Electronics recycling within the U.S. is growing because the industry consolidates and matures. The future of electronics recycling – at least within the U.S., and maybe globally – is going to be driven by electronics technology, precious metals, and industry structure, specifically. Although there are other things that can influence the business – including electronic products collections, legislation and regulations and export issues – I believe that these particular 3 factors may have a far more profound impact on the way forward for electronics recycling.

The newest data on the industry – coming from a survey conducted by the International Data Corporation (IDC) and sponsored through the Institute of Scrap Recycling Industries (ISRI) – found that the industry (in 2010) handled approximately 3.5 million a lot of electronics with revenues of $5 billion and directly employed 30,000 people – and that it really has been growing at about 20% annually over the past decade. But will this growth continue?

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Personal computer equipment has dominated volumes handled from the electronics recycling industry. The IDC study reported that over 60% by weight of industry input volumes was “computer equipment” (including PCs and monitors). But recent reports by IDC and Gartner show that shipments of desktop and notebooks have declined by a lot more than 10% and this the shipments of smartphones and tablets now each exceed that relating to PCs. About 1 billion smart phones will be shipped in 2013 – and the very first time exceed the volumes of conventional mobile phones. And shipments of ultra-light laptops and laptop-tablet hybrids are increasing rapidly. So, our company is entering the “Post-PC Era”.

Furthermore, CRT TVs and monitors have been an important portion of the input volumes (by weight) in the recycling stream – as much as 75% in the “electronic products” stream. And the demise from the CRT signifies that fewer CRT TVs and monitors will be entering the recycling stream – replaced by smaller/lighter flat screens.

So, what do these technology trends mean for the electronics recycling industry? Do these advances in technology, which lead to size reduction, result in a “smaller materials footprint” and much less total volume (by weight)? Since mobile devices (e.g., smart phones, tablets) already represent larger volumes than PCs – and in all likelihood turn over faster – they will likely probably dominate the long run volumes entering the recycling stream. And they are not only much smaller, but typically cost less than PCs. And, traditional laptops are replaced by ultra-books as well as tablets – meaning that the laptop equivalent is a lot smaller and weighs less.

So, even with continually increasing quantities of electronics, the body weight volume entering the recycling stream may begin decreasing. Typical computer processors weigh 15-20 lbs. Traditional laptops weigh 5-7 lbs. However the new “ultra-books” weigh 3-4 lbs. So, if “computers” (including monitors) have comprised about 60% in the total industry input volume by weight and TVs have comprised a large part of the volume of “electronic products” (about 15% from the industry input volume) – then approximately 75% of the input volume may be subject to the body weight reduction of technologies – perhaps as much as a 50% reduction. And, similar technology change and size reduction is occurring in other markets – e.g., telecommunications, industrial, medical, etc.

However, the inherent worth of these devices may be more than PCs and CRTs (for resale as well as scrap – per unit weight). So, industry weight volumes may decrease, but revenues could continue to increase (with resale, materials recovery value and services). And, since mobile devices are required to change over more rapidly than PCs (which may have typically turned over in 3-5 years), these changes in the electronics recycling stream may happen within five-years or less.

Another factor for your industry to consider, as recently reported by E-Scrap News – “The entire portability trend in computing devices, including traditional form-factors, is described as integrated batteries, components and non-repairable parts. With repair and refurbishment increasingly difficult for these kinds of devices, e-scrap processors will face significant challenges in determining the easiest method to manage these units responsibly, because they gradually compose a growing share of the end-of-life management stream.” So, does that mean that the resale possibility of these smaller devices may be less?

The electronics recycling industry has traditionally dedicated to PCs and consumer electronics, but how about infrastructure equipment? – like servers/data centers/cloud computing, telecom systems, cable network systems, satellite/navigation systems, defense/military systems. These sectors generally use larger, higher value equipment and possess significant (and growing?) volumes. They are not generally visible or looked at when considering the electronics recycling industry, but may be an increasingly important and larger share in the volumes it handles. Plus some, or even much, of this infrastructure is due jgigrb to change in technology – resulting in a large volume turnover of equipment. GreenBiz.com reports that “… because the industry overhauls and replaces… servers, storage and networking gear to allow for massive consolidation and virtualization projects and prepare for age cloud computing… the build-from cloud computing, the inventory of physical IT assets will shift from your consumer towards the data center… While the number of consumer devices is increasing, they are also getting smaller in size. Meanwhile, data centers are now being upgraded and expanded, potentially creating a large amount of future e-waste.”

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But, outside the U.S. – and then in developing countries particularly – the input volume weight for the electronics recycling stream will increase significantly – as the usage of electronics spreads to a broader market as well as an infrastructure for recycling is developed. Additionally, developing countries will continue to be attractive markets for that resale of used electronics.

Precious Metals

In the IDC study, over 75% by weight of industry output volumes was found to become “commodity grade scrap”. And more than one half of which had been “metals”. Precious metals represent a small part of the volume – the typical concentration of precious metals in electronics scrap is measured in grams per ton. However their recovery value is actually a significant area of the total value of commodity grade scrap from electronics.

Precious metals prices have risen significantly lately. The marketplace prices for gold, silver, palladium and platinum have each a lot more than doubled in the last 5 years. However, precious metals have historically been very volatile since their prices are driven primarily by investors. Their prices seem to have peaked – and they are now significantly below their high points last year. Whereas, platinum and palladium prices have traditionally been driven by demand (e.g., manufacturing – like electronics and automotive applications) and usually more stable.

Telecommunications equipment and mobile phones generally have the greatest precious metals content – approximately ten times the normal of scrap electronics according to per unit weight. As technology advances, the precious metals content of electronics equipment generally decreases – as a result of cost reduction learning. However, smaller, newer devices (e.g., smart phones, tablets) have higher precious metals content per unit weight than conventional electronics equipment – including PCs. So, in the event the weight volume of electronics equipment handled by the electronics industry decreases, and the market prices for precious metals decreases – or at least fails to increase – will the recovery value of precious metals from electronics scrap decrease? Most likely the recovery price of precious metals from electronics scrap per unit weight improves since more electronics goods are getting smaller/lighter, but have a higher power of precious metals (e.g., cell phones) than traditional e-scrap overall. So, this aspect of the industry may actually be a little more affordable. But the total industry revenue from commodity scrap – and especially precious metals – may not still increase.

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The electronics recycling industry inside the U.S. can be regarded as comprising 4 tiers of companies. From your very largest – that process well in excess of 20 as much as more than 200 million lbs. annually – to medium, small and the very smallest companies – that process less than 1 million lbs. annually. The top 2 tiers (which represent about 35% in the companies) process approximately 75% from the industry volume. The quantity of companies in “Tier 1” has now decreased due to consolidation – and continued industry consolidation will probably drive it more to the familiar 80/20 model. Even though there are over 1000 companies operating inside the electronics recycling industry in the U.S., I estimate that this “Top 50” companies process up to 50 % of the total industry volume.

What is going to eventually the lesser companies? The mid-size companies will either merge, acquire, get acquired or partner to compete with the greater companies. The small and smallest companies will either locate a niche or disappear. So, the entire variety of companies inside the electronics recycling industry will likely decrease. And more of the volumes will likely be handled by the largest companies. As with any maturing industry, the most affordable and profitable companies will survive and grow.

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