January/February 1989
In spite of declining precious
metal yields in recent years, more processors than ever are looking to
recycle electronics-based scrap. See how to maximize your return in this
potentially lucrative area.
By Robert J. Garino
Robert J. Garino is director of commodities for the
Institute of Scrap Recycling Industries, Washington, D.C.
Although most precious
metals were not strongly favored by the investment community through most
of 1988, industrial consumers sought ever-increasing amounts of gold,
silver, and the platinum-based noble metals--palladium, iridium,
ruthenium, rhodium, and osmium. Consumption was directed toward a host of
end-use markets, including jewelry, electronics, photography supplies, and
catalysts.
Last year, the U.S. consumed
3.2 million troy ounces (t.o.) of gold, 119 million t.o. of silver, and
825,000 t.o. of platinum for industrial purposes. While not all
industrial end uses grew uniformly last year, most published research
recognized the unique properties of gold, silver, and platinum, resulting
in generally bullish forecasts of long-term demand prospects.
Gold, for example, currently
plays an important role in the electrical and electronics industries.
Since it does not corrode or tarnish it is ideally suited for electronic
devices where circuit dependability is critical. Silver finds its way into
electronic applications for similar reasons. Platinum is also used in
electrical and electronic applications, although less extensively than
gold or silver; its largest end-use market is automotive catalysts.
Precious
Metal Yields Trending Lower
Precious-metal-bearing
scrap is most frequently found in assembled electronic or electrical
parts--for example, telephone relays, switches, and computers. Here you
may expect to see a host of elements, both metallic and nonmetallic. The
precious metals may be in an alloy or near-pure form, but may only
comprise a minute percentage of the total mass. In fact, precious metal
contents have dropped since the mid-1960s. Precious metal cladding, which
may have once been assayed as 1.0 percent gold, is now closer to 0.1
percent. Several refiners currently believe that the amount of gold in
electronic scrap is around 0.03 percent to 0.05 percent per short ton.
Others figure those levels are low. As one refiner stated, "yields
are trending lower, but the number of precious-metal-containing parts is
actually up. ... [There is] more bulk but less content." Still other
published estimates put gold yields even lower--between 2 and 10 t.o. per
short ton of scrap (0.006 percent to 0.03 percent). Silver yields have
been estimated at between 40 and 100 t.o. per short ton, and platinum at
around 1 t.o. or less per short ton.
The
Processor-Refiner Team
Although
some refiners buy electronic scrap solely from industrial sources, many
scrap processors still find they are able to participate in the
electronics reclamation process in a big way. Despite the relatively low
precious metal yields from electronic scrap, margins are sufficient to
motivate scrap processors to think seriously about capturing even more
electronic scrap. Even the lowest grades of scrap can prove to be an
important revenue generator.
As
with all scrap, knowing what to do with it and what to expect from it
helps determine your level of processing activity. Recycled Metals in
the 1980's, published in 1982 by the National Association of Recycling Industries,
advises establishing a sound salvage system consisting of collection,
identification, separation, blending, packaging, sampling to establish an
estimated value, weighing, and sending the precious-metal-bearing material
to an established, reputable refiner.
Typically,
a scrap processor contacts an independent refiner of precious metals and
asks what his scrap is worth. Since not all precious metal refiners can do
all things with all types of precious metal scrap, a common ground must be
established. Ron Rosenson, Behr Precious Metals Inc., Rockford, Illinois,
emphasizes "cooperation between buyer and seller ... and building
relationships." Behr Precious Metals believes careful sampling,
numbering, and verification by both parties avoids misrepresentation. The
company tries to find out where the scrap was obtained, since the amount
of precious metal contained in electronic scrap varies by manufacturer.
Segregation
Smooths the Way
Refiners
consider segregation an important step. They note that processors could
help themselves by taking the time to sort components like relays, plated
connectors, circuit boards, and plated wire. At Martin Metals, Inc., Los
Angeles, Griff Martin says it is not uncommon to receive electronic scrap
that must first be upgraded--at a cost to the supplier. "We can't
afford to ruin a melt, nor can we really afford to sort through all the
scrap. ... We advise the scrap processor to emphasize separation at the
scrap-generating level. In many cases, the thousands of pounds we receive
could have been reduced by the processor to hundreds of pounds."
Many
scrap processors buy scrapped computer mainframes directly from
dismantlers--a specialty business in itself. Dismantlers sell the motors
and other auxiliary parts elsewhere, and segregate the
precious-metal-containing components for resale to larger processors. ERM
Recycling, Inc., Melrose, Massachusetts, specializes in removing
electronic components from computer circuit boards. ERM's Marc Rosengard
pays close attention to the memory chips in scrap computers. According to
Rosengard, boards that have only a few dollars worth of gold and silver in
their circuitry may sometimes yield hundreds of dollars worth of memory
chips. These chips are resold domestically and for export to be
incorporated into new personal computers.
Unfortunately
for scrap processors, not all electronic manufacturers will sell their
scrap without first shredding up the circuit boards. "They do it for
so-called proprietary reasons," noted Rosengard, recalling a recent
example where a major electronics firm ground up several gaylords worth of
boards instead of selling them outright as scrap.
Electronic
Scrap Value
Assuming
he offers somewhat homogeneous material to the refiner, the processor
either may be quoted a price outright for his material or may be quoted a
price based on analysis of metallic recovery. For segregated material, the
latter practice is commonplace. Although slightly more complicated than an
outright quotation, calculation of a refining schedule is fairly standard
throughout the industry.
To
construct a typical refining schedule, treatment charges, metal
accountability, and minimum refining lots are among the factors considered
by both refiner and processor, says Allison Sloan, Sloan Metal Co., Inc.,
Chicago. Calculating the value of the gold contained in, for example, one
pound of electronic scrap would follow these broad guidelines:
1
pound of electronic scrap = 14.583 t.o. gross weight. Assay reveals: 0.03
percent gold content, or approximately 1/4000 of an ounce of gold. (14.583
t.o. x 0.0003 = 0.0043749 t.o. gold.)/ Gross value = $410.00 (hypothetical
published gold price per pound) x 0.0043749 = $1.79 per pound.
Treatment
Charges
Once
a gross dollar value is ascertained, the refiner charges for treating the
material received. (For simplicity we are assuming the processor is not
subject to any extraordinary deductions or credits.) The refiner's
treatment charge (T/C) covers the full cost of processing (burning,
melting, etc.), plus profit.
Currently,
treatment charges are being quoted in a wide range--between 40 cents and
$1.00 per pound. In addition, most refiners do not pay based on
100-percent recovery of the precious metal. For gold, for example, this
"metal accountability" is usually 95-96 percent. Factoring in
these basic charges, the $1.79-a-pound gross value is further reduced to
just over 80 cents per pound returned to the scrap processor:
$1.79
- 90 cents (initial T/C) - 1.7 cents @ 95 percent recovery = 81 cents per
pound.
A
similar exercise is conducted for silver and platinum.
Because
of the relatively low precious metal content of electronic scrap, most
refiners also post a minimum charge that is applied to the lot to be
refined. At present, refiners are quoting between $250 and $300 per ton as
a minimum charge. Thus, to take advantage of a refining schedule that
posts a minimum charge of $250 and assuming a T/C of 80 cents per pound,
the processor would have to ship a minimum of 312 pounds ($250 divided by
$0.80) for processing.
A
decision to seek out, process, and sell electronic scrap to a refiner is
based on a number of key variables. Numerous firms are currently involved
at different levels, and for some it has proved to be very profitable.
Reclaiming precious-metal-bearing scrap has clear potential: The
electronics industry is growing much faster than most have predicted.
While yields per item may well drop, profit incentives nevertheless exist
for scrap processors.
Use
Caution With Computer Scrap
Computer
scrap may present special environmental problems, depending on how it is
processed. State and federal environmental authorities recently brought an
action against a scrap processor for violations of various environmental
laws, alleging that material generated from shredding computers contained
more than the allowable 50 parts per million of polychlorinated biphenyls
(PCBs). The operator is vigorously disputing the accuracy of the alleged
PCB findings. As of press time, no final decision had been reported in
this case.
Should
scrap processors suspect computer equipment as a potential PCB source?
Before 1979, PCBs were widely used in many types of electrical equipment,
including computers. In that year, the Environmental Protection Agency
banned the manufacture, import, and use of PCBs in all but a few
applications. Therefore, computer components manufactured or imported
after 1979 should not contain PCBs.
This
would suggest that post-1979 computer scrap could be safely processed
without fear of PCB contamination. Nevertheless, PCBs are occasionally
discovered in post-1979 products (including most recently in imported
oil-filled space heaters). Clearly, EPA is not in a position to guarantee
that all post-1979 items are in fact free of PCBs.
In short, the processing of computer scrap that contains or may contain items of pre-1979 vintage should be viewed as presenting a significant risk of PCB contamination. Newer components are theoretically unlikely to contain PCBs, but the possibility cannot be ruled out.
In spite of declining precious metal yields in recent years, more processors than ever are looking to recycle electronics-based scrap. See how to maximize your return in this potentially lucrative area.