2. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Supply and Demand in the International Marketplace Navigating the Export Issue: Economic, Environmental and Ethical Considerations Robin Ingenthron American Retroworks Inc. Middlebury, Vermont www.retroworks.com An NRC Training Program sponsored by Dell Inc., October 2003

3. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 1)Understanding the basics behind domestic and foreign demand for used electronics and scrap 2) Understanding how supply and demand affect your costs 3) Understanding your own supply, and what could or should happen to it 4) Considerations for evaluating bids (ie demand) from multiple recycling vendors Session Goals:

4. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Chapter 1: Understanding the basics behind domestic and foreign demand for used electronics and scrap REALITY: If USA exports everything, we send 1/3 reusables, 1/3 recyclables, and 1/3 Toxics Along for the Ride. REALITY: if USA exports nothing, we destroy reuseables (and they cannot afford new); they mine to replace the recycled metals, and mining produces even more toxic harm than recycling. SOLUTION: Setting a Higher Standard. USA processing, limited exports (tested equipment, copper scrap), simple tests (like CRT Glass Test); market development to promote best practices; (funded) state processing contracts with restrictions and incentives; etc.

5. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Q: Why should we know the basics behind international demand? A: You’ll be asked several times a week, “Do you export this stuff?”

6. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Market Forces CD, Floppy Drives Cords, cables Video cards, Monitors, ATX cases Gold Copper Aluminum Steel Plastic Leaded glass (TVs and bad monitors) Gold process waste Mercury batteries Lax environmental standards Manufacturing Demand, Free market mining Low wages, better repair Contraband camouflage

7. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Example: World Copper Production 2001 1. Mined & refined (blister copper)13,570,000 tons* 2.Primary Smelter Recycling 1,234,000 (copper mixed in with concentrates) 3.Secondary Smelter Recycling 802,000 (copper derived from clean scrap) *This is after 98% ore waste is removed! A huge industry. Understanding World metals demand Average recycled to virgin (mined) sources for non-ferrous metals: 1/3 Growing Copper demand is forcing more mining, at higher environmental cost. Mercury and Lead are the models, with recycling rates above 75%.

8. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding USA demand Anti-Reuse Forces 1. Technical Labor cost 2. Affluence 3. Software rules 4.Parts, manuals costs Anti-Recycling Forces 1. Mining preferences 2.Labor cost 3.Population-based env. standards 4.Loss of manufacturing demand TAR under control. We are the best at throwing things away.

9. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT USA Electronics Recycling & Repair Employment Recycling Creates Jobs… at USA labor rates. Even in the USA, with lower repair/reuse rates, repair dwarfs recycling, mining, and disposal Understanding USA demand: Good News for Jobs is bad news for cost

10. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Giant Sucking Sound Growth in Chinese demand for copper (ore and scrap): 20% per year 1999-2002 Reuse Forces 1. High tolerance/demand for used 2. “Free” software 3.Cheap parts 4.Good, cheap tech. labor Understanding Export Forces to Asia Recycling Forces 1. Metal demand 2. Balance of Trade 3.Cheap labor 4.Cheap env. Laws

11. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Chinese demand in particular drives both recycling and mining 1. Electric and electronic appliances “made in China” 2. Chinese “New Deal” scale infrastructure development 3.Asia #1 in per capita consumption of gold & platinum (the only materials which the West does not consume most of) Mining nightmares in Borneo, Chile, Congo, Philippines, Turkey, etc.

12. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Better to meet demand than not to? E-Scrap is 300% richer in copper and other metals than mined ore Recycling produces a fraction of the pollution from mining. Gorilla and orangutan extinction is arguably driven by electrics metal mining. One Copper mine in Papua New Guinea (feeding China) dumped 80,000 Tons Per Day of Cyanide tailings into the OK Tedi River from 1990-2000 USGS – At 1990 rate of consumption, all known copper reserves will be exhausted this century: Ocean mining will be the primary source of copper in our lifetimes. USA Model? 95% from federal lands, $5/acre, 14/15 largest Superfund sites Hard rock mining produces 45% of all toxics produced by all USA industries. Gold mining releases more mercury into the environment than mercury production and disposal combined!!!

13. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Reuse in Asia: so huge, it competes head to head with OEMs. Software is practically free for refurbishers (an OS costs $70 to USA refurb) Singapore is a World Model: 65% of all employment is in high tech parts and equipment trade. “R & O” (Repair and Overhaul) is tracked by Bureau of Labor statistics. Environmental costs of extraction or recycling are equally weighted. China: Equal environmental standards for mining or recycling (equally lousy); arguably China is a free market, compared to USA. Hiding high tech goods – is contraband camouflage the primary use of electronic scrap? China’s #1 concern is collecting tariffs on working parts. (Last year’s “E-waste” ban enforcement? The intercepted toner cartridges were burned, intercepted computers crushed with a forktruck). Other complicating factors behind export demand

14. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding the basics behind domestic and foreign demand for used electronics and scrap 2) Understanding how supply and demand affect your costs 3) Understanding your own supply, and what could or should happen to it 4) Considerations for evaluating bids (ie demand) from multiple recycling vendors Chapter 2: Cost Implications

15. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT How the market forces affect your Recycling Costs Next 3 Slides: -USA costs currently (1000 monitors) -USA costs with 1900 copper prices -USA costs with Chinese labor rates

16. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Overall USA Monitor Management $ spent and earned per 1000 monitors Most demand for used is overseas

17. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Possible USA Monitor Management $ spent and earned per 1000 monitors If copper and lead returned to 1900 prices, and monitors were repaired at 75% rate Countries with high reuse and no mining subsidies have the advantage

18. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Overseas Monitor Management $ spent and earned per 1000 monitors No mining subsidies, and 10% technical and handling labor cost Countries with high reuse, no mining subsidies, and low wages are the winners

19. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding the basics behind domestic and foreign demand for used electronics and scrap Understanding how supply and demand affect your costs 3) Understanding your own supply, and what could or should happen to it 4) Considerations for evaluating bids (ie demand) from multiple recycling vendors Chapter 3: Knowing your supply

20. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding your own supply 1) Pristine takeouts for auction, clean scrap - you can deal with anyone directly 2) Toxic Junk, Contraband, leftovers - you should insist on domestic processing 3) “I dunno”…Mix of good, bad and ugly - you should deal with USA company with capacity to separate, process and market, and get documentation

21. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding your own supply 1) Pristine takeouts, off-lease equipment (Reuse material) Highly Sorted Working and repairable monitors, P2s+, cords, peripherals, cartridges positive revenue dollars per item (not pennies per pound) high overseas demand, with incentives to hide it from tariff collectors and anti-gray-market enforcers Working monitors -No screen damage -No VGA -No Apple -Make, Model, COM, -Year, other tech details

22. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding your own supply 2) The Dregs: Cherry-picked material, TVs, obsolete equipment, residue, shredded or baled material. Damaged CRTs Pennies per pound Overseas demand based on copper, gold and aluminum content One USA company sold good stuff to one export market, and (misrepresented) bad stuff to another

23. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding your own supply “I don’t know”: Then make sure the company you select has capacity to handle either type of E-Scrap. Working monitors “Crapple” “We’re switching to flat screens” One fellow insisted his 1990 public school Stuff “works as good as when it was new”. Another commercial client insisted that working monitors, replaced by flat screens, should be recycled/destroyed here in the USA.

24. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Understanding the basics behind domestic and foreign demand for used electronics and scrap Understanding how supply and demand affect your costs Understanding your own supply 3) Suggested Considerations for evaluating bids from multiple recycling vendors Chapter 4: Evaluating Bids

25. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 4 Simple Due Diligence Tests Glass recycling records Gold bearing scrap records Sample manifests (declared reuse items) Employees or capital investment per ton

26. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 1. CRT Glass Test - no known market in Asia for screen burned, scratched or busted tubes. Legitimate USA recyclers must be able to show where the non-repairable glass goes. Guidance document at retroworks.com, several other sites

27. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 2. Printed Circuit Board (PCB) Gold Test - Nasty recycling (and nastier mining) practices. We do all Printed Circuit Boards domestically. Q: Will this lead to more mining? A: Gold mining is maxed out already Reuters: chinese miner BAN: chinese circuit board / gold recycler

28. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 3. Truth in Exporting Test - Ask for shipping manifests (sensitive market info can be blocked out). Legitimate bill of lading shows make/model/voltage/COO/condition. DHS will enforce existing high tech export rules, customs declarations. How picky ? “Picky is good” If “for repair”, is it wrapped, tested, sorted and manifested? One export market included a carton of cigs in every sample photo of e-scrap they are soliciting at high prices. Hmmmm.

29. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT 4.Employment / Capacity Test -How many tons did the company handle last year? -How many employees per ton? -If fewer employees, how much automated processing equipment is in place? One NE company has 2 employees and ships 1000 containerloads per year This container certainly has several hundred cords, power supplies, and hard drives which could be reused - but it’s TAR, an abuse of reuse.

30. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT Here’s half a solution… “The Good News” In MA, state contract was issued with strict criteria for export and recycling, insurance, closure plans, etc. Violating your bid terms is enforceable (as fraud) by fines and prison sentences. “The Bad News” State funding for the contract was cut. Now most cities use low bidders. For the vendor, the blessing of the state contract becomes a curse in the unregulated marketplace... Moral – if you are going to drive up the costs with higher standards, you need to buy off the contract.

31. American Retroworks Inc. www.retroworks.comwww.retroworks.com Middlebury, VT mineralpolicy.org mpi.org.au USGS.gov moles.org ban.org copper.org www.antigraymarket.org these and other links www.retroworks.com