September/October 2006
International demand for used electronics is growing, but international agreements increasingly restrict their trade. The tension between market demand and import regulation has many electronics recyclers scratching their heads. Here’s how some companies are making e-scrap exports work.
By Steve Barlas
In an ideal world, the export of electronic scrap would achieve several laudable goals: It would keep electronics out of landfills, provide jobs to workers in developing countries, encourage the refurbishment and reuse of electronic products, and lead to the reclamation and recycling of the valuable commodities the electronics contain. In the real world, however, the picture is much less clear. Though there are many legitimate recycling operations in developing countries, nonprofit organizations including Greenpeace (Washington, D.C.) and the Basel Action Network (Seattle) have documented primitive recycling operations in China, India, and Nigeria that carelessly dispose of electronic components and release hazards into the environment that have the potential to damage the health of workers and their communities.
In an attempt to prevent such abuses, international treaties and some individual countries’ laws increasingly restrict international trade in electronic scrap. But at the same time, overseas demand for such materials seems relentless. Developing countries are the largest markets for reusable computers and televisions as well as for the commodities that electronic scrap contains, according to a U.S. Government Accountability Office report. The question that remains on many scrap recyclers’ minds, then, is how to navigate the complex set of laws and international agreements to export electronics for reuse, refurbishment, and recycling in an environmentally sound way.
Growing Supply and Demand
More than 100 million American computers, monitors, and televisions become obsolete every year, according to a recent GAO estimate. A significant portion of those computers is tucked away in attics and other nooks and crannies in the home. Increasingly, though, programs from municipal and commercial recyclers, large retailers, and nonprofits are luring those dinosaurs out of hiding for recycling.
Unlike most other recyclables, used electronics have the potential for refurbishment and reuse. With developing countries quickly expanding their middle classes, cheap, used computers and monitors are hot tickets. Brokers or foreign buyers might purchase used computer monitors (predominantly cathode ray tubes) for as little as $2, clean them up—or not—and sell them in a developing country for $20, considerably less than what a new monitor would cost. Used CPUs, cell phones, and laptop computers are similarly desirable. “While reuse and repair have declined in the USA, they are alive and well in most other parts of the world,” according to a May 2005 report from the Middlebury, Vt.-based World Reuse, Repair and Recycling Association (WR3A). Reuse markets are “essential to the economic viability of electronics recycling,” says Eric Harris, ISRI’s director of governmental and international affairs.
Once they’re no longer usable, electronics can be disassembled or otherwise processed for the recovery of their recyclable commodities, which include plastics, glass, and metals—gold, silver, platinum, copper, and aluminum, among others. Reclaiming the metals keeps them out of landfills and is more cost-effective than mining: The U.S. Geological Survey reports that 1 metric ton of computer scrap contains more gold than 17 tons of ore and much lower levels of harmful elements common to ores, such as arsenic, mercury, and sulfur. Unfortunately, when done improperly, metals reclamation can release potential hazards into the environment: lead, cadmium, and brominated flame retardants in circuitboards; the lead oxide and barium in CRTs; the mercury in switches; and polyvinyl chloride in electronic cables and wires, to name a few.
Opportunities and Concerns
Right now, information on U.S. e-scrap exports is anecdotal. The U.S. Department of Commerce does not track the export of electronic scrap, let alone differentiate between electronics destined for reuse and those destined for recycling. The U.S. EPA expects to release a draft report on e-waste, including statistics on exports, at the E-Scrap 2006 conference in Austin, Texas, in October, according to Clare Lindsay, project director for extended product responsibility in the EPA’s Office of Solid Waste.
WR3A did the number-crunching for the upcoming EPA report, and the demand for electronic scrap seems substantial. To use computer monitors as one example, WR3A documented overseas factory orders for 80,000 used, functioning monitors per month. (Those buyers estimated that their intermediaries source 120,000 monitors to get the 80,000, which means that every month 40,000 exported monitors are processed as scrap or discarded.) The GAO reported earlier this year that it found on an e-commerce Web site a broker in Pakistan who sought to purchase 1 million nonworking monitors annually at a price of $2 to $3 per monitor. In another instance, a broker specifically requested nonworking monitors and wanted to fill at least 10 containers, which would require 6,000 to 11,000 monitors, depending upon their size. Josh Turchin, vice president of California Metals Inc. (El Cajon, Calif.), estimates he receives an average of four solicitations a day from brokers looking to purchase used electronics.
Because there’s little regulation of electronic refurbishers and recyclers in developing countries, business practices for minimizing worker and environmental harm can vary. On its tour of Asian electronics refurbishers, WR3A reported finding “a very strong, very professional, and very legitimate reuse, repair, and recycling marketplace.” Chinese circuitboard recycler Hangzhou Keyun Metal Manufacture Co. Ltd., which Scrap profiled in the September/October 2005 issue, is an example of that country’s best recycling practices: The company’s recycling process emits no pollution, recirculates its water, and is licensed by the Chinese government. The article notes, however, that the company competes with illegal recyclers that are five times more profitable.
BAN described the worst practices of Third World electronic scrap processors in its 2002 report Exporting Harm: The High-Tech Trashing of Asia and in the follow-up 2005 report Digital Dump: Exporting Re-Use and Abuse to Africa. The report’s authors witnessed computers being recycled via the open burning of plastics and wires, the use of riverbank acid works to extract gold, the melting and burning of circuitboards that contained lead solder, and the cracking and dumping of lead-laden cathode ray tubes, all practices that can be hazardous to worker health and the environment.
Such “sham recyclers” hurt those who try to export responsibly, Turchin says, because the whole industry gets stereotyped as “people just selling to whoever’s going to pay them the most for scrap, with not a care in the world once it leaves their property. We share all the assumptions that are heaped on that set of practices as an industry, and it’s frustrating.”
International Action
One way governments have chosen to crack down on illegal or potentially hazardous operations is by regulating the import of materials that contain hazards. It’s not always clear whether such regulations apply to electronic scrap, however. The Basel Convention, an international agreement signed by 168 countries and ratified by 165 of them, governs the trade of hazardous waste between member countries and bans such trade between member and nonmember countries. A 1995 amendment to the convention—not yet ratified—would essentially ban the export of hazardous wastes from developed to developing countries.
The United States signed and ratified the Basel Convention in 1992, but Congress has not yet passed legislation to implement it, in part because of concerns about the 1995 “Basel ban” amendment. Thus, the United States is forbidden from exporting hazardous wastes to any Basel signatory country unless that country has a bilateral or multilateral agreement with it. Currently such agreements permit the United States to trade in hazardous waste with any of the countries in the Organization for Economic Cooperation and Development (which consists of North America, Australia, New Zealand, South Korea, Japan, and much of Europe) unless the country has banned such trade.
Even within the confines of the Basel Convention, however, there is no consensus on whether used electronics are inherently hazardous wastes. One part of the agreement exempts electronics and electronic components “destined for direct reuse,” which can include “repair, refurbishment, or upgrading.” Another part of the agreement characterizes as hazardous electronics that contain potential hazards (including CRT glass, PCBs, cadmium, mercury, and lead)—but only if such materials actually exhibit the hazardous characteristics listed in yet another section. “It is all rather confusing,” says Bob Tonetti, senior environmental scientist in the EPA’s solid waste division. “Developing countries without sophistication and expertise have no clear guidance.”
A further complication is that each participating country is allowed to set its own definition of hazardous, thus “Basel has the potential of producing 168 different definitions of hazardous waste,” ISRI’s Harris says. Participating countries can change their list of banned products at any time, and they can even regulate imports and exports more stringently than Basel. For example, China officially banned the import of nearly all used electronics in 2000 and expanded the ban further in 2002. The fact that China’s ban is widely circumvented, according to media and nonprofit reports, points out another big problem with such regulations: Countries don’t necessarily have the resources or infrastructure to enforce them.
The U.S. Position
Some question the premise that trade in electronic scrap should be banned. Export and import bans “deny developing countries the economic opportunity” that electronics recycling can bring, and they ignore the demand for the materials, Harris says. In fact, “globalization should only strengthen our business model,” Turchin says. “I don’t know what there is in principle preventing responsible processing from happening anywhere [in the world]. We just need to do a good job ofdelineating the process and [creating] metrics by which we can judge our success.”
The U.S. government has maintained its support of free trade in used electronics, whether for reuse or recycling, and processed electronic scrap. The EPA is very close to publishing a final rule on the recycling of CRTs that might indicate its approach to electronic scrap. The rule specifies that used, unbroken CRTs are exempt from Resource Conservation and Recovery Act regulations on solid wastes and hazardous wastes unless they are stored for more than one year, and used, broken CRTs are exempt so long as they are properly labeled, stored, and transported.
Exporters of used CRTs for reuse must submit a one-time notification to the EPA.
Exporters of used, broken CRTs for processing must notify the EPA, which must get the written consent of the importing country prior to shipment. The EPA’s Tonetti notes that the original rule, proposed in 2002, did not address exports, but because most of the comments the rule received concerned exports, the EPA chose to address the issue.
By largely exempting CRT recycling and exports from RCRA, Harris says, “the EPA has codified a longstanding principle in the scrap recycling industry: that scrap is not waste and recycling is not disposal.”
Though some states have tightened their regulation of electronic scrap, they have no authority over interstate or international commerce. Even California, whose oversight over solid waste disposal laws is often more stringent than the EPA’s, has its hands tied when it comes to e-scrap exports. Andre Algazi, chief of the universal and household hazardous waste section of the California Department of Toxic Substances Control, notes that the EPA has the authority under the RCRA to prohibit the export of hazardous waste, but it has not delegated that authority to the state. California’s electronics recycling program, which began in 2005, requires e-scrap exporters to provide the state with information on the export’s destination. The state can enforce those notification and documentation provisions, but it cannot restrict the exports themselves, Algazi says.
Industry Action
ISRI has taken several steps to promote the responsible export of electronics for refurbishment and recycling. “Most scrap recyclers want to do the right thing,” Harris says, “and we’re working to show them a clear path to comply” with international regulations.
It’s in recyclers’ best interests to ensure e-scrap exports are handled responsibly, Turchin explains. For electronic scrap recycling to operate successfully, “we need to be concerned about the long-term ramifications of what we’re doing,” he says. “The bottom line is that this material needs to be treated properly, or it’s an environmental threat. We need to do everything we can as an industry to make sure that’s not happening. There’s a huge demand for the recycling of electronics, [and] we need to develop back-end processes to service that demand responsibly.”
In April, ISRI’s board of directors approved voluntary Electronic Recycling Operating Practices, which incorporate best practices for exports of products intended for both refurbishment and recycling. The practices require e-scrap exporters to have downstream recyclers and brokers provide written certification and/or submit to audits that ensure they process electronic scrap in facilities with adequate environmental controls. The facilities must minimize the potential release of hazardous substances into the environment and handle hazardous materials in a manner that affords appropriate protections for human health and safety. Further, the document specifies that recyclers should not export used electronic products that cannot be recycled and are intended for disposal. Because the practices specify that exports for refurbishment must meet many of the same requirements as those for recycling, Harris says, they close loopholes that some companies have been using to get around import regulations.
The operating practices have been incorporated into ISRI’s Recycling Industry Operating Standard, a comprehensive, integrated management system for quality, environmental, health, and safety management. An accreditation process for RIOS certification is under development. ReMA also is participating in a multi-stakeholder process with the EPA to develop certifiable best practices for electronics recycling, including exports. Harris is working to ensure that the Electronics Recycling Operating Practices, as part of RIOS, will fulfill the EPA’s best practices requirements.
Export Solutions
Even with confusing, ever-changing import regulations, some electronics recyclers have found success by using the following strategies:
Export electronics for refurbishment and reuse only. Bob Glavin, president and CEO of United Recycling Industries Inc. (West Chicago, Ill.) and chair of ISRI’s Electronics Recycling Council, says when URI exports a used monitor, it’s always in good working condition, and the customer pays a pretty penny for it—meaning he or she isn’t going to turn around and sell it for $5 to a chop shop beside a river in China or Nigeria. If the monitor is beyond repair, URI shreds it and sends the CRT glass to a U.S. or Canadian smelter that can reclaim the lead.
Export to countries within the OECD. URI also shreds the other electronic products it receives and separates out recyclable commodities including steel, aluminum, and copper. It sends the remaining circuit boards and plastic fraction for processing to companies such as Noranda, which has facilities in the United States and Canada; Umicore SA in Belgium; and the Hamburg, Germany, facility of Norddeutsche Affinerie AG.
California Metals’ largest export market is Mexico, where it largely sells electronics for reuse. “We’re able to market a lot of older systems people have [recycled] into a Latin American market,” Turchin says. “We’re 20 minutes from the Mexican border, so we capitalize on that.”
Export only to companies you can certify or audit. Mark Matza, executive vice president of The Fortune Group (Dallas), says his company processes “Basel-listed” electronics in the United States and sends only the clean plastic and metals to the four facilities it owns in China. Reusable electronics, including working monitors (but not CRTs), go to a Fortune facility in Hong Kong. (Matza notes that under China’s “one country, two systems” government, Hong Kong has its own environmental regulations. Hong Kong is complying with the Basel agreement, but not the stricter bans on electronic scrap China implemented in 2002, he says.) “If an item can’t be reused, and is listed as a hazard by Basel, we document the re-export out of Hong Kong to a refiner in an OECD country,” he says.
From its Hong Kong facility, Fortune sells used electronics to any of the 700 recyclers who have permits from Hong Kong’s Environmental Protection Department—and who make Hong Kong a thriving market for used electronics. Fortune audits the companies it sells to, Matza explains: It visits recyclers’ facilities to make sure they have equipment for cleaning and repairing used electronics, shipping boxes for finished products, and other indicators that the company operates a legitimate business. “If you’re selling blindly to a broker, you are opening yourself up for problems,” he says. Further, his customers audit his company’s operations to ensure international compliance.
Sell to a reputable broker who will handle exports—and audits. California Metals relies upon a small number of brokers who provide the company with detailed information about downstream purchasers. To export responsibly, Turchin says, “you have to have 100-percent confidence” in your brokers. “I need to have good relationships with people I can trust to represent our interest and make sure things are processed properly.”
The brokers can ship the e-scrap “wherever they need to send it depending on market conditions,” he says. “My principal concern is with what happens when it gets there. I need to know all of the possible options of where the material might be going, how it will be treated when it gets there, [and] that it will be treated in an environmentally responsible manner.”
For exports to scrap processors in China, for example, Turchin says, he expects the broker to provide each processor’s certification of environmental compliance and pictures of the company’s recycling process. “They have to guarantee that 100 percent of everything they receive is spared from the waste stream,” he says. California Metals asks for the same types of guarantees before it does business with any company, domestic or foreign, he notes. But not every company is willing to provide them. “Some [companies] hide behind the language barrier and act like they really can’t understand what we’re asking for, and that just disqualifies them from doing business with us,” he says.
Beyond Exports
While countries tighten their regulation of e-scrap imports, state-level electronics recycling programs might make domestic processing more attractive.
California’s e-recycling program, which began in 2005, covers CRT and LCD televisions and monitors, laptop computers with LCD displays, and plasma TVs. Consumers pay an extra fee when they purchase those products, and that money eventually goes to a recycler when he or she “cancels” the device, which, in the case of a CRT, means taking the yoke off. Recyclers can go further, of course, grinding up the glass and selling it, or shredding the plastic and selling that. Moreover, the same recycler can still take in a used, intact CRT and simply sell it without canceling it, forfeiting the payment.
Jeff Hunts, program manager at the California Integrated Waste Management Board, believes many fewer CRTs originating from California users are being exported because of the program. “Exports of intact devices have probably fallen because we will pay for [electronics] to be deconstructed here” and turned into commodities, he says. In 2005, the program’s first year, the state fielded payment claims for nearly 65 million pounds of CRT devices processed by participating recyclers, he says. Other states that recently have launched electronics recycling programs include Maine, Maryland, and Washington.
The challenges of exporting electronic scrap are directly related to the potentially hazardous substances they contain. In the long term, the e-scrap export picture might become clearer as the use of such substances declines. This year the European Union implemented a directive on the restriction of hazardous substances in the manufacture of electronics (RoHS). The goal of RoHS is to reduce or eliminate electronics’ use of lead, mercury, cadmium, hexavalent chromium, and two brominated flame retardants. China is in the process of implementing similar regulations. ISRI’s voluntary Design for Recycling® program also encourages manufacturers to consider end-of-life recyclability at the earliest stages of product design. If electronics manufacturers adjust their products globally in response to such efforts, the problems of exporting electronic scrap might one day be history.
Steve Barlas is a writer based in Arlington, Va.
International demand for used electronics is growing, but international agreements increasingly restrict their trade. The tension between market demand and import regulation has many electronics recyclers scratching their heads. Here’s how some companies are making e-scrap exports work.