be weak individually but strong when bonded together by good leaders, he said. In his view, leaders are relentlessly focused, fearless, capable of changing, and focused on building trust. “Leaders become a product of everything they’ve seen and done,” McChrystal said. “If you’re a leader, you’re going to get some scars, and those scars are the experiences that can help you be a better leader.”
ISRI Honors Three Industry Veterans
Harry Heinkele, Ray Alpert, and Jake Farber received ISRI’s Lifetime Achievement Award at the April 7 opening general session of the association’s convention in Los Angeles.
Heinkele began his career in the metals industry in 1955 with American Metal Co. (New York). After other positions with Continental Ore Corp. and National Lead Co., both in New York, he went to work in 1980 for Commercial Metals Co. (Dallas), starting what would be a 24-year career with the company. CMC selected him as the first president of its Secondary Metals Processing Division, a position he held until his retirement in 2004. Heinkele served in numerous ReMA leadership roles, including chair of the environmental and finance committees, trustee of the insurance group, and member of the national board of directors. ISRI’s Gulf Coast Chapter recognized Heinkele in 2005 with its Israel Proler Award for his decades of contributions to the industry.
Ray Alpert and Jake Farber worked as partners in Alpert & Alpert Iron & Metal (Los Angeles) for more than 50 years, though they came into the scrap industry from different backgrounds. Alpert was born into the Alpert & Alpert family business, whereas Farber joined the company after marrying Alpert’s sister, Janet. After graduating in the first law school class at the University of California-Los Angeles, Alpert entered the family scrap business and teamed with Farber over the decades to build the firm from a single operation to a multi-location, 400-employee corporation with scrap processing operations, two aluminum smelting facilities, and a strong presence in international trade. Both men have been active volunteers in their local Jewish communities. Farber also rose to the top ranks of scrap industry associations, including serving as president of the National Association of Recycling Industries—an ReMA predecessor—from 1978 to 1980 and as two-term president of the Bureau of International Recycling (Brussels) from 1987 to 1991. For his industry service, the Philadelphia Metals Association honored Farber with its Phoenix Award in 1989.
Turbine Manufacturer Earns DFR Award
ISRI selected Wind Simplicity (North York, Ontario) as the recipient of its Design for Recycling® Award for its Windancer compact wind turbines. The company, founded in 2004 by father-daughter team Alfred Mathieu and Sharolyn Vettese, manufactures what it calls “revolutionary” horizontal-axis wind turbines that are quiet and highly efficient. Its turbines allow users to generate clean, free electrical energy wherever there are good wind resources, and the products are designed to be completely recyclable at the end of their useful lives, the company says. At right, ReMA Chair John Sacco presents the DFR award to Vettese.
Fundraising for a Good Cause
Sure, the ReMA convention is incredibly busy for attendees and exhibitors alike, but one company—iScrap App (Rockaway, N.J.)—made time to support a good cause. The company hosted a charitable event April 7 to raise funds for St. Jude Children’s Research Hospital (Memphis, Tenn.). The “iScrap for Kids” silent-auction event, held at the ESPN Zone at L.A. Live, raised $2,640 for the hospital, which seeks to find cures for children with cancer and other catastrophic diseases through research and treatment. Sponsors of the event included Scrap, Pascap Co. (Bronx, N.Y.), Bowe Knives (Bettendorf, Iowa), Peak Seven (Deerfield Beach, Fla.), Recycling Today Media Group (Richfield, Ohio), and others.
Tire Recycler Gleans Service Honor
ISRI’s Scrap Tire Processors Chapter recognized Gary Champlin, general manager of Champlin Tire Recycling (Concordia, Kan.), at the ReMA convention with its Service to Industry Award for his work to improve and promote the scrap tire recycling industry. Champlin, a 19-year veteran of the tire recycling business, has served as chair of ISRI’s tire and rubber division and as a member of ISRI’s government relations committee, leadership committee, climate change task force, and national board of directors as a division director. He also is a member of the ASTM International (West Conshohocken, Pa.) committee that writes national standards for playground surfacing and serves or has served in various capacities for the United Tire Recyclers (Ballico, Calif.), the Kansas Organization of Recyclers (Topeka, Kan.), the Mid-America Tire Dealer Association (Topeka), the Kansas Landfill Association (Topeka), and the Cloud County [Kan.] solid waste committee (Concordia). Champlin is the fourth recipient of this annual award. Above, Champlin accepts the Service to Industry Award from ReMA Chair John Sacco and Kip Vincent of Colt (Scott, La.), president of the Scrap Tire Processors Chapter.
Silent Auction Raises Record Funds
The Recycling Research Foundation raised a record $22,255 at its third annual silent auction, held April 6-8 at the ReMA convention. The auction featured 27 items, many of them artworks or vacation packages. The two prizes that raised the most money, $3,850 each, were the Los Angeles Convention and Visitors Bureau’s donation of two tickets to either the Grammy or the Emmy award show, including room and board, and a tarping system from Roll-Rite (Alger, Mich.). The proceeds will fund recycling-related research projects and scholarships for graduate students studying in fields beneficial to the scrap recycling industry. RRF thanks individuals and companies for their donations and bids, which helped make this its highest-grossing silent auction. For more information on RRF, contact Tom Crane, 202/662-8536 or tomcrane@isri.org.
A Sincere Thanks
ISRI appreciates the support of companies that sponsor events and items at its annual convention. This year, the following 13 companies deserve recognition for their generosity, which helped make ISRI’s Los Angeles convention a memorable occasion.
Allan Co.: paper spotlight
Alpert & Alpert Iron & Metal: Cyber Café
Atlas Metal & Iron Corp.: exhibit hall map
Coca-Cola Recycling: nonferrous hospitality area
Company Wrench: aisle signs
Harris: convention program
RecycleGuard®: opening general session
Scrap: tote bag
Scrap Trading: pocket schedule
Sennebogen: highlighter pen
Sierra International Machinery: closing gala
Terex Fuchs and Evermore Recycling: convention lanyards
Tung Tai Group: copper spotlight
ISRI’s convention made a triumphant return to Los Angeles after a 22-year hiatus, posting its second-largest turnout ever while drawing attendees from around the world.