The International Scrap and Recycling Industry Handbook

The international scrap and recycling industry handbook

SRH The international scrap and recycling industry handbook Edited by

Vincent Rich

Wo o d h e a d p u b l i s h i n g l i m i t e d Cambridge, England

Published by Woodhead Publishing Limited, Abington Hall, Abington Cambridge CB1 6AH, England www.woodhead-publishing.com First published 2001, Woodhead Publishing Ltd © 2001, Woodhead Publishing Ltd The authors have asserted their moral rights. This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. Reasonable efforts have been made to publish reliable data and information, but the authors and the publisher cannot assume responsibility for the validity of all materials. Neither the authors nor the publisher, nor anyone else associated with this publication, shall be liable for any loss, damage or liability directly or indirectly caused or alleged to be caused by this book. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming and recording, or by any information storage or retrieval system, without permission in writing from the publisher. The consent of Woodhead Publishing Limited does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from Woodhead Publishing Limited for such copying. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. ISBN 1 85573 248 3 ISSN 1474-5259 Typeset by Best-set Typesetter Ltd, Hong Kong Printed by Astron On-Line, Cambridgeshire, England

Contents

Preface Contributors Index Introduction Vincent Rich A brief history of recycling The materials balance approach to resource and recycling flows Waste and the waste management hierarchy Recycling flows and recycling rates The economics of recycling Markets and market prices PART 1: FERROUS AND NON-FERROUS METALS 1 Aluminium James F King

1.1 Physical characteristics, properties, products and end-uses 1.2 Production processes and technologies 1.3 Market features, structure and operation 1.4 The structure of the scrap recovery/recycling sector 2 Copper Martin Thompson

2.1 Physical characteristics, properties, products and end-uses 2.2 Production processes and technologies 2.3 Market features, structure and operation 2.4 The structure of the scrap recovery/recycling sector 3 Lead Vincent Rich

3.1 Physical characteristics, properties, products and end-uses

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3.2 Production processes and technologies 3.3 Market features, structure and operation 3.4 The structure of the scrap recovery/recycling sector 4 Iron and steel James F King

4.1 Physical characteristics, properties, products and end-uses 4.2 Production processes and technologies 4.3 Market features, structure and operation 4.4 The structure of the scrap recovery/recycling sector PART 2: PRECIOUS METALS 1 Gold Tony Warwick-Ching

1.1 1.2 1.3 1.4

Physical characteristics, properties, products and end-uses Production processes and technologies The gold market The structure of the scrap recovery/recycling sector

2 Silver Tony Warwick-Ching

2.1 2.2 2.3 2.4

Physical characteristics, properties, products and end-uses Production processes and technologies The silver market The structure of the scrap recovery/recycling sector

3 Platinum group metals Tony Warwick-Ching

3.1 3.2 3.3 3.4

Physical characteristics, properties, products and end-uses Production processes and technologies The platinum group metals market The structure of the scrap recovery/recycling sector

PART 3: OTHER MATERIALS 1 Plastics John Murphy

1.1 1.2 1.3 1.4

Physical characteristics, properties, products and end-uses Production processes and technologies Market features, structure and operation The structure of the scrap recovery/recycling sector

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Contents

2 Rubber M E Cain, Dr P Jumpasut and P J Watson

2.1 2.2 2.3 2.4

Physical characteristics, properties, products and end-uses Production processes and technologies Market features, structure and operation The structure of the rubber recovery/recycling sector

3 Pulp and paper Tom Bolton (updated and revised by Eric Kilby of the Paper Federation of Great Britain)

3.1 Physical characteristics, properties, products and end-uses 3.2 Recycling production processes and technologies 3.3 Market features, structure and operation 3.4 The structure of the waste recovery/recycling sector 4 Glass David Moore

4.1 Physical characteristics, properties, products and end-uses 4.2 Production processes and technologies 4.3 Market features, structure and operation 4.4 The structure of the cullet recycling sector PART 4: THE REGULATORY FRAMEWORK 1 The European Union Robert Barrass and Shobhana Madhavan

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8

The recycling industry and environmental regulation The economic context The definition of waste and raw material Environmental regulation Waste management strategy: the hierarchies Implementation of the waste management strategy Waste management regulations Impacts of environmental policies on the recycling industry 1.9 The international dimension 1.10 Conclusion

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Preface

This Handbook is designed as a source of information and reference on the scrap and recycling industry, which can be updated and extended on a regular basis. It consists, initially, of a dozen Chapters each covering a specific material, but using a similar format. These Chapters set out the main factors surrounding the production and consumption of each material, and describe and explain the key influences affecting their recycling (and recovery). Additionally, the Introduction to the Handbook provides an overview examining the broader context of scrap generation and recycling, as well as some general issues of concern for the industry. A final Chapter reviews current and proposed legislation affecting the recycling industry in Europe. Our intention is to expand the Handbook with future updates to include chapters on additional materials and to extend the focus to specific end-product categories (for example end-of-life vehicles, electrical and electronic equipment, used oil, textiles). Scrap is defined by the Concise Oxford English Dictionary as (amongst other things) ‘odds and ends, leavings; waste material’, but this at best understates, and at worse misrepresents, its economic value in modern societies. Recycling as a process provides the means for generating value from scrap materials (or residuals or non-product substances). Recycling in its broadest sense can be taken to mean the ‘reclamation of potentially useful material from household, agricultural and industrial waste’ (Andrew Porteous, Dictionary of Environmental Science and Technology, Wiley (2nd edn), 1997). While this remains a good description of the fundamental process, particularly where basic materials (or products) are involved, or where reclamation takes place close to the point at which the waste materials are generated, it belies its potential complexity. According to the International Reclamation Bureau (IRB), ‘recycling is the whole system in which obsolete or redundant products and materials are reclaimed, refined or processed, and converted into new, perhaps quite different, products’. Where it takes place at ‘off-site’ facilities, often involving the creation of vertical and

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Preface

horizontal supply networks, recycling may therefore require fairly complicated organisational, commercial and technological infrastructures, the development and functioning of which ultimately generates a significant physical and economic impact.

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Contributors

Vincent Rich is Chair of the Department of Economics and Quantitative Methods, and Deputy Director of the Centre for Business and Environment at the University of Westminster. He has teaching and research interests in business economics, environmental economics and commodity market economics. He has published widely on the non-ferrous metals industry and on environmental economics, and is author of The International Lead Trade (1994), also published by Woodhead Publishing Limited. Between 1980–88 he worked as a Senior Consultant for CRU International in London and has subsequently worked as a freelance consultant for CRU, and for the Economist Intelligence Unit (EIU). Vincent has been a regular contributor to the EIU’s (now quarterly) World Commodity Forecasts since 1990. James King received a first class honours degree in Economics from the University of Cambridge, England in 1967 and joined the Bank of England. After eight years working on regional economic and industrial development for governments and private consultancies in the UK and Canada, in 1978 Mr King joined Commodities Research Unit Ltd, London, as Research Director for steel and aluminium. Since 1980 Mr King has been an independent consultant, specialising in the economic and commercial aspects of the aluminium and steel industries. Services include regular, in-depth reports on these industries and special consultancy projects for clients around the world. After working for a merchant bank and a tin smelting company, Martin Thompson joined Rio Tinto in 1968, becoming Commercial Adviser, and retiring in 1999. Starting in iron ore and pyrites, from 1975 he dealt mainly with base metals, specialising in copper. He has regularly written articles on the metal, and in 1988 he undertook for GATT the examination of the copper trade practices dispute between the EC and Japan. He was Chairman of the British Copper Development Association, Vice Chairman of the European Copper Institute, and

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Contributors

Chairman of the Statistical Committee of the International Copper Study Group. Tony Warwick-Ching is a principal consultant in non-ferrous metals at CRU International in London. Since working in the mining industries of Central Africa in the 1970s he has undertaken a wide range of consultancy and publishing assignments in the mining and metals field. He has given a number of conference papers and published many specialist articles on non-ferrous and precious metals, and is the author of The International Gold Trade, published by Woodhead Publishing Limited. John Murphy has spent a lifetime writing about plastics and elastomers, both with established journals and on a freelance basis. A graduate of Exeter University, he began his career as a copywriter in the packaging industry, moving after a few years to a leading plastics manufacturer. In 1961 he joined the newly launched Plastics and Rubber Weekly as Assistant Editor, becoming Editor in 1967. He played a leading role when a sister newspaper was set up in Germany. In 1975 he set up his own newsletter, Plastics Industry in Europe, and in more recent years has concentrated on freelance writing. He is the author of the book Recycling Plastics – Guidelines for Designers and a number of other books on plastics and their applications, as well as handbooks on reinforced plastics and on additives for polymers. Maurice Cain has spent over 50 years in the rubber industry, initially as a research chemist and later as the head of a Publications and PR Group for which he edited technical publications and wrote widely on the industry. As Secretary-General of the International Rubber Study Group 1994–2000, Mr Cain was responsible to its Member Governments for the publication of world-wide statistics on the rubber and related manufacturing industries as well as statistical, economic and techno-economic studies on matters relating to the rubber industry. He now works as a freelance contributor to several rubber trade journals. Dr Prachaya Jumpasut graduated magna cum laude from the University of Wisconsin, with a BBA in Economics. He later went to the University of Michigan as a research and teaching fellow, receiving an MA in 1979 and a Doctorate in 1981, specialising in international economics and economic development. He was an assistant professor at

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Contributors

the National Institute of Development Administration in Bangkok before joining the International Rubber Study Group in 1982. Since then he has written extensively on a range of topics and has presented many papers at various international conferences. He holds the position of the Head of Economics and Statistics at the IRSG. Philip Watson graduated in 1965 with an Honours Degree in Economics and Statistics from Nottingham University. In 1974, prior to joining Pirelli Ltd, he gained a Diploma in Management Services. In 1992, he obtained the status of Chartered Statistician. Since 1979 he has been employed at the International Rubber Study Group and is currently its Consultant Statistician. Over the past two decades he has written and presented many Secretariat papers for the Group. Tom Bolton joined the paper industry in the mid-1950s and he has accumulated a lifetime of experience in the industry. He has worked in the UK with a number of international companies and with their subsidiaries in the UK and South Africa. Starting as a technologist, he began work as a research and development scientist at a time when the industry was moving from its craft base to establish a position as a scientifically based industry. He has held a variety of senior positions in technical, production and general management in a wide range of papermaking and converting operations around the world. His contacts are truly international, and with this perspective he recently wrote The International Paper Trade published by Woodhead Publishing Limited in 1998, and the recently published Current Practice in Environmental Reporting: The Chemicals Industry (Woodhead Publishing Limited 2001). David Moore is Managing Editor at the Society of Glass Technology, an international learned society concerned with glasses of any and every kind. He is responsible for the overall running of the society as well as for production of the journals Physics and Chemistry of Glasses and Glass Technology, books and conference proceedings. He is a regular contributor to Glass Technology and SGT News and has developed the society’s electronic publications and web presence, www.sgt.org. The Society of Glass Technology is the host of the 19th International Congress on Glass, the triennial gathering of leading artists, scientists and technologists.

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Contributors

Robert Barrass is an economic consultant with over 20 years’ experience in the environmental field. He previously worked for the UK Department of the Environment and The European Commission, and has also served as an adviser to the government of Poland on environmental management. His expertise includes development and assessment of environmental policies, legislation and programmes, regulations and economic instruments, and appraisal of infrastructure projects. He has contributed to waste management strategies in the context of the European single market, studies of economic and employment impacts of environmental measures, and assessment of environmental liability regimes and charging and taxation systems. He has published a number of papers in these areas, and is also coauthor of European Economic Integration and Sustainable Development, published in 1996. Shobhana Madhavan is Professor, and Director for the Centre for Business and Environment, at the University of Westminster. A member of the Chartered Institute of Transport and a Councillor for the Environment Council, she has an extensive track record of research in transport and business economics. This includes pioneering work on transport and travel behaviour in developing countries, and studies of technology transfer and environmental issues relating to the motor vehicle industry. She has been a European Community Jean Monnet Scholar, a visiting scholar at the Transport Research Laboratory and the Indian Institute of Management and a specialist adviser to the House of Lords Select Committee on the European Communities. She has written numerous publications in the fields of environment and transport, and is co-author of European Economic Integration and Sustainable Development.

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Index

Entries are in the form Section/chapter/page number aluminium castings, 1/1/19, 1/1/29 competing materials, 1/1/1 conductivity, 1/1/3 consumption, 1/1/2, 1/1/30 dross, 1/1/15–16 end-uses historical evolution, 1/1/4 semi-finished, 1/1/15 energy requirements, Intro/20 grades, 1/1/6 Hall-Heroult process, 1/1/6 LME Contract, 1/1/15, 1/1/18 ‘mini-mills’, 1/1/13 new scrap industrial, 1/1/10–11, 1/1/20 internal, 1/1/9–1/1/10 old (post consumption) scrap availability, 1/1/20–22, 1/1/30 beverage cans (see also UBC) US recycling, 1/1/11–13 Western Europe, 1/1/12 collection schemes, 1/1/22–23 foil, 1/1/15 processing costs, 1/1/21 recycling rates (UK), Intro/15–18 regulation, 1/1/22–23 price relationships historical trends, 1/1/24–25 representative, 1/1/24, 1/1/28–29 secondary, Intro/24–25, 1/1/18, 1/1/32–33 production major secondary producers, 1/1/16–17, 1/1/20 primary, 1/1/6 secondary production trends, 1/1/18–20 products specification, 1/1/6, 1/1/26–27 properties, 1/1/1–4

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remelted scrap ingot (RSI), 1/1/23 secondary alloy, 1/1/14–15 secondary industry structure billet plants, 1/1/7 semi-finishing plants, 1/1/7 trade in scrap, 1/1/23–24, 1/1/31 aluminium alloy LME contract, 1/1/18, 1/1/28 Aluminium Association alloy specifications, 1/1/14–15 American Metal Market, 1/3/23 Asahi Glass, 3/4/5 Association of Plastic Manufacturers in Europe (APME), 3/1/15–16 AtoFina (formerly Elf Aquitaine), 3/1/12 Australian Gold Refineries, 2/1/11 Austrian Institute of Applied Systems Analysis (IIASA), 3/3/15 autocatalyst (see Platinum group metals) Basel Convention, Intro/8, 1/3/20–21, 1/3/24, 4/1/5, 4/1/11, 4/1/16–18 basic oxygen furnace (BOF), 1/4/6 Battery Council International (BCI), 1/3/19 Bergsoe process, 1/3/8, 1/3/9 BLIC (Liaison Office of the Rubber Industry of the EU), 3/2/13 British Metals Federation (BMF), 4/1/7, 4/1/15 British Plastics Federation (BPF), 3/1/15 Bronze Age, 1/2/1 carbon steel, 1/4/1 catalytic convertors, 2/3/3 Chalcolithic (copper) period, 1/2/1 Chicago Board of Trade (CBOT), Intro/31 ‘climate change’ levy, 4/1/15 coal (metallurgical) coking, 1/4/10

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Index

pulverised coal injection (PCI) (see steel, blast furnace technology) Cobat, 1/3/24 coke markets, 1/4/11 production, 1/4/10–11 Comex contracts, 1/2/9 Company Francaise des Ferailles, 1/4/29 composting, Intro/10 Consolidated Gold Fields, 2/1/5–6, 2/1/12 (see also Gold Fields Mineral Services) Coors, 3/4/12 Coopers & Lybrand, Intro/23 copper brass, 1/2/2 bronze, 1/2/2 blister (and anode), 1/2/5, 1/2/8 cathodes, 1/2/6 concentrates specification, 1/2/5 trade, 1/2/7–8 conductivity, 1/2/2 consumption statistics, 1/2/9 electro-refining, 1/2/5 energy requirements, Intro/20 end-uses semi-fabricated, 1/2/3 wire, 1/2/3 extraction hydrometallurgical, 1/2/5–6 pyrometallurgical, 1/2/4 geology, 1/2/4 matte, 1/2/5 new scrap availability, 1/2/10, 1/2/13 old scrap sources, 1/2/11 supply sensitivity, 1/2/13–15 price relationships, 1/2/10, 1/2/17 production mine, 1/2/6–7 refined, 1/2/7 product lifecycles, 1/2/13 properties, 1/2/1–2 raw materials, 1/2/11 scrap contractual provisions, 1/2/17–18, 1/2/23–24 price trends (US), Intro/32 recycling arrangements, 1/2/15 specifications, 1/2/18–23

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usage, by country, 1/2/11, 1/2/13 trade blister (and anode), 1/2/8 scrap, 1/2/15–17 Copper Development Association (CDA), 1/2/3 Corex process, 1/4/13 Cost-benefit analysis, Intro/10, Intro/22–23 CRU International, 1/2/3 cullet (see Glass) Degussa, 2/1/11 DETR, Intro/7, Intro/10, Intro/23, Intro/24, Intro/32, 4/1/3, 4/1/11 direct-reduced iron (DRI) competiveness of, 1/4/15, 1/4/25 prices, 1/4/33–36 process technology, 1/4/7, 1/4/16–17 DSD Dual System (Germany) (see also German Packaging Ordinance), 3/1/17, 4/1/12 DSM, 3/1/13 Economist Intelligence Unit (EIU), 1/3/15 ECOTEC, Intro/32 Electric Arc Furnace (EAF) (see steel production technology) electrical and electronic product recycling, 3/1/16 end-of-life vehicles (ELV), 1/1/17, 1/4/19, 1/4/30, 3/1/16, 3/4/10 Engelhard, 2/1/10 Enichem, 3/1/9 Environment Agency (UK), 4/1/6–7 Environmental policy, impact on EU recycling industry, 4/1/15–16 European Aluminium Association, 1/1/12 European Coal and Steel Community (ECSC), 4/1/6–7 European Glass Container Federation, 3/4/9 European Union (EU) barriers to use of recycled materials, 4/1/3–4 control of effluent discharges, 4/1/8 environmental action programme, 4/1/3 Environmental Management and Audit Scheme, 4/1/9

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Index

policy on landfill, 4/1/4 waste definition(s), 4/1/4–7, 4/1/17 waste hierarchy, legislative framework, 4/1/9–10 waste management permits and licenses, 4/1/14 regulatory measures, 4/1/11 waste shipments (see also Basel Convention) green, amber and red lists, 4/1/14–15 European Union (EU) Directives batteries and accumulators, 4/1/12 definition, 4/1/1 disposal of end-of-life vehicles, 3/4/10, 4/1/12–13 integrated pollution prevention and control, 4/1/7–8 packaging and packaging waste, 3/1/17, 4/1/12 Exide, 1/3/11, 1/3/24 externalities, Intro/23, Intro/32 futures contracts and markets, Intro/28–29, 4/1/3 German Packaging Ordinance, 3/1/17–18, 3/1/19 glass bottle banks growth in UK, 3/4/11 colour, 3/4/2 composition, 3/4/2 cullet availability, 3/4/7 definition, 3/4/5 energy savings, 3/4/5–6, 3/4/7 foreign (external), 3/4/8 impurities, 3/4/6–7, 3/4/9–10 internal, 3/4/8 intenational trade, 3/4/12 pricing arrangements, 3/4/12 recycling rates, 3/4/8, 3/4/9, 3/4/11 end uses, 3/4/1 flat glass, 3/4/3, 3/4/8–9 flint, 3/4/8 glasphalt, 3/4/7 industry structure containers, 3/4/5 flat glass, 3/4/14–15 natural occurrence (as obsidian), 3/4/1

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production EU, by sector, 3/4/4 costs, 3/4/4 glass containers in Western Europe, 3/4/6 production technology, 3/4/3, 3/4/4 properties, 3/4/1 recycled content, by colour (UK), 3/4/10 types, 3/4/2 gold consumption statistics, 2/1/2 end uses coinage, 2/1/1, 2/1/8 electronics, 2/1/2, 2/1/8 jewellery, 2/1/1–2, 2/1/8 Miller process, 2/1/4 pricing refined metal, 2/1/5 scrap, 2/1/13 production refining industry, 2/1/3, 2/1/11 refining technologies, 2/1/3–4 secondary, by region, 2/1/12 properties, 1/2/2, 2/1/1 recycling chain, 2/1/3, 2/1/10–11 scrap classification, 2/1/3, 2/1/7–10 international trade, 2/1/13 supply influences, 2/1/5–7 specifications, 2/1/4, 2/1/5 treatment/refining charges, 2/1/13 Gold Fields Mineral Services (GFMS), 2/1/12 Guardian Industries, 3/4/5 Hamersley Iron (HiSmelt process), 1/4/13 Handy & Harman (see Silver, pricing) Her Majesty’s Stationery Office (HMSO), 3/3/3–4 Hybrid vehicles, 1/3/24 Impact electric car (GM), 1/3/24 incineration, Intro/10, Intro/24 independent cast houses aluminium, 1/1/7 Institute of Scrap Recycling Industries (ISRI), 1/2/17, Intro/32 International Copper Study Group (ICSG), 1/2/13 International Institute of Synthetic Rubber Producers, 3/2/1

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Index

International Lead and Zinc Study Group (ILZSG), 1/3/4, 1/3/5, 1/3/10, 1/3/14, 1/3/15, 1/3/18, 1/3/20–21 International Reclamation Bureau, Preface/1 International Rubber Study Group (IRSG), 3/2/2 iridium, 2/3/1 iron cast iron, 1/4/5 direct reduced iron (DRI), 1/4/6, 1/4/7, 1/4/8, 1/4/14–16 primary iron, 1/4/7 iron ore, 1/4/7, 1/4/10 Isasmelt process, 1/3/9 Jaako Pophry, 3/3/14 Johnson Matthey, 2/1/11, 2/3/4, 2/3/5–6, 2/3/8, 2/3/10 Kivcet process, 1/3/8, 1/3/9 landfill, Intro/10, Intro/23 (see also waste hierachy) lead antimonial, 1/3/8 batteries, lead-acid lifetimes, 1/3/7, 1/3/17 recycling rates, 1/3/17, 1/3/19 recycling schemes, 1/3/17, 1/3/19–20 technology, 1/3/6–7 weight, 1/3/6 bullion, 1/3/8–9 consumption influences on, 1/3/5 trends by end-use, 1/3/3–4 electric vehicles, 1/3/24 end uses by country, 1/3/5 historical development, 1/3/2–5 industrial sectors, 1/3/2–3 energy requirements, Intro/20 geology, 1/3/7–8 industry structure battery industry, 1/3/11–12 concentration, 1/3/10–11 secondary sector, 1/3/10 North American Producer Price (NAPP), 1/3/12 product lifecycles, 1/3/7

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production energy requirements, 1/3/9 pattern of secondary, 1/3/25 primary, 1/3/24 secondary flowchart, 1/3/8 share of secondary, 1/3/13–15 technologies, 1/3/8–9 properties, 1/1/2, 1/2/2, 1/3/1–2 raw materials, 1/3/13–15 refining technologies, 1/3/9 remelt, 1/3/13, 1/3/17–18, 1/3/26 scrap categorisation, 1/3/16 collection chain, 1/3/18–19 definition as waste, 1/3/21 international trade in, 1/3/20–21 processing costs, 1/3/9 representative scrap prices, 1/3/22–23 sources, 1/3/16 supply elasticity, 1/3/17, 1/3/22 supply responsiveness (elasticity), 1/3/12–13 toxicity, 1/3/2 life cycle assessment (LCA), Intro/10, 4/1/10–11 London Bullion Market Association (LBMA) gold pricing, 2/1/5 silver pricing, 2/2/4 London Metal Exchange (LME), 1/1/15, 1/1/18, 1/2/10, 1/3/12 market failure (see Recycling) materials balance approach, Intro/3–5 materials conservation, Intro/5 Matsushita, 1/3/11 Metal Bulletin, 1/3/22–23 Metaleurop, 1/3/24 Metallstatistik, 1/3/24 Metals Week, 1/2/17, 1/3/12, 1/3/23 Meyer-Parry case, 4/1/6–7 Midrex, (see DRI process technology) Miller process, (see Gold) Municipal Solid Waste (MSW) composition, by country, Intro/13 controlled waste, Intro/6 National Packaging Protocol (Canada), 3/1/19 natural rubber (hevea brasiliensis), 3/2/1 Nymex, 2/3/4

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Index

obsidian (see glass, natural occurrence) Organisation for Economic Co-operation and Development (OECD), 1/3/20–21, 4/1/5, 4/1/17 osmium, 2/3/1 Owens-Illinois, 3/4/5 Packaging (waste) Recovery Note (PRN), 3/4/12–13 palladium availability from scrap, 2/3/5–8, 2/3/10 consumption by end use, 2/3/2–3 Pamp, 2/1/11 paper end uses, 3/3/2 industry characteristics, 3/3/1–2, 4/1/2 production processes deinking, 3/3/8–10 removal of contraries, 3/3/7–8 recycled fibre (RCF) definitions, 3/3/3–4, 3/3/5 usage, 3/3/3, 3/3/6 utilisation by region, 3/3/13–14 utilisation forecasts, 3/3/14–15 recycling chain, 3/3/10, 3/3/12 ‘urban forest’, 3/3/10–11 virgin fibre, 3/3/4 wastepaper broke, 3/3/4 classification, 3/3/5 costs and benefits of recovery from MSW, Intro/22–23 industrial, 3/3/4 municipal solid waste (MSW) in USA, 3/3/11 optimum recycling, Intro/23, 3/3/15 post-consumer, 3/3/4 pricing arrangements, 3/3/17–18 price trends (US), Intro/29–30 trade patterns, 3/3/15–17 UK standard groups, 3/3/5 Paper Federation of Great Britain, 3/3/3, 3/3/5 pig iron, 1/4/6, 1/4/8–10, 1/4/32 Pilkington, 3/4/3, 3/4/5 plastics additives, 3/1/2 calendering (see processing techniques, extrusion) classification, 3/1/1

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end uses, 3/1/2–4 engineering (or technical) plastics, 3/1/10, 3/1/19 feedstocks, 3/1/4 high performance plastics, 3/1/11 industry location, 3/1/7–8 PET, 3/1/8, 3/1/14, 3/1/20 properties, 3/1/1 polymerisation process, 3/1/4 polyvinyl chloride (PVC), 3/1/3, 3/1/8, 3/1/18 processing techniques extrusion, 3/1/6–7 moulding, 3/1/5–6 recycling feedstock (or chemical), 3/1/14, 3/1/16 industry structure in EU, 4/1/2 legislation, 3/1/12, 3/1/16–19 mechanical, 3/1/12–13, 3/1/16 rates, 3/1/9, 3/1/15–16 waste to energy, 3/1/14 scrap market development, 3/1/19–20 new (process), 3/1/11 post-consumer, 3/1/12 thermoplastics commodity plastics, 3/1/8 consumption, by region, 3/1/9 consumption, by type, 3/1/10 main forms, 3/1/2 production, by region, 3/1/9 production, by type, 3/1/10 thermosets, 3/1/2 platinum availability from scrap, 2/3/5–8, 2/3/10 consumption by end-use, 2/3/1–2 platinum group metals (pgm) (see also individual metals, platinum, palladium, rhodium, osmium, iridium and ruthenium) autocatalyst recycling rates, 2/3/5–8 end uses, 2/3/3 pricing arrangements refined metal, 2/3/4–5 scrap, 2/3/11 properties, 2/3/1 recycling arrangements, 2/3/9–11 recycling ratios, 2/3/8 recycling technology, 2/3/4 trade in scrap, 2/3/11

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Index

posco, 1/4/3 PPG Industries, 3/4/5 product characteristics, Intro/14, Intro/19 Producer Responsibility Obligations (Packaging Waste) Regulations (UK), Intro/37–39, 3/4/12 protocol, 1/3/24 Proximity principle, Intro/8 pulp, (see paper, virgin fibre) Pulp and Paper International, Intro/32 Pulp and Paper Week, 3/3/17 QSL process, 1/3/9 Quexco, 1/3/24 Rand Refinery, 2/1/11 raw material, definition, 4/1/5 recycling definition, Intro/1 diminishing returns, Intro/8 energy requirements, Intro/20 external benefits, Intro/23 external costs, Intro/23 history of, Intro/1–3 market failure and, Intro/23–24 optimal level of, Intro/22–25 recycling industry size, Intro/2–3 structure, Intro/25–27, 4/1/2 recycling rates by material and product, Intro/17 calculation, Intro/17–18 factors affecting, Intro/13–15 Recycling World, 4/1/7, 4/1/16 Refuse-Derived Fuel (RDF), 3/1/15 Renco Group, 1/3/24 residuals (see Scrap) resources non-renewable, Intro/4 renewable, Intro/4 Returbatt, 1/3/24 reuse, definition, Intro/12–13 rhodium availability from scrap, 2/3/5–8 consumption by end use, 2/3/3 Royal Canadian Mint, 2/1/11 rubber consumption by region, 3/2/4 end-uses and products, 3/2/2 granulated, 3/2/10

Index / page vi

international trade, 3/2/13–14 natural pricing, 3/2/5 trading arrangements, 3/2/5 production by region, 3/2/4 properties, 3/2/1 reclaimed, 3/2/11 scrap availability, 3/2/6, 3/2/8 chemical recovery, 3/2/7, 3/2/11 tyre dumps, 3/2/7 synthetic trading arrangements, 3/2/5–6 world capacities, 3/2/1 tyre arisings, 3/2/7–8, 3/2/9 composition, 3/2/3–4 energy recovery (TDF), 3/2/12–13, 3/2/14 life cycle, 3/2/8 product life extension, 3/2/9–10 reuse, 3/2/9 waste disposal legislation, 3/2/7, 3/2/13 rubberised asphalt, 3/2/12 thermal decomposition, 3/2/12 thermal disposal, 3/2/12–13 ruthenium, 2/3/1 Saint Gobain, 3/4/5 scrap (see also individual materials) definition, Intro/1 merchants, Intro/26 supply elasticity, Intro/12 trade, Intro/3–4 types Home (Revert), Intro/11 manufacturer’s (process/prompt), Intro/12 old, Intro/12 secondary billet plants (see independent cast houses) secondary materials availability, Intro/15 markets development, Intro/28 prices, Intro/28–29 silver consumption statistics, 2/2/1–3 electrolytic refining moebius process, 2/2/3–4 Thum-Balbach process, 2/2/4

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Index

end uses, 2/2/2–2/2/3 pricing, 2/2/4 production, 2/2/9 properties, 1/2/2, 2/2/1 recycling chain, 2/2/8–9, 2/2/10 recycling economics, 2/2/10–11 scrap forms, 2/2/7–8 international trade, 2/2/10 sources, 2/2/3–4, 2/2/5–6 supply influences, 2/2/5, 2/2/7 Silver Institute, 2/2/2, 2/2/10 Society of Motor Manufacturers and Traders (SMMT), 1/3/24 sol-gel process (see glass, production technology) starting-lighting-ignition (SLI) batteries (see lead, batteries) steel alloy, 1/4/1 blast furnace technology feed materials, 1/4/10–13 pulverised coal injection (PCI), 1/4/11–13 cold-rolled (CR) coil (see finished steel products) competing products, 1/4/2 crude steel, 1/4/6, 1/4/18 downstream products, 1/4/5 end-uses demand influences, 1/4/5–6 energy requirements, Intro/23 external scrap availability, 1/4/26–28 new industrial, 1/4/18–19, 1/4/22 old scrap, 1/4/19–22 pricing arrangements, 1/4/32 relative importance, 1/4/24–25 requirement for, 1/4/17, 1/4/23, 1/4/25 scrap products, 1/4/20 tramp elements, 1/4/21–22 foundry pig iron, 1/4/9–10 finished steel products, 1/4/4 galvanised (see finished steel products) hot-rolled (HR) coil (see Finished steel products) internal scrap, 1/4/17–18, 1/4/26 new ironmaking technology Corex process, 1/4/13 HISmelt process, 1/4/13

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price relationships forecast, 1/4/35–36 historical trends, 1/4/33–34, 1/4/44–47 representative, 1/4/32–35, 1/4/43 production, by process, 1/4/22–24, 1/4/38–41 properties, 1/4/1–3 scrap industry structure, 1/4/28–30, 4/1/2 semi-finished products (semis), 1/4/3–4 Siemens-Martin process, 1/4/7, 1/4/8, 1/4/22 specifications, 1/4/37 stainless, 1/4/1 tinplate (see Finished steel products) trade in scrap, 1/4/25–26, 1/4/30–32, 1/4/4 sustainable development, Intro/3 Texasgulf, 2/3/10 thermodynamics, laws of, Intro/3, Intro/14 tinplate (see steel) Tocom, 2/3/5 Tombesi judgement (see also EU, waste defined), 4/1/6 trading centres (see under individual materials) UBC recycling plants, 1/1/7, 1/1/8 United Nations Conference on Trade and Development (UNCTAD), 1/3/21 US Aluminium Association alloy designation, 1/1/6, 1/1/14 US Bureau of Labour Statistics, Intro/29, Intro/30, Intro/32 US Environmental Protection Agency (US EPA), Intro/8, 3/3/11, 4/1/9 US Geological Service, 2/2/10 US Highway Bill (ISTEA), 3/2/12 US Scrap Tire Management Council, 3/2/14 Used Tyres Project Group of the European Comission, 3/2/13 Usinor, 1/4/29 Varta, 1/3/11 vehicles in use, 1/3/15, 1/3/14 ‘Valorisation’, 3/1/18 Virgin material, Intro/11, Intro/19 virtual metals, 2/1/2, 2/2/2, 2/3/8

Index / page vii

Index

waste classification, Intro/9 defined, Intro/8, 4/1/4–7, 4/1/17 restrictions on trade (see under individual materials, Basel Convention and EU) waste to energy (WTE) recycling (see plastics recycling) waste management hierarchy, Intro/8–9

Index / page viii

Wavin Re-use, 3/1/13 Worldwatch Institute, Intro/4 Yuasa, 1/3/11 zinc energy requirements, Intro/20 properties, 1/1/2, 1/2/2

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Introduction Vincent Rich

A brief history of recycling The materials balance approach to resource and recycling flows Waste and the waste management hierarchy The problem of waste The waste (management) hierarchy Recycling flows and recycling rates Scrap generation and recycling flows Home (or revert) scrap New (prompt industrial or process) scrap Old (commercial or post-consumer) scrap Re-use

Influences on recycling rates Material characteristics Substitutability of secondary (scrap) and primary raw materials as production inputs Product markets Environmental awareness and government regulations

Measuring recycling rates The economics of recycling Recycling decisions and recycling efficiency Producer recycling (resource use) decisions Product purchase and discard decisions

The optimal level of recycling The structure of the recycling industry Markets and market prices Notes References

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A brief history of recycling The reuse and recycling of materials by societies has a long history, stretching back to the time when man first produced objects for ornamentation or tools and articles for use. The intrinsic value of these artefacts compared to individual income and wealth, the relative difficulty and high cost of obtaining virgin materials or replacement products, would have made reuse, recovery or recycling an economic and physical necessity. While for much of human history recycling will have remained largely a local, craft-based or ‘industry’, some ‘waste’ materials (like glass and precious metals) were already subject to long distance trade over 2000 years ago. Early recycling activities would have been small in scale and limited to materials and products that could be directly reused or were technically fairly easy to recover. The period prior to industrialisation in England has been described as ‘a golden age of recycling’. Materials like clothing, roofing lead, bricks and building stone, and other metals were invariably recovered and used again. Fabrics (such as rags) were recycled to produce paper,1 an activity that continued well into the nineteenth century, undermined only by the development of the means to produce paper efficiently from wood. Following the Industrial Revolution in Europe and North America, and the development of more sophisticated technologies for the processing of metals and other materials, the underlying potential for recycling increased. This period also witnessed the development of growing regional and international trade in scrap. The emergence of organised forward and futures markets from the mid-nineteenth century onwards, and published reference prices, will have helped support the development of markets for secondary materials and products, and the evolution of a recycling industry, as such. During the first half of the last century, however, technological innovation, including developments in processing and transportation, also increased the accessibility (and reduced the cost) of virgin ores and materials, and facilitated their movement to centres of consumption. At the same time, increasing wealth undermined the incentive to recycle, while the introduction of new materials and more sophisticated products, and trends towards miniaturisation and economisation in materi-

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Introduction / page 1

Introduction

al usage, gradually made recycling a more technically-demanding (and increasingly costly) undertaking. Nevertheless, the recycling industry not only survived, but expanded and became increasingly diversified in the second half of the twentieth century, and for sound economic reasons. The recycling of wastepaper, for instance, began (tentatively) in the 1960s and 1970s because of growing shortages of economically accessible virgin fibre; the OPEC-induced oil price rises of the 1970s also stimulated recycling activity across of range of materials, and gave impetus to the further development of plastics recovery technology. The underlying economics of materials recycling are closely linked to developments in primary (virgin material) markets, both overall supply and demand conditions, and the evolution of commodity prices. Apart from earlier episodes of economic dislocation (war, trade sanctions, etc), direct government interest in recycling (reflecting growing political pressures) only really emerged in the 1960s. This interest has evolved from one based around materials conservation (and worries about resource depletion) to a focus on the perceived environmental benefits (in terms of reduced pollution) of recovering and re-using discarded products or waste materials. Recycling, together with other forms of recovery and re-use, is now high on the political agenda, largely as a result of the pressure emanating from heightened consumer concerns. In addition, the intrinsic cost savings and potential competitive advantages associated with recycling are now more widely recognised by business, partly because the changing legislative environment has forced them to view it as such. The management of waste has been transformed as an economic activity in recent years, and is now a large scale, international undertaking in its own right in terms of both the flow of resources it represents and the employment it generates. The scrap and recycling industry is an important, and rapidly expanding, part of this.2 Despite these structural changes, however, household repair and re-use of products together with ‘informal’ recycling networks (now increasingly driven by altruism, rather than economic necessity) remain important, as do the activities of small scrap traders and merchants. This is particularly the case in developing countries, where the dynamics of the recycling process are markedly different from in the West. A distinction needs to be drawn, however, between the generation and collection of residual materials on the one hand, and the actual util-

Introduction / page 2

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Introduction

isation of these materials in the production process on the other. While material utilisation processes in developing countries are fundamentally the same as in industrialised countries, the motivation to recover materials from the various waste streams is very different. ‘Recovery in most developing countries is mainly a market driven phenomenon with a comprehensive domestic trade system. It is expanding and developing rapidly without any government support. In contrast, . . . in the industrialised world . . . public participation and government involvement play a much more important role’.3 Governments certainly now take a more pro-active role, both nationally and through international forums and treaties. They are increasingly recognising the need to adopt systematic policies towards the environment and, reflecting the current focus on ‘sustainable development’, this has included an increased emphasis on waste management and recycling activities. There is particular concern over the vast (and increasing) amounts of waste materials (redundant products, components, chemicals, etc) generated in the course of economic activity, both by producers and consumers. The worry is that this waste may give rise to irreversible damage to the global natural environment and so adversely affect future physical and economic well-being.

The materials balance approach to resource and recycling flows The process of production and consumption in modern economies inevitably gives rise to pollution or waste which requires (proper) disposal. The links between economic systems and the natural environment in which they are embedded and on which they rely are complex, but can be described (and explained) using the materials balance approach4 which builds on the first and second laws of thermodynamics. Using this approach, the various interactions between economy and environment (and vice versa) can be readily appreciated and analysed (see Fig. 1). Two aspects of the laws of thermodynamics are particularly important in the broader context of recycling, which we will develop further later: (1) All resource extraction, production and consumption activities (including recycling operations themselves) eventually give rise to waste products (residuals) equal in matter/energy terms to the resources

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Introduction / page 3

Introduction

Environment as supplier of natural resources Q

I Basic processing

Extraction

Fabrication

Consumption

IS Non-product outputs Modification activity

IRT

QW

IRT RECYCLING WP Environment as waste receptor I IS IRT WP WPR Q QW

WPR

Environmental damage (pollution)

= primary material and energy inputs = secondary (recycled) inputs = primary inputs for recycling and/or modification processes = residuals requiring disposal = residuals generated during treatment and/or recycling processes = final product output = residuals from consumption

1 The materials balance framework. Source: adapted from Turner, Pearce and Bateman (1994).

flowing into these sectors (i.e. I = WP + WPR + QW); and, (2) Complete recovery or recycling of these waste products (residuals) is impossible because of material losses; Solow5 has likened the process to that of the multiplier in macroeconomic theory and this seems a useful analogy. Further, because of diminishing returns, the closer recovery approaches 100%, the greater the cost (in financial or energy terms) of each incremental increase. In the context of recycling, a distinction can usefully be drawn between renewable and non-renewable materials or natural resources. Renewable natural resources are those (like timber) that are normally replenished naturally at a measurable rate, but may be prone to overuse or alternatively recyclable to some degree. Non-renewable (or depletable) natural resources (like metals or fossil fuels), on the other

Introduction / page 4

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Introduction

hand, are essentially finite in quantity. The total quantity available will not be known, however, and the resource base may be greatly expanded by recycling or recovery (where production processes or end-product usage allows). Materials and energy (I ) are drawn into the economic system from the environment, are processed and (physically and/or chemically) transformed into products (Q) that are then distributed to their point of consumption or usage. At various stages in the process (and at varying intervals) ‘non-product’ or intermediate outputs will be partially recycled, with residual materials (wastes) returned to the natural environment (WP). Eventually, end-of-life products also form part of the waste ‘stream’ (QW) which needs to be effectively managed. The materials balance approach suggests that ultimately the key concern should be reducing the amount of virgin or primary natural resources (I) drawn into the economic system (or materials conservation). The quantity of resources required can be reduced in one of two broad ways: 1 By reducing economic activity itself, or the materials intensity of that activity (the amount of materials used per unit of production or consumption). The former may prove to be problematic, politically. The latter could be achieved by altering the overall mix of goods and services produced, or by cutting the materials intensity of individual products. 2 By increasing the re-use or recycling of materials from the waste stream. This may require changes in the pattern of incentives and penalties facing economic agents i.e. (firms/organisations or households), technological modification or improved information flows.

Waste and the waste management hierarchy The problem of waste Waste can be broadly defined as ‘any substance or object which the holder discards or intends or is required to discard’.6 However deciding whether an item or material is in practice waste or not (and at what stage waste again becomes a resource) can be difficult because of the almost

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Introduction / page 5

Introduction

infinite range of materials and disposal points involved. Often it can only be determined on a case-by-case basis, sometimes through recourse to the law, and the issue remains subject to widespread and continuing debate. There are also problems related to the classification of waste itself. Fundamentally, waste can be categorised according to its origin (domestic/industrial, etc), form (solid/liquid/gaseous) or properties (inert/toxic), but government agencies also develop their own classification systems for waste management purposes. At this stage it is probably most useful to categorise waste arisings on the basis of their origin. Controlled waste includes most industrial, commercial and municipal solid waste (MSW); there is a separate category of special or hazardous wastes. The latter are, as one might expect, strictly monitored and their disposal is very tightly regulated. Finally, there are large quantities of agricultural waste (largely organic matter), construction (demolition) wastes, mining (and quarrying) wastes and sewage sludge which are usually not directly covered by waste management legislation. The main focus of recycling activities has been on so-called controlled wastes, i.e.: 1 industrial waste (from factories and industrial plants) 2 commercial waste (from wholesalers, catering establishments, shops and offices) 3 municipal (solid) waste (collected by or on behalf of the local or municipal authority, mainly from households) Partly as a result of definitional problems and partly reflecting a lack of government emphasis on systematic waste management policies, available data (by country) on the volume, source and forms of waste generated is far from comprehensive, and of variable quality. Legislation has now been enacted in the EU proposing the development of a new database on waste, which is proceeding. As part of this exercise, Eurostat (a European statistical agency) has recently published data on waste arisings and management in Europe, based on a questionnaire developed and applied in conjunction with the OECD. This shows that the amount of MSW generated in Western Europe amounted to approximately 190 million tonnes per year (or some 400–500kg per person) in the mid-1990s. Separate studies have shown that MSW generation in Europe is closely correlated with economic growth, but that overall waste production rose much more than GDP growth in the 1990s. Per capita MSW arisings in the EU increased by roughly 2% per year (or by

Introduction / page 6

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Introduction

Table 1 Estimated controlled waste arisings in England and Wales Source

Volumes

Commercial and industrial waste1

Total volume: 70–100 million tonnes 30% from commerce; 70% from industry 35% recycled/reused; 50% to landfill.

Municipal waste2

Total volume: 27 million tonnes 90% from households (22 kg per household per week, 1.14 tonnes per year) 8% collected for recycling/composting; 85% disposed of to landfill.

Note: 1. Based on a national survey undertaken by the Environment Agency between October, 1998–April, 1999. 2. From 1997/98 annual survey undertaken by Local Authorities. Source: ‘A way with waste’, DETR, June, 1999.

about one third in total) between 1985 and 2000. Waste management, however, remains dominated by landfill and incineration rather than recycling (and composting). Only in Austria, Denmark, Germany, the Netherlands and Sweden has any major progress been made in switching from landfill and towards recycling, at a rate which exceeds the underlying growth in MSW.7 Recycling rates for MSW in these countries ranged between 23–39% in the late-1990s; if composting is inlcuded, the recovery rates achieved were between 28–48%. Table 1, which provides more detailed data on controlled waste for England and Wales indicates a MSW recycling (and composting) rate of only 8%. Recycling of commercial and industrial waste is somewhat higher, as one would expect, at about 35%, but the volumes involved are also much greater (with 70–100 million tonnes of this waste being produced annually, three or four times that of MSW). Waste generation has been increasing faster in North American than in Europe (at some 3–4% per year) since the 1960s, but both the USA and Canada have been more successful at expanding the amount of this that is recycled, rather than simply dumped in landfill. Recycling initiatives and waste diversion targets have been in place in most states since the early 1980s, and there are well-developed community-based recycling schemes in many areas. One problem in terms of consistency (both between states and internationally) is that there is no commonly accepted definition of MSW in North America; in particular there is significant variation across states and provinces in terms of how much commercial and industrial waste is included.

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Introduction

Figure 2, shows the US Environmental Protection Agency’s (EPA) estimate of the growth of MSW in the USA between 1960 and 2000, both in total and on a per capita basis. Although the amount of waste generated per person has stabilised in recent years, it is still (at over 700kg/per year) far greater than in Europe. Over the same period, the recycling rate for MSW has risen from about 6% to over 30%, with many states now achieving rates of 40–50%. Most industrialised countries are facing increasing difficulty in disposing of the waste they generate, either because of a physical shortage of landfill sites which meet acceptable environmental standards, or because the availability of suitable sites for disposal (for landfill or incineration) is limited by social or political pressures. The problem is generally less acute in North America, but there are pockets of shortage (in New England, for instance). Further, a strict application of the ‘proximity principle’8 embodied in EU and other international legislation (like the Basel Convention), is likely to further accentuate the waste management and disposal problems facing national governments.

The waste (management) hierarchy The waste (management) hierarchy (see Table 2) has for many years been advocated by environmentalists as an indicator of the preferred ‘ranking’ of waste disposal options based on their perceived impact on the environment. It has also informed (both explicitly and implicitly) the waste management strategies adopted by the UK, the European Union (EU) and the USA since the early 1990s. However most writers believe that the hierarchy should act, at best, as a general guide rather than as a precise policy prescription under all circumstances. According to Pearce and Brisson (1995) for instance, ‘popular ideas that ‘rank’ (disposal) options in terms of source reduction, re-use, recycling, incineration and landfill (usually in that order) have no logical foundation, although the ranking might turn out to be correct on detailed analysis. Indeed . . . the idea that ‘more recycling is better’ has no foundation unless it is clear what the starting point is and what the relevant costs and benefits are’. In other words, all options (related to a particular material, product, process, waste management project or policy initiative) should be evaluated (as far as possible)

Introduction / page 8

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Millions of tons per year

1960

1965

1970

Total MSW

1975

2 Municipal solid waste generated in the USA, 1960–2000.

0

50

100

150

200

250

1980

Per capita MSW

1985

1990

1995

2000

0

100

200

300

400

500

600

700

800

Introduction

Introduction / page 9

kg per person/per year

Introduction

Table 2 The waste (management) hierarchy Waste management option

Key elements

Reduction at source

Process, product or packaging re-design; durability. ‘Green’ consumerism. Refillable containers, reconditioned products (re-moulded tyres), product repair. New uses for redundant goods. Recyclable products (disassembly); use of secondary inputs; sorting of household waste (MSW). Separation of organic materials in MSW; household composting of biodegradable waste. Recoverable lowgrade heat. Separation of combustibles in MSW; preor post-incineration materials recovery. Treatment of hazardous and clinical wastes; pre- or post-incineration materials recovery Energy from landfill gas (65% methane/35% CO2) for heat/electricity.

Reuse

Recycling and recovery

Composting

Incineration with energy recovery Incineration without energy recovery (disposal) Landfill (disposal)

Source: Compiled by author from DETR (1999) and various other sources.

according to the overall (social) benefits and costs they generate. Various studies have attempted to model the relative attractiveness of the various waste management options using a range of techniques including or combining a study of their financial cost-effectiveness, a full economic evaluation (using cost-benefit analysis) and/or Life Cycle Assessment or LCA (aimed at determining the total environmental and social impact of product usage and disposal).9

Recycling flows and recycling rates Scrap generation and recycling flows In the current discussion, a useful categorisation is one based on the quantity, inherent value and quality of the material discarded, and on the complexity of the recycling chain involved. We can identify four separate recycling flows (or circuits) distinguished largely by source and purity of material which are common to all economies namely home (or

Introduction / page 10

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Introduction

R4

HOUSEHOLDS R3b R4

R3b

LOCAL/MUNICIPAL AUTHORITIES

R3a

FIRMS D (Final products /distribution)

FIRMS E (Waste management firms/ scrap merchants) R2

FIRMS A (Natural resource extraction)

S

FIRMS C (Conversion/ fabrication) R2

FIRMS B (Smelting/refining/ basic processing) primary/secondary R1 = ‘Home scrap’ R2 = ‘Prompt/commercial’ scrap (R1 + R2 = ‘New’ scrap) R3a = Old scrap (commercial) R3a = Old scrap (MSW) R4 = Re-use S = Secondary raw materials V = Virgin raw materials

V

R1

3 Recycling/residual resource flows.

revert) scrap; new (prompt industrial or process) scrap; old (commercial or post-consumer) scrap; and re-use. All of these apart from home scrap (see below) contribute to (measurable) overall national recycling ‘rates’. These interrelate as shown in (Fig. 3). Home (or revert) scrap Home (or revert) scrap is generated as off-cuts during treatment of raw materials (both primary and secondary) within basic smelting, refining or processing plants. It is of known purity and available in large and regular quantities. Home scrap recycling rates are very high (approaching 100%), and this material is rarely sold externally.

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Introduction / page 11

Introduction

New (prompt industrial or process) scrap New (prompt industrial or process) scrap is sometimes also known as manufacturer’s scrap; it is generated during manufacturing or fabrication of finished or semi-finished products.10 Its level of contamination or purity may be high or low depending on which stage of the manufacturing stage it is generated and the complexity of the product of which it forms a part. Such scrap is invariably collected and recycled on a regular basis, but usually requires the intervention of a secondary material (or scrap) merchant in order to return it to basic processing plants. Supply of new scrap tends to be price-inelastic, being more directly determined by levels of industrial activity. The increasing efficiency of manufacturing processes has led to a large decline in the volume of new scrap generated in recent years for some metals (copper, lead and iron and steel). For others (aluminium and zinc, for instance), however, the share of secondary production coming from new scrap has been growing. Old (commercial or post-consumer) scrap Old scrap may be generated by firms during the final stages of the production or distribution chain (commercial scrap), where it arises largely in the form of packaging waste. Collection and recycling of this material is the domain of (scrap) merchants; it is fairly consistent in quality and available in reasonable quantities, but under normal circumstances its supply (and demand from merchants) will be relatively price-elastic. Commercial scrap has been targeted by legislation in a number of countries. Old scrap also arises from households and small commercial firms as part of municipal solid waste (MSW). Although the intrinsic value of recyclable materials contained in MSW is high (see Table 3), recycling rates in most industrialised countries have traditionally been very low. Scrap generated in MSW is typically characterised by high contamination and lack of homogeneity, and is generated in relatively low quantities from dispersed sources and locations. The supply of postconsumer recyclables (via scrap merchants or directly from municipal authorities) will, at least in the short-term, be partly price-dependent (more will be offered for recycling and more will be collected over greater distances the higher its value). Re-use Re-use involves the re-employment of a redundant (postconsumer) product (as an object) either in its original use (a refillable

Introduction / page 12

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Introduction

Table 3 Composition of MSW in selected countries (% of total waste, by weight) Material

USA

UK (1996)

France (1995)

Spain (1996)

Greece (1996)

Hungary (1996)

Tanzania

Paper and board Plastics Glass Metals Textiles Compostables Others Total

37.5 8.3 6.7 8.3 2.9 24.6 11.7 100

32 11 9 8 2 21 17 100

25 14 13 4 3 29 15 100

21 11 7 4 5 44 8 100

18 10 3 3 4 51 11 100

19 5 3 4 3 32 33 100

9 2 1 3 1 59 25 100

Per capita MSW (kg/yr)

730

476

597

390

372

473

na

bottle or re-mould tyre, for instance), or in a different application. Once quite widespread, post-consumer re-use is now increasingly uncommon, certainly in the modern industrialised economies. The term ‘re-use’ is sometimes also extended to cover the on-site collection and re-introduction of materials within industrial operations; however, ‘re-use’ of industrial residues normally requires changes to in-plant practices and some source segmentation (which would place the material under home or new scrap in the categorisation used above).

Influences on recycling rates There are four principal influences on rates of recycling: material characteristics; the substitutability of secondary (scrap) and primary raw materials as production inputs; product markets; and environmental awareness and government regulations. We can identify a number of key influences on the recycling rates achieved for particular materials and products. These relate to their intrinsic nature (which will determine their inherent recyclability), how they have been used (and disposed of) as well as the existence or otherwise of established recycling infrastructure and systems (which may have been market-driven or have emerged as a result of public policy). Material characteristics As intimated above, there is a wide variation in the recycling rates achieved for the different recycling flows; these range from almost 100%

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Introduction / page 13

Introduction

Contamination High

Low

High

High

Home scrap

Mass

Homogeneity

Old scrap ( MSW) Low

Low Dispersed

Concentrated Location

4 Physical characteristics of recyclable materials.

at one extreme (home scrap or recycling flow R1) to less than 10% at the other (for MSW or reuse, R3b or R4) in some countries. To a large extent this can be explained by the physical characteristics of the materials involved in each of the flows and by the laws of thermodynamics (Turner et al, 1994). The four key characteristics are mass (or volume of recyclable materials); homogeneity (level and consistency in quality of recyclable materials); contamination (or mixing of materials); location (the number of points at which the materials are first discarded as waste or residuals, and their geographical dispersion) (see Fig. 4). Residual materials which are of greater purity (high homogeneity and low contamination) will be technically easier and therefore less costly to recycle; if in addition they are available in high volumes and concentrated in a small number of locations they will be cheaper to collect and transport to recovery operations. This will have underpinned the evolution of efficient scrap (residual) collection systems (infrastructure and organisations) which will help facilitate high recycling rates. The purity of recycled products also influences the underlying demand for them; the relatively low rate of plastics recycling compared to that of lead or aluminium, for instance, is due to the difficulty of producing a product of adequate quality from waste plastics.

Introduction / page 14

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Introduction

Substitutability of secondary (scrap) and primary raw materials as production inputs The extent to which secondary (scrap or residual) raw materials are viewed as a close substitute to primary (virgin) materials will help determine the market for recycled materials, and therefore the demand for them. The degree of substitutability will depend on the physical characteristics (quality, purity and degree of contamination) of the raw materials involved, their ease of availability, the flexibility of processing technology (which will define the feasibility of using either virgin and/or scrap materials, and in what proportion), costs of production and, indeed, the relative prices of secondary and primary materials (see below). Product markets The availability (and recycling rates) of particular materials within MSW will also be influenced by end-use patterns (product forms and design, lifetimes and durability), demand growth rates and wider trends in consumption. Here we would also include the availability of markets for recycled products or products containing recycled materials, both in traditional end-uses and through the development of new market opportunities. Environmental awareness and government regulations Environmental awareness, conditioned by a range of (largely intangible) historical and cultural factors as well as levels of income and economic well-being, clearly has an influence on local and national recycling rates. The better overall ‘recycling’ performance of some countries might be perceived to be partly the result of the higher priority assigned by individuals (because of education, lifestyle, etc) to environmental matters. This heightened environmental awareness will itself influence the policy agenda (locally, nationally and internationally) and make it more likely that government regulations favouring and encouraging recycling (where this is seen as the most environmentally benign waste management option) are introduced.

Measuring recycling rates Where suitably disaggregated and reliable data is available, recycling rates for individual materials (or indeed) products can be calculated, (see Fig. 5 and 6). In its simplest sense a recycling ‘rate’ for a

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(Recycling as % of post-consumer product waste)

Glass containers

Plastic soft drink bottles

Paper & board

5 Product recycling rates in the USA, 1997. Source: US EPA.

0

10

20

30

40

50

60

70

80

90

100

Old newsprint

Aluminium cans

Automobile batteries

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(% of consumption)

Aluminium

Copper

1985 Ferrous metals

Lead

1990 Zinc

Plastic

6 Material recycling rates in the UK, 1985–1995. Source: various, from DETR website.

0

10

20

30

40

50

60

70

80

1995 Paper & board

Glass containers

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material will be given by the ratio of the tonnage recycled annually/annual tonnage available for recycling. For individual materials, a relatively low overall recycling rate may however simply reflect the pattern of usage of the material in question, (the range and type of products in which it is used, average product lifetimes, etc), suggesting a degree of caution when using this measure as a guide to the relative recyclability of different materials. These elements are considered in detail within the Chapters following. Even for a given material the basis of calculation can vary, giving rise to wide differences in perceived recycling rates. Table 4 illustrates a range of plausible recycling ‘rates’ for aluminium in the UK, which range from 31% to 88%. The need to take account of international movements of secondary (waste or scrap) materials makes matters particularly complicated, both in terms of estimation and terminology (which is far from standardised). The inclusion of secondary raw material net imports in the calculation of a national recycling rate (as part of the numerator, tonnage recycled annually) produces a recycling activity rate (or ‘utilisation rate’); if net imports are not included then a recycling effort rate (or ‘recovery rate’) has been calculated.11

The economics of recycling Recycling decisions and recycling efficiency Recycling flows are affected by three distinct types of decision made by individual firms (or other private/public organisations) and

Table 4 Recycling rates for aluminium scrap in the UK, 1988 Basis of calculation

Recycling rate

Secondary aluminium + scrap consumed/total aluminium consumption Secondary aluminium production/total aluminium consumption Secondary aluminium production/primary aluminium consumption Old aluminium scrap recovery/aluminium scrap theoretically available1 Old aluminium scrap recovery/recoverable aluminium scrap

31% 32% 47% 63% 88%

Note: 1. Based on a product-by-product analysis of material content and product lifetime. Source: Derived from Henstock (1996).

Introduction / page 18

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households, and the transactions that result from them; (i) a resource use decision by firms both individually and sectorally (as basic processors, Firms B in Fig. 3), involving the appropriate balance between virgin and recycled material inputs; (ii) a purchase decision by households or firms (as consumers), relating to the types of products demanded, the form in which they are purchased (i.e. packaging materials) and their inherent characteristics (i.e. their durability); and, (iii) a discard decision by households and firms, involving the choice of when and how to dispose of the residual material or redundant product (which will involve a range of possible waste management options).12 Overlaying these decisions will be the policy environment engineered by governments, which will determine the precise blend of incentives and penalties facing individual economic agents, and will reflect the emphasis given to recycling within their overall waste management strategies. Producer recycling (resource use) decisions For profit-seeking firms, the decision to recycle depends on the availability and cost of recycled (or secondary) materials (or inputs) relative to virgin (or primary) materials. It also requires that any price differential in favour of recycled materials be sustained over time, to make investment by firms in infrastructure and processing technology (including the means for ensuring future environmental compliance) worthwhile. The choice by the firm between virgin and recycled inputs will also determine the market possibilities for residual materials, where this material is being re-used within the same industry. New scrap is usually of high quality and is simple to identify and collect. The costs of recycling new scrap are consequently low, and its supply (and demand) is highly price inelastic; under normal circumstances it is therefore economic for firms to recycle this material. Collection and transport usually represent a significant part of total recycling costs involved in the supply of post-consumption secondary raw materials (old scrap). Sources of old scrap are normally concentrated in and around urban centres, close to areas of product consumption and usage, while processing facilities may sometimes be located at some distance from these, particularly those plants which were established originally to treat primary (virgin) materials. Unit transport costs of secondary materials will also be relatively higher because the opportunities for bulk shipment available to primary materials will largely be absent.

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Introduction

Table 5 Energy requirements for primary and secondary metal production Metal

Source

GJ/t

Aluminium

Bauxite (typically 47% Al2 O3) (25% Al) Secondary

270 20–30

Copper

Best case: (1% ore) Worst case: (0.3% ore) Secondary

91 184 4–50

Copper

Electrolytic

74

Lead

2% ore Secondary

39 1–11

Steel

Average open hearth

31

Zinc

5% ore Secondary

61 3–28

Source: Henstock (1996).

A major competitive advantage of many secondary materials lies in the potential savings in direct energy requirements they permit (see Table 5), although the precise benefits depend crucially on the form of scrap or residual input used, and therefore the treatment process required. There may also be indirect benefits because the form of energy required is different (i.e. electricity as compared to fossil fuels). Figure 7 represents an analysis of the resource-use decision facing a firm which can use either recycled or virgin materials in the manufacture of a given product (for simplicity we assume that these are completely substitutable as inputs13). It shows a conventional downward-sloping demand curve (D), and associated marginal revenue curve (MR), which provide a measure of the value of the material to the firm; we assume here that the firm operates in an imperfectly competitive market. MCV represents the marginal cost of virgin materials to the firm, while MCR shows the marginal cost to the firm of using recycled (or secondary) materials. MCJ is the horizontal summation of the two lines. The firm’s objective is assumed to be profit maximisation, which is achieved by equating MR with MCJ (or point S in the diagram); this indicates an optimal output level of Q*. The relative amounts of virgin and recycled materials used can be derived from the point of intersection of the line ST with MCV and MVR; these are QV and QR, respectively. The recycling ‘ratio’ (or the share of output met from recycled inputs) in this example is TN/TS. Anything which increased the supply and reduced the cost of recycled inputs (through central government subsidies or local recycling initiatives) would shift MCR downwards to

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MCV MCR Price/cost

MCJ S M

T

N

D MR

0

QV

QR

Q*

Output

7 Producer use of virgin and recycled material inputs.

the right and increase this ratio. A tax on virgin materials would have a similar effect. As a result, the MRV curve would shift upwards to the left (the use of virgin inputs would be more costly) and so too would the MCJ curve. Total usage of materials would fall, but the demand for recycled inputs (because they would now be relatively cheaper) would rise. Product purchase and discard decisions Current consumer decisions over which type and what quantity of products to purchase will influence product design, production and packaging decisions and ultimately have an impact on the volume and composition of the MSW stream. Subsequent discard or disposal decisions will determine when the redundant product should be discarded (because it is broken, no longer meets the consumer’s needs, or is superceded by a new product) and the method of discard. Consumer purchase decisions are influenced by the characteristics exhibited by products, which may well include how environmentally benign they are or how durable, as well as their price. Raising levels of recycling requires that firms manufacture products that are themselves recyclable, and that use recovered secondary materials, thus generating demand for these materials. Consumers must also be willing to buy products that are easy to recycle or that use recycled inputs, viewing these as positive product attributes. They must similarly be willing to actively participate in both corporate/product

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recycling programmes and those initiated by local or state authorities. If high recycling rates are to be achieved it will be necessary to provide incentives for households to participate in collection schemes, as well as measures to generate public awareness. There are two broad strands here; expanding the usage of recycled materials (or recyclate) in existing products and markets as well as the development of a wide range of more diverse, perhaps higher value, uses of recyclate in sectors which may be different to those in which it originated. The latter approach, by both enlarging and deepening the market for individual recycled materials may also provide greater price stability.14

The optimal level of recycling Are current levels of recycling likely to be socially ‘non-optimal’ or economically inefficient in some sense? In other words, are there grounds for believing that current levels of recycling in most countries are too low? There certainly appears to be a widespread public perception that there are significant environmental and economic benefits to be gained from recycling. There also seems to be broad public support for measures intended to increase the recycling of materials and products. The optimal level of recycling for any residual material is determined by both technological and economic considerations. Technological factors will place a physical limit on the proportion of any material or residual that can ultimately be recycled. However, because the process of recycling (i.e. collection, separation, recovery and utilisation) is not costless, there must be a stage at which the additional costs incurred in recycling outweigh the extra (financial) benefits, or where the optimal level of recycling, in narrow economic terms, is reached. Without government intervention, recycling can be expected to take place up to the point at which the marginal cost of the recovered material equals its market value in saleable or usable form (or where marginal private cost = marginal revenue). However, this represents the private ‘optimum’; it excludes any social benefits (or costs) that might be attached to recycling. The market mechanism (using the information and incentives provided by relative prices) is normally seen as an efficient way of guiding resource allocation decisions in an economy. However, the existence of a

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range of ‘imperfections’ or so-called ‘market failures’ may prevent the efficient amount of recycling actually taking place. These failures result largely from the presence of extensive externalities15 (or external costs and benefits) attached to the resource use and product disposal decisions set out above, but which are not captured by the market price of the good consumed or service undertaken (which reflect only private costs and benefits). The incentive for households and firms to undertake recycling is consequently reduced; because of this the market alone is therefore unlikely to guarantee ‘optimal’ levels of recycling or recovery (or, indeed product durability) from society’s point of view (see Fig. 3). The external benefits of recycling will include: 1 resource conservation or a reduced demand for virgin resources (materials and energy); if these are wholly or partly imported there may be significant macroeconomic,16 as well as strategic, benefits. 2 lower pollution impact due to reduced waste disposal. 3 reduced demand for land for dumping and landfill, making it available for recreational or other social purposes. There will, of course, also be external costs that arise from recycling, largely relating to the environmental impact of collection and transport of residual materials (e.g. road congestion, etc) and the added pollution generated by the recovery process itself (e.g. the use of chemical inputs which themselves become wastes). Quantifying the external costs and benefits attached to recycling (and other waste management options), however, is a difficult exercise, and one couched in uncertainty and subjectivity.17 Indeed no option (apart from waste minimisation) appears to perform best in all circumstances and all of them have particular advantages and disadvantages which need to be evaluated using a common (monetary) measure before an effective comparison can be made. Nevertheless, Table 6 (DETR, 1999) indicates positive external benefits from the recycling of all materials apart from plastic film. The figures are based on an earlier study by Coopers and Lybrand (1997), which also ranked recycling above other options (apart from source reduction) when judged on the broader basis of total economic (financial and external) costs. On a material specific basis, Brisson (1997) found the total economic costs of recycling for all materials (again apart from plastic film) to be positive, but that these showed wide variation. The external benefits from the recycling of metal and glass are significant, but for paper and rigid

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Introduction

Table 6 External costs and benefits of different MSW management options Waste management option

External cost estimate1 (£ per tonne of waste, 1999 prices)

Landfill Incineration (displacing energy from coal-fired power stations) Incineration (displacing average-mix electricity generation) Recycling Ferrous metal Non-ferrous metal Glass Paper Plastic film Rigid plastic Textiles

-3 +17 -10 +161 +297 +929 +196 +69 -17 +48 +66

Note: 1. Positive (+) numbers represent positive externalities (net external benefits). Source: DETR (1999).

plastic these are much smaller. In many ways, wastepaper recycling represents a special case. Paper is derived from a renewable source (and therefore does not face major problems of resource depletion); large scale international movements of wastepaper may themselves generate negative environmental impacts, and; energy recovery from the incineration of low grade wastepaper (on its own or mixed with other MSW) may (at least globally) be preferable in environmental terms to more recycling.18 According to ECOTEC (2000) various recent (UK-based) studies conclude with a generally favourable view of recycling on environmental grounds, and this has been replicated by studies in the US and elsewhere, with the main benefits centred on resource conservation, pollution reduction and energy conservation effects. An alternative approach is to disaggregate the analysis by focusing on a specific material or a particular recycling scheme or locality; this will generally prove to be more tractable and less controversial, as well as providing useful insights for policy formulation. The study by Hanley and Stark (1994), which utilises a cost-benefit analysis of waste paper recycling, is a good example of this approach. Table 7 based on the study provides a systematic summary of the key elements involved.19 Four major categories of market failure affecting the markets for recycled, secondary materials can be identified (DETR, 1999). These are;

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Table 7 Costs and benefits of waste paper recovery from muncipal solid waste Costs

Benefits

1 Private recovery costs (actual costs incurred in the collection of wastepaper for recycling) 2 Environmental costs of recovery (In principle these would comprise the economic valuation of the external costs associated with different phases of wastepaper recovery i.e. transport and reprocessing. However, given the comparability of these costs for landfill and for virgin material processing, they were not included here).

1 Value of secondary material (based on the market price of secondary fibre) 2 Avoided private costs of alternative disposal (measured by avoided landfilling costs) 3 Reduced (municipal solid waste) collection costs 4 Avoided environmental costs from alternative disposal (reduced damage from landfilled waste paper) 5 Scarcity value saved (because land for landfill is in limited supply) 6 Existence value of recycling (the satisfaction derived from participation in recycling; not quantified here)

Source: Hanley & Stark (1994).

lack of internalisation of external costs in the prices of primary (virgin) materials; inappropriate technical standards (which are biased unnecessarily towards primary materials); lack of information (the perception that secondary materials are inferior to primary materials); market structure (that large buyers or sellers dominate the market for secondary materials).

The structure of the recycling industry Although we can identify a number of structural features common to the various materials considered here, there are also important differences. The intention here is to try to draw out these common elements, whilst indicating any idiosyncrasies or distinguishing features (which will be discussed more fully in the following Chapters). There are also difficulties related to satisfactorily identifying the boundary of the recycling industry (or industries), because of the overlap between primary and secondary producers, either in terms of raw material usage (if scrap or virgin inputs are substitutable) or product (the range or quality of output from secondary and primary producers may be indistinguishable). The recycling industry tends to be highly segmented, both vertically and horizontally. In most countries, recycling has traditionally

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Introduction

Product manufacturers/fabricator Ps Smelter/ re-processors

Materials recovery facility

Municipal authority

Commercial /industrial firms

Psr Scrap merchants/traders

Charities / voluntary organisations

Municipal authority

8 The structure of the recycling industry.

been based on a ‘pyramidal’ structure (see Fig. 8), with successive stages in the scrap collection and processing chain characterised by smaller numbers of market participants and a growing scale of activity. This is partly a function of the historical and spatial evolution of the recycling industry, but it also follows from its underlying economics and the logistics of scrap collection from a wide range of sources. Recycling systems vary in complexity according to the nature and form of material being recovered, and partly as a consequence of this, the number of stages in the chain between waste (residual) generation and reprocessing operations. Here, we can distinguish between metals, which for many years have had well established collection systems based around scrap merchant intermediaries, and other materials (glass, plastic and paper, for instance) where formal recycling systems have only relatively recently been developed, often in response to legislative demands. The last few years has seen a major restructuring of the scrap and collection and processing system in many countries for both economic and environmental reasons. For many metals this has meant a reduction in the number of independent merchants and an increase in their average size; this has mirrored an increase in scale of operation at the secondary smelting or reprocessing stage, reinforced by mergers and acquisition. This streamlining has also been accompanied, by the evolution of more direct and closer links between reprocessors and their ‘captive’ merchant or municipal suppliers, and between re-processors and fabricators.

Introduction / page 26

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These links have often been characterised by formal, long-term agreements. Ideas of producer responsibility underpinning recent environmental legislation in this area, suggest further rationalisation along these lines in the future, and ultimately the need for manufacturers as far as possible to internalise the entire recycling chain within their scope of operations. Another major structural change has been the growing involvement of municipal authorities (and generally increased participation of households and firms) in recycling activities, which has dramatically increased the volume of recyclables available from MSW and the number of sellers of this material.

Markets and market prices Two market transactions (and market prices) are of interest here (see Fig. 8). Firstly, the sale of secondary materials (in the form of refined metal, recycled paperboard or reclaimed plastic, etc) from smelter/ re-processor to product manufacturer/finisher (at market price Ps). And, secondly, the sale of scrap or residuals (as raw materials) from merchants and traders, or by local authorities via materials recovery facilities, to smelters or re-processors (at market price Psr). Both Ps and Psr are ultimately related to the price of the underlying primary product. Although secondary materials (especially metals) can be indistinguishable in terms of quality from their primary counterparts, consumer preferences will favour the latter unless these are significantly more expensive. Indeed, ‘unless environmental or strategic reasons transcend economics, the ruling price of primary . . . places a de facto ceiling on the price of secondary’.20 In the medium-term, secondary materials will trade at a discount to primary materials, although the differential will vary by region, and from time to time may disappear completely. The Chapters that follow explain the scrap pricing arrangements, and market determinants, for each individual material. There is a wide variation in the amount and quality of information available to buyers and sellers in each market, and this has a major impact on market operation. The markets for many residual materials (scrap metals, used metal products and wastepaper, for instance) are well-established, with published data on reference prices widely available. These are representative prices, with variable premiums or discounts depending on the purity of the scrap or residual. These materials have been traded for

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Introduction

some time, are of recognisable quality, purity or grade,21 and are related to an underlying commodity market. Other residual materials (like redundant plastics and glass) face markets that are thinner, more highly segmented and therefore less standardised, or (in the case of rubber) no real market at all. Negotiated prices predominate, severely limiting transparency and market efficiency. Often there are small numbers of re-processors or buyers of recyclate relative to the number of sellers which exaggerate price movements; when demand for a material is high, prices tend to rise sharply, but even a marginal fall in demand can often result in a collapse in prices. The result has been greater price volatility and uncertainty, both of which have arguably had an adverse impact on recycling activity. The volatility of scrap prices is apparent from Fig. 922 and from the data provided in later Chapters. Scrap prices (as do those of other commodities) respond to underlying economic conditions and trends in industrial activity, both domestically and internationally, and are affected by speculation. However, they have also become increasingly influenced by the widespread efforts made by governments in recent years to raise recycling rates through targeted legislation. These measures effectively amount to ‘enforced recycling’, and if their implementation is not managed properly can result in severe marked distortion. They can have a devastating effect on prices, often exacerbating the problem of volatility,23 and accentuating an already declining trend in real prices. This would suggest either that governments also actively promote the development of new uses for recycled materials and new markets for recycled products, or that government intervention on the supply-side is reduced, leaving levels of recycling to be determined purely by market forces. Scrap prices do certainly appear to fluctuate more dramatically than the prices of the finished or semi-finished products of which they form a part. However, apart from the case of wastepaper (see Fig. 10) (of the materials shown here), scrap prices may be fundamentally no more volatile than those of comparable virgin raw materials (like metal ore and concentrates or virgin pulp, for instance). However, there is a general absence of forward and futures markets for secondary raw materials, which would otherwise permit suppliers and users of these materials to protect themselves against the risk of price fluctuations by hedging. The aluminium alloy contract on the London Metal Exchange (LME) is probably the most high-profile example, but it remains very much in the

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50

100

150

200

250

UBevCan scrap

Sep-90

Jan-92

Sep-92

Jan-94

Crude materials

Sep-94

Jan-96

Iron & steel scrap

9 Selected US producer prices, 1990–2000. Source: US Bureau of labour statistics.

Index (Jan 1982=100)

Jan-90 May-90

Jan-91 May-91 Sep-91

May-92

Jan-93 May-93 Sep-93

May-94

Jan-95 May-95 Sep-95

May-96 Sep-96 Jan-97 May-97 Sep-97 Jan-98 May-98

SHG zinc

Sep-98 Jan-99 May-99 Sep-99 Jan-00 May-00 Sep-00

Introduction

Introduction / page 30

Index (Jan 1982=100)

-9

0

Wastepaper

Paper

Rcy paperboard

t t t t t t t t t t t ay p 91 ay p 92 ay p 93 ay p 94 ay p 95 ay p 96 ay p 97 ay p 98 ay p 99 ay p 00 ay p M Se n - M Se n - M Se n - M Se n - M Se n - M Se n - M Se n - M Se n - M Se n - M Se n - M Se a a a a a a a a a a J J J J J J J J J J

10 US producer prices for wastepaper and paper products, 1990–2000. Source: US Bureau of labour statistics.

n Ja

0

100

200

300

400

500

600

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shadow of the primary aluminium contract, and does not yet dominate the pricing of secondary metal. Other exchanges have developed contracts based on scrap or waste materials (like the recyclables exchange run by the Chicago Board of Trade between 1995 and 1999 for instance), but these have often suffered from liquidity problems, and have fallen short of providing mechanisms for full forward or futures trading.

notes 1. From D Woodward (1985), quoted by Ackerman (1997). 2. According to a recent report from the Worldwatch Institute (2000), the global recycling industry now processes more than 600 million tons of material each year, has an annual turnover of $160 billion, and employs more than 1.5 million people worldwide. 3. Beukering and Duraiappah (1996). 4. See Turner, Pearce and Bateman (1994), Chapter 1 and Henstock (1996), Chapter 3, for further discussion. For a detailed formulation of the materials balance approach see Kneese, Ayres and D’Arge (1970). 5. Solow (1974). 6. From the EU Framework Directive on Waste. Sixteen categories of waste are currently specified. 7. See the research study produced by consultants Enviros Aspinall for the Resource Recovery Forum. Reported in Warmer Bulletin 72, May 2000. 8. Under the proximity principle countries are encouraged to work towards selfsufficiency in waste disposal. However, as Brisson (1993) points out this principle should only apply to those materials which have a limited secondary market, or none at all, and therefore no or a very low market price. 9. ECOTEC (2000) provides an excellent review of a number of recent UK studies (which use a combination of life-cycle assessment and economic evaluation). 10. An earlier analysis of new scrap generation rates suggested average scrap ratios (the percentage of metal purchased that ends up as non-product) for aluminiumbased, copper-based, and iron and steel products of about 20%, but with a wide variation between individual products. Bever (1976), quoted by Henstock (op. cit) p53. 11. Turner, Pearce and Bateman (1994). Very different figures can emerge. For instance, according to Pulp and Paper International, the UK recovery rate for wastepaper in 1994 was 35%, while the utilisation rate was 66%; comparable figures for the USA were 41% and 34%, respectively. 12. This categorisation is derived from Fenton and Hanley (1995), who use it as a conceptual framework for examining the effectiveness of particular waste management policy instruments. 13. Newspaper can be produced almost entirely from recycled newsprint, but requires some virgin newsprint for quality purposes; this is sometimes the case with metals recycling, although it is normally technological or economic factors that determine. 14. See DETR (1999) for a discussion of specific measures that have been proposed for the UK. 15. Externalities can be defined as unintentional spillover effects associated with either production or consumption of a good or service that have positive or

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16.

17. 18. 19.

20. 21. 22.

23.

negative effects on third parties (i.e. those not directly involved in the production or consumption activity itself ). See Da Vita (1998) and Rich et al. (1999). The macroeconomic benefits will arguably be even larger in developing countries because of substantial employment generation, often in the informal sector, and because of savings in scarce foreign currency. See ECOTEC (2000) for a detailed discussion of difficulties involved in estimation. See Collins (1996) for an eloquent discussion of these issues. Interestingly, the study concludes that the particular scheme under consideration while desirable when social costs and benefits are included, is unprofitable from a private (cost/benefit) viewpoint. Henstock, op. cit, page 34. Standard specifications are published by individual trade associations and industry bodies, like the Institute for Scrap Recycling Industries (ISRI), for instance. The US Bureau of Labour Statistics (BLS) provides comprehensive and comparable US time series data on a vast range of commodity prices, but not for rubber, plastics or glass (cullet) scrap. The most notorious example of this was the German Packaging Ordinance (1991) and the Duales Systems Deutschland (DSD) scheme.

references Ackerman F, Why do we recycle? Markets, values and public policy, Island Press, 1997. American Metal Market, http://www.amm.com Ayres R U, Metals Recycling: Economic and Environmental Implications, INSEAD Working Paper 97/59/EPS/TM, 1997. Collins L, ‘Recycling and the Environmental Debate: A Question of Social Conscience or Scientific Reason?’, Journal of Environmental Planning and Management, 39 (3), 1996. Edwards J and Ma C, Futures and Options, McGraw-Hill, Singapore, 1992. Fenton R and Hanley N, ‘Economic instruments and waste minimization: the need for discard-relevant and purchase-relevant instruments’, Environment and Planning, (27), 1995. Hanley N and Slark R, ‘Cost-benefit analysis of paper recycling: a case study and some general principles’, Journal of Environmental Planning and Management, 37 (2), 1994. Henstock M E, The Recycling of Non-Ferrous Metals, ICME, Ottawa, 1996. Kneese A V, Ayres R U and D’Arge R C, Economics and the Environment: A Materials Balance Approach, Resources for the Future, Washington, 1970. McQuaid R W and Murdoch A R, ‘Recycling policy in areas of low income and multi-storey housing’, Journal of Environmental Planning and Management, 39 (4), 1996. Pearce D W and Turner R K, ‘Market-based approaches to solid waste management’, Resources, Conservation and Recycling, 8, 1993. Powell J C, Craighill A L, Parfitt J P and Turner R K, ‘A lifecycle assessment and economic valuation of recycling’, Journal of Environmental Planning and Management, 39 (1), 1996. Solow R M, ‘The Economics of Resources or the Resources of Economics’, American Economic Review, 64 (2), 1974.

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Tilton J E, ‘The future of recycling’, Resources Policy, 25 (197–204), 1999. Turner R K, Pearce D and Bateman J, Environmental Economics, Harvester Wheatsheaf, 1994. van Beukering P and Duraiappah A, The Economic and Environmental Impacts of the Waste Paper Trade and Recycling in India: A Material Balance Approach, CREED Working Paper Series No. 10, 1996.

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1 Aluminium James F King

1.1

Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties Light weight Strength Moderate melting point Ductility Conductivity Corrosion resistance Barrier properties

1.1.2 Products and end-uses 1.2

Production processes and technologies 1.2.1 Aluminium production processes Primary smelters Independent cast houses Secondary billet plants UBC recycling plants Secondary smelters Semi-finishing plants

1.2.2 Primary and secondary aluminium 1.2.3 Aluminium recycling processes Internal scrap collection and processing External scrap collection and processing New industrial scrap Old scrap Dross

1.3

Market features, structure and operation

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Part 1

1.4

The structure of the scrap recovery/recycling sector 1.4.1 Relative importance of secondary production 1.4.2 Forms and availability of scrap 1.4.3 Scrap recycling arrangements 1.4.4 Trade in scrap 1.4.5 Scrap pricing arrangements

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1.1 Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties Aluminium is a light metal of silver appearance with unique properties of strength, resistance to corrosion, ductility and surface finish. Like all industrial materials, aluminium products are useful because of a combination of characteristics. Aluminium in semi-finished form appears as rolled products (plate, sheet and foil), extrusions, forgings and castings. It competes with a wide range of alternative materials in various applications, including cast iron, rolled steel, tinplate (rolled steel coated with tin), galvanised steel (rolled steel coated with zinc compounds), cast zinc, copper wire, copper tube, forged titanium, cast magnesium, timber, plastics such as PVC and PET, glass, cardboard and metallised paper. Aluminium is the third most important industrial metal after steel and cast iron. Cement is believed to be the only industrial material with consumption greater than steel. Even on an equivalent surface area basis (recognising that aluminium is only one-third the weight of steel for a piece of the same dimensions), the consumption of aluminium would be the equivalent of 86 million tonnes of steel, only 14% of the consumption of steel. The world consumption of metals is shown in Table 1.1. In any application aluminium is selected against competing materials on the basis of a balance of cost and functional characteristics. The characteristics include: Light weight Aluminium has a density of 2.7 grams per cubic centimetre, compared to the competing metals shown in Table 1.2. Relatively light weight means that the price of aluminium per tonne can be much higher than, for example, coated steel but can be competitive when measured on the basis of square area of a sheet product. Hence, if steel sheet is priced at $700 per tonne for a particular quality, aluminium sheet can be priced at $2048 per tonne and have the same price per square metre. Similarly, aluminium can be higher priced per tonne than iron or zinc but still be competitive on a volume basis in castings.

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Chapter 1 / page 1

Part 1: Ferrous and non-ferrous metals

Table 1.1 World consumption of major metals, 1996

Cement Steel Cast iron Aluminium Copper Zinc Lead Nickel Magnesium Titanium Tin

m tonnes

Annual % growth 1975–1996

1234 632 50 29 13 8 6 <1 <1 <1 <1

2.1 0.8 -1.8 2.6 2.6 1.6 1.0 1.8 2.6 na 0.4

Note: The information in all tables and figures has been compiled by the author from a wide variety of sources.

Table 1.2 Properties of industrial metals

Magnesium Aluminium Titanium Zinc Tin Steel Copper Lead

Density (g/cc = t/m3)

Melting point °C

1.7 2.7 4.5 7.1 7.3 7.9 8.9 11.3

650 660 1670 419 232 1540 1084 327

Note: g/cc = grams per cubic centimetre. t/m3 = tonnes per cubic metre.

Light weight in relation to strength permits aluminium to compete in applications where the weight of components is important, e.g. in road vehicles or aircraft. Strength Although lower in structural strength than steel or titanium for an equivalent thickness, aluminium in common alloys (alloys with silicon and magnesium) has substantial structural strength. This permits it to compete in applications where structural strength is important, in combination with other characteristics, such as in building products. In special alloys (‘strong’ or ‘hard’ alloys with manganese, copper and other

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additions and specially heat treated) the structural strength is greatly improved, making aluminium suitable for major load bearing, as in aircraft structures. Moderate melting point The melting point of aluminium is 660°C. This is low in comparison with structural metals such as steel or titanium, which makes aluminium less suitable for very high temperature applications, but is adequate for most normal applications. A moderate melting point permits aluminium to be used to make castings with considerable structural strength. In this respect aluminium is not as easily cast as zinc and has a similar melting point to magnesium, but is much less reactive and therefore easier to work than the latter. The relatively low melting point also allows molten aluminium to be cast directly into semi-fabricated products in the form of continuous-cast sheet and rod. Ductility When heated to moderate temperatures aluminium is a highly ductile material, allowing it to be worked with conventional rolling mills using steel rolls and to be extruded through steel dies into complex shapes, a process which is not possible for steel on a large scale. The rolling capability allows aluminium to compete with flat-rolled steel and other rolled metals. The extrusion capability allows extruded aluminium to compete with steel rolled into simple shapes and with steel fabricated by forming and/or welding into complex shapes. It also permits aluminium to compete with timber and extruded plastics in complex constructions such as window and door frames. High ductility allows aluminium to be rolled to very fine gauges, making possible the production of aluminium foil down to a thickness of around 6 microns, and thereby allowing competition with plastic film, cardboard, etc, in packaging applications. Conductivity Aluminium is a good conductor of heat and electricity, better than steel but less good than copper in both respects. Aluminium therefore competes with copper (and now with optic fibres) in the market for electrical and telecommunications cables. It also competes with copper in heat transfer applications such as car radiators and with steel for domestic radiators and in cooking utensils.

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Corrosion resistance On contact with the atmosphere a thin coating of impenetrable aluminium oxide is formed, which prevents further corrosion. This gives untreated aluminium a dull appearance but, when subject to surface treatment in the form of anodising, this corrosion resistance is combined with an attractive finish. Anodised aluminium products therefore require minimum maintenance, allowing them a potential cost advantage over materials such as timber and uncoated steel, which must be repainted, and also permitting competition with stainless steels. Barrier properties Aluminium is impervious to liquids and gases and non-reactive, making thin aluminium foil a suitable material for food wrapping and other types of packaging, in competition with other materials such as plastic film or cardboard, where these characteristics are not so evident.

1.1.2 Products and end-uses As we have seen, aluminium in semi-finished form appears as rolled products (plate, sheet and foil), extrusions, forgings and castings. The extraction of aluminium metal from aluminium oxide became a commercial possibility in 1888 and the development of the market began from that time. Initially this took the form of sales of aluminium for electric cables (rod and wire products) and domestic cooking utensils (sheet products). Subsequently applications expanded into building products (sheet and extruded products) and builders’ hardware (cast products). Aluminium always had a strong position in the aircraft industry from its beginning and benefited enormously from the surge in demand for wartime aircraft manufacture (hard alloy sheet, extruded and forged products). In the 1960s aluminium gained ground in certain building applications in various markets (soft alloy sheet and extruded products), and through the 1970s and 1980s the development of the packaging market gave a further boost, particularly in the form of the aluminium beverage can in North America (alloy sheet products). Packaging developments also permitted the steady growth of demand for aluminium foil. The rising cost of energy after 1973 and again after 1979 changed

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Table 1.3 Semi-finished aluminium consumption by end-use, Western countries, 1995 m tonnes Transport Construction Packaging Electrical Consumer durables Engineering Other Total Western

%

6.3 5.5 4.5 3.1 1.8 1.7 2.6

25 22 18 12 7 7 10

25.5

100

the focus of the automotive industry away from size and performance to comfort and economy. This required lighter weight without too much reduction in body size. Aluminium has benefited strongly from this, gaining against cast iron in engine blocks and other components (cast products), against copper in radiators (sheet products) and, most recently, against steel in wheels (cast and forged products). Initial progress was made against steel in automotive frame and body parts (sheet and extruded products) in the early 1990s. This is now accelerating into a wider range of high-performance and luxury cars. The development of new applications continues across a wide front in the industrial countries. At the same time the old applications, such as electrical conductors, household utensils, basic foils and simple building products, still have growth potential in the developing world, where aluminium consumption remains very low. Semi-finished aluminium consumption by end-use in the Western countries can be seen in Table 1.3. Further discussion of the particular aluminium products relevant to the aluminium scrap and recycling industries follows below. Typical specifications of the main aluminium products are shown in Appendix Table 1.

1.2 Production processes and technologies Aluminium scrap and recycling are involved at various stages of the aluminium industry and their role can be appreciated only within the total structure of the industry.

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1.2.1 Aluminium production processes Production units within the industry can be classified into the following types. Primary smelters Primary smelters use the Hall–Heroult electrolysis process to produce aluminium from the primary raw material of aluminium oxide (alumina). The product is primary aluminium, normally containing over 99.5% pure aluminium. The quality of primary aluminium traded on the London Metal Exchange (LME) is 99.7% pure aluminium, known also by the US Aluminum Association alloy designation of P1020A. This metal contains a maximum of 0.1% silicon and 0.2% iron. Current world capacity for primary aluminium is 25 million tpy (tonnes per year) in some 230 smelters. Primary aluminium is shipped in the form of ingot products. Molten metal from the reduction section of the smelter (pot-lines) is taken to a separate part of the plant (the cast house). There the metal is subject to processes which can include: • holding in oil- or gas-fired furnaces to stabilise temperature; • alloying if necessary by the addition of prepared alloying elements in the form of proprietary master alloys, silicon metal, magnesium metal or manganese metal; • treating by filtration or proprietary gas purging techniques to remove minor impurities, gases and solid inclusions; • pouring into ingot machines to produce solid cast ingot products. These machines produce different shapes, metallurgical properties and surface finishes on the ingot products, which comprise billet (cylindrical extrusion ingot for extrusion), slab (rectangular rolling or sheet ingot for rolling), foundry alloys (small ingots for use in aluminium foundries to make castings) and remelt ingot (sows, T-ingot/T-bar or ‘standard ingot’ [pigs of 2–30kg] for remelting at other locations); • delivering molten metal in liquid form after treatment to other locations for casting into ingot products or further processed within the plant by direct casting to semi-finished items such as continuous-cast strip or wire rod.

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In some cases cast houses at primary smelters add some cold remelt ingot and/or scrap from outside the plant (external scrap) to produce additional quantities of ingot products beyond their capacity for molten primary aluminium. About 1.2 million tonnes of such remelting occurs in Western primary smelters, producing ingot products which are not directly reported in the industry’s primary aluminium statistics. Independent cast houses Independent cast houses are often former primary aluminium smelters where the electrolysis sections (pot-lines) have been closed. They receive and melt cold metal (mainly remelt primary ingot with some external scrap) and produce a range of primary ingot products. Such plants are particularly important in Japan. Secondary billet plants Secondary billet plants are independent cast houses which receive and melt cold external scrap of particular qualities (mainly extrusion scrap), with additions of remelt ingot to control quality, and which produce mainly billets. UBC recycling plants UBC (used beverage can) recycling plants receive and melt cold external scrap of particular qualities (mainly used beverage cans), with additions of remelt ingot to control quality, and produce mainly slabs. Secondary smelters Secondary smelters receive and melt external scrap of a wide variety of qualities and produce mainly secondary foundry alloys for use in aluminium castings. Semi-finishing plants Semi-finishing plants (plants making rolled extruded and cast products) melt internal scrap generated by their own manufacturing operations, plus additions of external scrap from other locations and/or remelt ingot.

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1.2.2 Primary and secondary aluminium For statistical purposes production of primary aluminium is measured at primary smelters. All plants of Type 2–5 and many plants of Type 6 remelt or handle molten aluminium. Plants of each of these types use both remelt primary ingot and scrap. In the aluminium industry, therefore, scrap metal and recycling are an integral part of the complex structure of the industry. In many cases plants are designed with remelting furnaces and casting equipment sufficient to process remelt primary ingot and the scrap which they generate in their own downstream operations (internal scrap, also known as ‘runaround’ or ‘home’ scrap). Some semi-fabricating and billet plants, all UBC recycling plants and most plants producing foundry alloys are designed to process scrap from other locations (external scrap). Where plants process external scrap they are considered to produce ‘secondary aluminium’. For example, a plant which remelts used aluminium beverage cans (UBCs) and processes them into slabs for further rolling is considered to be a producer of secondary aluminium. A rolling mill which remelts primary ingot and blends this with its own internal scrap has remelting and casting capacity, but is not considered as producing secondary aluminium.

1.2.3 Aluminium recycling processes Our information on capacity for secondary and recycled aluminium indicates that at the end of 1995 secondary aluminium capacity in the Western countries was 11.8 million tonnes at over 600 plants. In addition, information on semi-fabricating capacity and on primary smelter cast houses indicates that there is capability to remelt internal scrap at a further 400 extrusion plants and 300 rolling mills, to add external scrap in the cast houses of many primary smelters. Hence, there are at least 1300 plants in the Western world with the capacity to melt aluminium scrap in some form, i.e. to recycle aluminium. Their production is probably understated by the industry’s statistics which we must use in this analysis. Using information for capacity and an assessment of the typical operating rates of plants, we estimate that the normal quantities of aluminium scrap which are produced and consumed at various stages of

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Table 1.4 Aluminium scrap production and consumption (Western countries, ‘000 tonnes metal content, 1998) Production

Consumption

At primary smelters At secondary smelters, etc. At semi-finishing plants

0 0 5600

700 8600 5600

Total

5600

14 900

the aluminium industry in the Western countries are as shown in Table 1.4. This indicates that aluminium plants consume about 15 million tonnes of scrap, but generate nearly 6 million tonnes in their own operations (internal scrap). They therefore require to source about 9 million tonnes of scrap (aluminium content) from outside the industry (external scrap) in order to meet their requirement to produce semi-finished products. This 9 million tonnes is a measure of the quantity of recycled or secondary aluminium. The main processes which are involved in the recycling of aluminium scrap within the various stages of the industry described above include the following. Internal scrap collection and processing Aluminium scrap is generated within plants at all stages of the aluminium products industry. At primary or secondary smelters scrap is generated in the form of such items as off-specification ingots and butts sawn from billets or slabs in the cast house. This scrap is all recycled within the smelter, by being added to the molten metal in the cast house. At semi-fabricating plants scrap is generated in the form of offcuts, damaged or off-specification extrusions, rolled products, wire rod, etc. This scrap can amount to 20% of the throughput of the equipment, depending on the product mix and the efficiency of the operators. This scrap can be easily collected within the plant and segregated by type of alloy. Almost all rolling mills and most larger extrusion plants (plants with capacity over perhaps 10000tpy) and many smaller extrusion plants have oil- or gas-fired remelting furnaces and casting equipment similar to primary smelters. These casting units are fed with scrap (and

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usually also remelt primary ingot and alloy metals for alloy control purposes) to produce slabs or billets for their own use. This internal scrap is essentially material circulating within the aluminium industry which is generally not recorded in industry statistics and is not recycling in the normal sense of the term. It is, however, a large quantity of metal and its reprocessing is essential to the economics of the industry. External scrap collection and processing External scrap which is available for recycling is of two types: 1 ‘New industrial scrap’ (scrap generated by the users of semifabricated products, such as scrap from the processing of sheet into cans or extrusions into windows). 2 ‘Old scrap’ (scrap recovered from aluminium products which have completed their life in service, such as the return of a used beverage can or the dismantling of a scrapped car). New industrial scrap Much new industrial scrap is similar in principle to internal scrap from the semi-fabricating stage. It may be offcuts of sheet and extrusions, damaged products, etc., which are easily identifiable by type of alloy and are uncontaminated by processing. This type of scrap, together with the scrap from semi-fabricators such as small extruders who do not have their own remelting facilities, is suitable for returning to the semi-fabricators or to specialist remelting operations such as secondary billet producers. These companies will convert the scrap back into billets and the material may move in a closed loop by means of toll conversion. Under this arrangement the semi-fabricator (rolling mill or extruder) tollconverts scrap from his customer back into billets or slabs and then into new extrusions or rolled products for payment of a conversion fee. This is the practice, for example, in the recycling of scrap sheet from the manufacture of aluminium cans. The can maker punches the can blanks from the sheet, leaving a significant quantity of unused material. The purchasing arrangements for the sheet include provision for this scrap to be returned to the rolling mill for reprocessing into new can sheet. Secondary billet producers operate in a similar manner. This type

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of plant operates by purchasing or toll-converting scrap from extruders who do not have their own remelting facilities, processing the scrap into billet for a conversion fee. This type of toll-conversion arrangement has developed quite strongly in the past decade, with the emergence of many secondary billet plants whose business is toll-conversion of extrusion scrap. Other forms of new industrial scrap are machine turnings, swarf and other material from the milling, boring or cutting of metal. This material may be of mixed alloy composition and will almost certainly be contaminated with oil, other metals, paint, dirt, etc. It is not suitable for feeding to the normal remelting equipment of semi-fabricators or secondary billet plants. This scrap would normally be collected by merchants or supplied direct to secondary smelters for processing, as described below. Old scrap Old scrap is the scrap which we generally associate with the scrap metal trade – material collected from products which have finished their useful lives. Old scrap aluminium is recovered from several major types of product and is accordingly processed by different types of operation. As in the processing of internal scrap and new industrial scrap described above, the key factor is the segregation of clean scrap into identifiable qualities and reasonable quantities. If this is possible, special processing arrangements can be made. One example is the decommissioning of overhead electric cables. In most countries high-tension conductors are pure aluminium or aluminium alloy cables with a steel core. Replacement of old cables involves the collection of tonnes of material, which can be processed to yield a large quantity of aluminium of known composition. This can be remelted by semi-fabricators, secondary billet plants or primary smelter cast houses and commands a price close to that of primary metal. The most important product area at present for the organised segregation of aluminium scrap is the processing of used beverage cans (UBC) and the USA has led the way in developing recycling systems. The average aluminium beverage can produced in the USA in 1996 contained 14.2 grams of aluminium (compared to 20 grams in 1975), and in 1996 63 billion cans, containing 893000 tonnes of metal, were collected for recycling. The collection rate was over 63% of the cans used in the USA. Figure 1.1 shows that most of the growth of US scrap

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4

million tonnes

3 3 Other old scrap UBC scrap New scrap

2 2 1 1 0 1975

1980

1985

1990

1995

Years

1.2

100

1.0

80

0.8

60

0.6 40 0.4 20

0.2 0.0 1975

percent collected

million tonnes

1.1 Recycled aluminium: sources – USA.

Aluminium collected Collection rate (%)

0 1980

1985 Years

1990

1995

1.2 Recycled aluminium: beverage can scrap recovery – USA.

supply up to 1991 came from UBC scrap, with new industrial scrap and other old scrap remaining broadly constant in volume over much of the period. Figure 1.2 shows the development of UBC recycling over the past 20 years in terms of the tonnage of metal collected and the collection rate. The European Aluminium Association estimates that in 1996 total beverage can consumption in Western Europe was 29.7 billion units, of which 50% were aluminium; 37% of aluminium beverage cans were collected for recycling (i.e. 5.5 billion units). The potential in Europe for increases in the number of beverage cans consumed, the share of aluminium and the rate of collection are all substantial.

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In the US recycling system UBCs are collected by individuals or voluntary groups and returned to locations such as supermarkets where they are redeemed for a payment per can. The cans are then moved to central depots where they undergo preliminary sorting to eliminate steel cans or waste and are then baled for shipment to a recycling plant. Special can recycling plants have been developed, either by the integrated producers who have can sheet rolling mills or by specialist processors serving the mills. These plants process the baled cans in one or more furnaces with special environmental control equipment to handle the emissions from the burn-off of lacquers and decorative coatings on the cans. Most aluminium cans are manufactured in two pieces – a onepiece can body in alloy 3004 and a separate can end (top) with pull tab in alloy 5082. As indicated in Appendix Table 1.1, showing the specifications of aluminium products, the body has high manganese content for ductility and strength at very low thicknesses in the can-making process. The end has high magnesium content for rigidity. The whole can is remelted, so the resulting alloy is a blend of these two and must be adjusted by adding remelt primary ingot and alloying elements. The resulting metal is cast into new rolling slabs at the plant, or in some cases moved in molten form to the cast house of a rolling mill. A further use of scrap in the rolling sector is in the ‘mini-mill’, a concept which was developed particularly in the USA. In these plants selected scrap is remelted and blended with primary aluminium and the molten metal is processed in continuous roll (strip) casters into aluminium strip without hot rolling. This strip is then cold rolled and can be used for certain foil applications and for building sheet products which will be subsequently painted or do not require exceptional surface quality. These mini-mills are normally operated by small companies which are independent of the major integrated groups and which thrive on their low raw materials and overhead costs. In principle all aluminium sheet or extrusion scrap which can be segregated into economic quantities will be separated by scrap merchants so that it can be supplied to the relevant specialist sector of the industry – rolling mill’s cast house, extruder’s cast house, secondary billet producer, etc. – because such consumers will pay higher prices for a scrap product which is closer to their own end products and which therefore requires less sorting, handling and alloying. Whether in practice this type of segregation is commercially attractive for the scrap

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merchant depends largely on geography – the transport cost of moving the segregated scrap to a specialist consumer who will pay a higher price compared to a closer, non-specialist consumer who will pay a lower price. Old sheet or extrusion scrap which cannot be technically or economically segregated, together with old aluminium castings from motor vehicles, machinery, etc., and new industrial scrap which is in inconvenient form (swarf, turnings, etc.) are collected by merchants or moved direct to the final type of recycling plant – the secondary aluminium smelter. These plants are more numerous than primary aluminium smelters and on a much smaller scale. A large secondary smelter would have capacity of 30000tpy, while a large primary smelter would be over 200000tpy. Many secondary smelters have capacity under 10000tpy and most are run by small companies independent of the primary aluminium smelting or semi-fabricating industry. Secondary smelters are designed to handle a wide range of aluminium scrap. The incoming material is inspected and may be hand sorted or classified by methods such as heavy-media flotation to remove waste material. It will then be melted in oil, gas or, in some cases, electric induction furnaces. Various types of furnace (rotary hearth, reverberatory, etc.) are used within the industry according to the type of scrap being handled. In order to remove impurities and avoid oxidation, a salt flux is added to form a cover on the surface of the melt. Salt fluxes are a proprietary mix which might be, for example, 48.5% sodium chloride (common salt), 48.5% potassium chloride, 4% a complex fluoride salt. Molten metal is tapped from the furnace and alloys are added. The product of most secondary smelters is foundry alloy – alloys such as Aluminum Association 380.1 (similar to UK alloy LM24), which contains 9.5% silicon and 4% copper. A wide range of such alloys, with varying contents of silicon from 5% to 20% and copper from 1% to 5%, with some magnesium, are produced for use in the manufacture of aluminium castings, including engine blocks, cylinder heads and a wide range of automotive and engineering components. The automotive sector in total is generally considered to take about 85% of the production of the secondary smelting industry. Almost all alloys produced in secondary smelters from scrap have iron content in the range of 0.6% to 1%, which is brought into the process by the scrap as a result of contamination during the product’s life and

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subsequent handling. Such an iron content is satisfactory for casting applications and for certain sheet applications (alloys 3103 and 3105 which are typically produced in the mini-mills described above), but is well beyond the level tolerable for producing wrought aluminium products with particular performance or surface finish qualities, where iron is typically below 0.5%. Primary aluminium to LME specifications has only 0.2% iron. Although most castings are produced from secondary aluminium and have iron content above 0.5%, where metal requires guaranteed high strength characteristics and structural integrity, as in car and truck wheels, the specified iron content may be below 0.5%. In this case there is a borderline between secondary alloys (e.g. alloy 356.1) and alloys which can only be produced from primary metal (e.g. alloy 356.2). Since October 1992 the LME has traded secondary aluminium ingot (termed ‘aluminium alloy’ by the LME). Of the many possible alloys which could be traded, the LME selected as the deliverable qualities US alloy 380.1 and the similar German alloys DIN 226 and Japanese alloy ADC12. Secondary smelting processes can also produce certain other products. These include powders or granules for use in the metallurgical sector, for the deoxidisation of steel or other metals. A final form of old aluminium scrap is aluminium foil. Large-scale recycling of consumer foil has not been possible to date because of the difficulty of separating foil from household refuse. Efforts are being made by the industry, in response to government pressures to reduce the volume of waste, to develop aluminium foil collection and recycling. Unless collected in large quantities and densified, foil cannot be economically remelted because losses in the furnace are very high. Foil scrap, mainly from foil manufacturers or industrial consumers, can be processed without melting into powders or flakes, which are used to make pigments for the printing industry. Dross Whenever aluminium is melted or molten aluminium is held in a furnace, dross is generated. It is the result of oxidation of the surface of the metal in contact with the air or the separation of impurities from the pure metal or alloy in the furnace. The dross floating on the surface of the melt is a mixture of aluminium oxide, impurities and aluminium metal. It is periodically skimmed from the surface of the metal in the furnace

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and removed in pots for treatment, cooling and storage prior to removal from the plant. Dross which results from processing internal scrap has low impurities and is ‘white’ dross. Dross which results from processing new industrial scrap that has not been contaminated is also white dross, similar to that from processing internal scrap. Dross which results from processing old scrap generally has high impurities and contains salt. This is referred to as ‘black’ dross. Black dross has a lower aluminium content and is not a reactive substance (will not further oxidise). It is normally contaminated with magnesium from the alloy in the scrap and chlorides from the salt flux. Dross is processed by specialist recyclers to extract the aluminium content as remelt ingot. The salt slag and other waste products from secondary smelting and dross processing operations present a problem of disposal. In some areas it is classified as a hazardous waste product and must be dumped under controlled conditions. The disposal cost of slag in Europe is commonly $50 per tonne or more, and this cost and the regulation of disposal has raised interest in the recycling of salt slag. Several proprietary processes have been developed since the early 1990s which aim to recover some aluminium from the slag and convert the remainder into harmless products.

1.3 Market features, structure and operation As described above, the market for recycled aluminium is in various parts and the products of recycling serve distinct markets – principally foundry alloys, rolling slabs from UBCs and secondary billets. Figure 1.3 provides some indication of the relative importance of the sources of remelted metal in the USA by showing the quantities of metal recycled from external scrap by secondary smelters, integrated companies (mainly processing UBCs into slab) and others (mainly independent semi-fabricators remelting scrap into billets). Production by secondary smelters was broadly flat from the late 1970s until the late 1980s, but accelerated in recent years because of the growth of demand for aluminium castings in the automotive industry. Recycling by the integrated producers has risen strongly and production by others also grew in the 1990s.

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4

million tonnes

3 3 Others

2

Integrated producers

2

Secondary smelters

1 1 0 1975

1980

1985

1990

1995

Years 1.3 Recycled aluminium: producers – USA.

The structure in Europe and Japan is different, with recycling by integrated producers much less significant and the role of secondary smelters larger. The expected growth of can recycling will move the European and Japanese recycling industry structure closer to that of the USA. A further significant development in the structure of the aluminium recycling industry will be the establishment of organised car recycling. With the car manufacturers becoming responsible for programmes to recycle their end-of-life vehicles (ELVs), they will establish links with the larger scrap merchants, secondary smelters and perhaps larger foundries producing car components. This development is likely to favour the growth of the larger companies in the industry rather than the smaller, more fragmented structure which characterises much of the recycling sector today. These various segments of the recycling industry do not compete significantly with each other in the markets for end products because each is serving a separate market. The prices of their products are, however, interlinked. Integrated producers making rolling slabs from UBCs supply these slabs to their affiliated rolling mills. To the extent that there is a market in such slabs, which are identical to the products from primary smelter cast houses, the prices are determined by the prices of slabs from the primary aluminium producers. Those prices are in turn determined essentially by the price of primary aluminium ingot, plus a premium

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for alloys and shape. The price of primary aluminium today is essentially determined by the London Metal Exchange price for primary aluminium. These price relationships are illustrated in Appendix Table 1.2. Secondary billet is in a similar situation. The products are in principle identical to the billets from primary smelter cast houses and the pricing is therefore the same, being determined by a premium over LME primary aluminium. As noted earlier, secondary ingot is now traded on the LME. There is intense dispute in the secondary aluminium smelting sector about the value of the LME contract and the meaning of its prices in the market. Up to now the contract cannot be said to dominate the pricing of secondary ingot, with producers and consumers still able to negotiate prices for individual alloys at levels different from the LME. Because so much secondary ingot is used in the automotive market, either directly at car makers’ foundries or by foundries closely tied to the car industry, individually negotiated prices continue and can vary between the important geographical areas, particularly between the USA, the main countries of Europe and Japan. Over time the volume of trade on the LME can be expected to increase, as it did steadily for primary aluminium, which started trading in 1978, and as a result the pricing of secondary ingot should become more uniform and may eventually be dominated by LME pricing. On average over the past ten years secondary ingot (alloy 380/LM24) has traded at a discount to primary ingot of around $50/tonne but, when primary metal prices are low, secondary ingot prices may be at a premium to primary metal. There is also a fairly stable pricing structure for other major secondary alloys, as shown in Appendix Table 1.2.

1.4 The structure of the scrap recovery/recycling sector 1.4.1 Relative importance of secondary production Appendix Table 1.3 presents key statistics for the world aluminium industry from 1975 to 1996, with a long-term forecast. This shows that total semi-finished aluminium consumption (aluminium in all forms) increased from a cyclically low value of 14.3 million tonnes in 1975 to

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Aluminium

35

million tonnes

30 25 20

Secondary Primary

15 10 5 0 1975

1980

1985 Years

1990

1995

1.4 Aluminium: world production, 1975–97.

29.4 million tonnes in 1996, a compound growth of 3.6% per annum. In 1996 the largest consuming sector for aluminium products in the Western world was the transport sector, accounting for 25%, followed by packaging and construction. 1993 was the first year in which the transport sector was the largest end-use, and reflects the increasing use of aluminium in vehicles, particularly in the form of castings. As already described, recycled aluminium has its major role in aluminium castings, which are mainly used in the transport sector, and in aluminium can sheet, which is part of the packaging sector. These have been the two most rapidly growing sectors of the aluminium market for the past decade. Appendix Table 1.3 shows that in 1996 the total metal supply for the production of semi-finished products was some 29.7 million tonnes. Of this, secondary aluminium (aluminium produced from external scrap, as discussed earlier) was 8.7 million tonnes, equal to 29.3% of metal supply. In 1975 secondary aluminium contributed 3.1 million tonnes, equal to 19% of metal supply. Figure 1.4 shows the trend of metal supply over the years. The quantity of aluminium recycled has therefore risen at 5.3% per annum over the period from 1975, compared to the growth of the total aluminium market of 3.6%. Of the 8.7 million tonnes of secondary metal produced, at least 5 million tonnes went into aluminium castings. The largest producers of secondary aluminium in 1996 are shown in Table 1.5. The USA, Japan, Germany and Italy are estimated to account for 72% of the world production of secondary aluminium between them.

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Table 1.5 Major producers of secondary aluminium, 1996 m tonnes USA Japan Germany Italy China France United Kingdom Former USSR

3.35 1.19 0.78 0.55 0.45 0.35 0.30 0.20

World total

8.69

1.4.2 Forms and availability of scrap The forms in which aluminium becomes available as scrap and the methods of collection were described in a previous section. We estimate that some 10 million tonnes of external aluminium scrap were consumed in 1996. As noted, over 5 million tonnes of scrap were consumed in the form of internal scrap circulating within the aluminium industry. Of the 10 million tonnes of external scrap consumed, we estimate that 4 million tonnes was new industrial scrap and 6 million tonnes was old scrap. The availability of scrap to meet the demand for recycled metal is a constant issue for debate. Certain countries feel themselves permanently short of aluminium scrap and this leads their commentators to suppose that there is a general worldwide shortage. New industrial scrap can only be recovered from products which are being manufactured, i.e. which are going into current consumption. In industrial countries a very high proportion of new industrial scrap is recovered and provides a feed of material to replace part of the requirement for primary aluminium at semi-fabricators and to provide inputs for secondary smelters. This will continue and the scope for increases in this type of recycling is limited. It depends essentially on the volume of production of semi-fabricated products and the trend to reduced scrap losses in the fabrication process. The numerical estimates are based on the assumption that new industrial scrap amounts to 15% of the quantity of material taken into the fabricating industry and that all of this is in principle available for recycling.

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Aluminium

Old scrap can only be recovered from aluminium products which have been sold into the economy, i.e. from past consumption. The cost of remelting aluminium scrap is far less than the cost of producing primary aluminium. The cost of remelting and casting aluminium scrap is of the order of $400 per tonne, including some profit for the smelter. The cost of producing primary aluminium from alumina is of the order of $1500 per tonne, including profit, for the lowest-cost primary smelters. Allowing for melting losses, a secondary smelter can therefore normally afford to pay at least $950 per tonne for aluminium scrap and be competitive on the end product with a primary smelter. Aluminium scrap costs far less than $950 per tonne to collect, sort and transport to a smelter. For any level of market demand for the products which can be made from scrap, it will therefore almost always be commercially attractive for merchants and consumers to recycle the maximum quantities of scrap technically possible before primary aluminium products are used to make those products. Consequently, aluminium scrap is a relatively valuable material and is capable of long-distance, international transport. For these reasons there is an incentive to collect it, and large quantities of easily recyclable metal will not be allowed to remain uncollected anywhere in the world. Judging by the quantities of aluminium which have entered the economy during this century, and particularly in the past 20 years, it appears that there is a large stock of material which will become available for recycling and there will be a financial incentive to recycle it. As aluminium beverage can consumption develops in Europe and other parts of the world, the future supply of recyclable scrap will increase still further. On this basis, therefore, we believe that the aluminium recycling industry will have the raw material available to sustain some quite rapid growth, at over 3% per annum into the long term. The magnitudes involved are illustrated in Appendix Table 1.3. We estimate that the world stock of old scrap available for collection in 1996 was over 86 million tonnes. Actual old scrap collection was 6 million tonnes, figures suggesting that 7% of the available stock was collected in that year. The stock of scrap available for collection will increase steadily in the future and the quantity of old scrap which will have to be collected each year will double to over 12 million tonnes by 2016. At that time annual collection will be equal to less than 10% of the available stock. Although this proportion is small, it is higher than has been required in previous years.

© Woodhead Publishing Ltd

Chapter 1 / page 21

Part 1: Ferrous and non-ferrous metals

An alternative benchmark indicator of the availability of scrap is the quantities of scrap which will have to be collected each year in relation to the quantity of aluminium entering the economy in that year. On this measure the scrap collected in 1996 was equivalent to 35% of the aluminium entering the economy (semi-finished aluminium consumption). This proportion had increased from 26% in 1975. Our forecast implies that it will continue to increase only modestly, to 38% by 2016. We do not believe that in general the quantities of scrap which will have to be collected will make it impossible for the forecasts of secondary aluminium consumption which we have used to be achieved.

1.4.3 Scrap recycling arrangements As described earlier, the development of the aluminium recycling industry has led to commercial arrangements between scrap generators and scrap consumers. This includes arrangements for the buy-back of scrap and the toll-conversion of scrap back into aluminium slabs, billets and semi-fabricated products. In the long term the relatively high value of aluminium will mean that arrangements for recycling will be commercially driven and financially self-supporting. This has been the experience with the can recycling industry in the USA. Part of the marketing of aluminium cans and the sheet for them is, however, to promote both the environmental and financial aspects of recycling. In order to do this, the aluminium and can industries have found it necessary to engage in promotional pricing. This is achieved by offering in the early years prices for aluminium cans which are above market levels for other types of scrap. This induces the establishment of collection networks by individuals, voluntary groups, etc., which then become self-sustaining at market prices for scrap cans. The European can market is at the stage where this type of promotional pricing is still necessary. Government assistance or incentives for the recycling of aluminium should otherwise be a low priority, because the inherent commercial value of aluminium scrap should be sufficient to ensure maximum collection. The aluminium recycling industry is, however, concerned about two aspects of legislation. The first is the general problem of regulations which define nonferrous metal scrap in ways which make its collection, transport and

Chapter 1 / page 22

© Woodhead Publishing Ltd

Aluminium

processing difficult. This general issue is covered elsewhere (see Part Four, Chapter 1). The second is the tendency for regulations concerning recycling to include measures which discriminate between materials. Such actions include the prohibition of aluminium beverage packaging in some countries as a device to reduce consumer waste, and the imposition of mandatory deposits on beverage containers as a device to encourage the general recycling of containers. The aluminium industry believes that these measures discriminate against the inherent recycling advantage of aluminium packaging, which is its relatively low cost of recycling and high value. The industry believes that, if left to market forces, aluminium packaging would be preferred by manufacturers and consumers because of its technical advantages and recycling value. Measures which increase the apparent attractiveness of products which are inherently less economic to recycle reduce the growth potential of aluminium and subsidise the market position of these other products, such as glass or plastic containers. The aluminium industry has not been able to prove the validity of this position, but in the future it could become an issue, for example, within the European Union, where the interests of a single market and free competition between materials may be in conflict with some of the environmental regulations imposed by member states. As noted earlier, the organised recycling of cars by their manufacturers will bring new arrangements for scrap recycling.

1.4.4 Trade in scrap Our estimates of the trade in aluminium scrap and in relation to consumption for some of the major countries are shown in Appendix Table 1.4. The United States is largely self-sufficient, but has significant trade. Scrap imports come to the midwest and the east coast mainly from Canada, while exports go from the west coast to the large importing markets in Asia, Japan, Taiwan and Korea and from the southern states to Mexico. Those Asian markets are also served with scrap and remelted scrap ingot (RSI) from Russia and other countries of Eastern Europe. The latter product, although an ingot, is used as scrap by the Japanese industry. In Europe the flow of material is essentially from southern

© Woodhead Publishing Ltd

Chapter 1 / page 23

Part 1: Ferrous and non-ferrous metals

Germany and Eastern Europe into Italy and from the UK and Belgium into northern Germany and France. Apart from the Asian market, which is fundamentally short of scrap for its growing secondary smelting and remelting industries and must be supplied by ocean movements of scrap, most international scrap trade is relatively short distance and results from local geographical imbalances.

1.4.5 Scrap pricing arrangements A scheme of price relationships for aluminium products at all stages of the primary and secondary metal markets is shown in Appendix Table 1.2. This shows our assessment of typical relationships between all the products, starting from a given level of LME prices for primary aluminium. We believe that in essence all the product prices can be related back to LME prices for primary aluminium. This includes the prices for aluminium scrap. In the medium term the price of secondary aluminium alloys is determined by the price of primary aluminium because primary metal can always be substituted for secondary metal in the production of castings or wrought products if secondary prices are too high. In the medium term the maximum price of the common scrap grades used in secondary smelters is determined by the price for the secondary smelter’s foundry alloy. If scrap prices are too high, secondary smelters cannot earn a sufficient return on investment and will close. In the short term these relationships can be broken for periods of time. If demand for scrap is high, prices can rise above their long-term level for a while. If prices of secondary foundry alloy, following primary metal prices, are driven down to exceptionally low levels, forcing scrap prices down, there comes a point where scrap supply is reduced because the costs of collection, transport and processing make scrap supply uneconomic. This appears to be reached when scrap prices fall into the range of $700 per tonne. At this point scrap supplies are reduced and the price of secondary ingot can fall no further. The pricing scheme in Appendix Table 1.2 indicates, for example, that if the LME price of primary ingot is $1650/tonne, secondary alloy 380 for the foundry industry will be $1600 and aluminium scrap from old cast material will be $1164/tonne and from used bever-

Chapter 1 / page 24

© Woodhead Publishing Ltd

Prices ($/tonne)

Aluminium

3000

3000

2500

2500

2000

2000

Primary Secondary 1500

1500 Scrap

1000

1000

500 1984

500 1986

1988

1990

1992

1994

1996

1998

Years 1.5 Aluminium ingot and scrap: prices, 1984–98.

age cans $1034/tonne in densified form and less in other, less processed forms. If the LME price of primary aluminium falls to $1250/tonne, as in early 1999, the price of secondary alloy would normally fall to $1300 and old cast aluminium scrap would drop to $900/tonne. Price relationships between primary aluminium, secondary ingot and scrap are shown in Appendix Table 1.5 and Figure 1.5.

© Woodhead Publishing Ltd

Chapter 1 / page 25

Chapter 1 / page 26

Slab/rolled products AA 1050 AA 1080 AA 1100 AA 1200 AA 3004 AA 3103 AA 3105 AA 5082 AA 5182

AA 1080 AA 1350 Electrical conductor Electrical conductor

AA P1020A

Remelt ingot AA 1050

Product

99.5% 99.8%

99.6% 99.7%

99.5% 99.6% LME 99.7% 99.7% 99.8%

99.5 99.8 99.0 99.0 rem. rem. rem. rem. rem.

99.5 99.6 99.7 99.7 99.8 99.5 99.6 99.7

Al-T

0.05 0.03 0.20 0.05 0.05 0.10 0.30 0.05 0.05

0.05 0.05 0.03 0.03 0.03 0.05 0.01 0.01

Cu

% by weight

0.40 0.15 0.40 0.40 0.40 0.70 0.70 0.40 0.40

0.40 0.35 0.20 0.20 0.20 0.40 0.35 0.20

Fe

0.05 0.02 — — 1.00 0.30 0.80 4.50 4.50

0.05 0.03 0.03 0.03 0.02 — 0.01 0.01

Mg

Si

0.25 0.15 0.25 0.25 0.25 0.50 0.50 0.25 0.25

0.25 0.25 0.10 0.20 0.15 0.10 0.10 0.10

Appendix Table 1.1 Specifications of aluminium products – chemical

Appendixes

0.050 0.020 0.015 0.015 0.015 — 0.100 0.015 0.015

0.030 0.030 0.030 0.030 0.020 0.015 0.010 0.005

Ti

0.07 0.06 0.05 0.10 0.10 0.20 0.40 0.10 0.10

0.03 0.03 0.03 0.03 0.02 0.05 0.02 0.02

Zn

— — — — 0.10 0.10 0.20 0.10 0.10

— — — — — 0.01 — —

Cr

— — — 0.05 1.20 1.50 1.50 0.05 0.35

— — — — — 0.01 0.005 0.005

Mn

— — — — — — — — —

— — — — — 0.050 0.015 0.015

B

— — — — — — — — —

— — — — — 0.005 0.005 0.005

V

0.03 0.02 0.05 0.05 0.05 0.05 0.05 0.05 0.05

0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03

Other each

0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

0.15 0.15 0.10 0.10 0.10 0.10 0.15 0.15

Other total

Part 1: Ferrous and non-ferrous metals

© Woodhead Publishing Ltd

© Woodhead Publishing Ltd

AA 390 AA 356.2

AA 380.1 AA 356.1

AA 384.2 AA 319.2 AA 514.1 AA 413.2 AA 360.2 AA 520 AA 222.1 AA 332.1 AA 355.1 AA 443.1 AA 413.1

Foundry alloys

LM0 LM2 LM4 LM5 LM6 LM9 LM10 LM12 LM13 LM16 LM18 LM20 LM21 LM22 LM24 LM25 LM26 LM27 LM28 LM29 LM30

Billet/extruded products AA 2014 heat-treat AA 2024 heat-treat AA 6061 heat-treat AA 6063 heat-treat AA 7075 heat-treat 99.5 rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem. rem.

rem. rem. rem. rem. rem. 0.03 2.50 4.00 0.10 0.10 0.10 0.10 11.00 1.50 1.50 0.10 0.40 5.00 3.80 4.00 0.10 4.00 2.50 1.80 1.30 5.00 0.10

5.00 4.40 0.40 0.10 1.60 0.40 1.00 0.80 0.60 0.60 0.60 0.35 1.00 1.00 0.60 0.60 1.00 1.00 0.60 1.30 0.50 1.20 0.80 0.70 0.70 1.10 0.20

0.50 0.50 0.70 0.35 0.40 0.03 0.30 0.15 6.00 0.10 0.60 11.00 0.40 1.50 0.60 0.10 0.20 0.30 0.05 0.30 0.60 1.50 0.30 1.50 1.30 0.70 0.45

0.80 1.50 1.20 0.90 2.50 0.30 11.50 6.00 0.30 13.00 13.00 0.25 2.50 12.00 5.50 6.00 13.00 7.00 6.00 9.50 7.50 10.50 8.00 20.00 25.00 18.00 7.50

0.90 0.90 0.80 0.60 0.35 — 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

0.15 0.15 0.15 0.10 — 0.50 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.10

0.25 0.25 0.25 0.10 5.60 — — — — — — — — — — — — — — — — — — — — — —

0.10 0.10 0.35 0.10 0.23 0.03 0.50 0.60 0.70 0.50 0.70 0.10 0.60 0.50 0.50 0.50 0.50 0.60 0.60 0.50 0.30 0.50 0.60 0.60 0.60 0.30 0.10

1.20 0.60 0.15 0.10 0.50 — — — — — — — — — — — — — — — — — — — — — —

— — — — — — — — — — — — — — — — — — — — — — — — — — —

— — — — —

0.05

0.05 0.05 0.05 0.05 0.05

0.15 0.15 0.15 0.15 0.15

Aluminium

Chapter 1 / page 27

Chapter 1 / page 28

Extrusion billet Standard extrusion

Billet/extruded products (FOB producing mill in main consuming areas)

Rolling slab Rolling slab Standard sheet, 0.9mm Can body stock, 0.30mm Can end stock Plate, 25mm Auto body or lithographic sheet

alloy 6063 alloy 6063

alloy 1050 alloy 3004 alloy 1050 alloy 3004 alloy 5082 alloy 5083 various

alloy 1080 alloy 1085 alloy 1090 alloy 1095

Remelt standard ingot, 99.80%, on truck, EU duty paid Remelt standard ingot, 99.85%, on truck, EU duty paid Remelt standard ingot, 99.90%, on truck, EU duty paid Remelt standard ingot, 99.95%, on truck, EU duty paid

Slab/rolled products (FOB producing mill)

alloy 1020 alloy 1020 alloy 1020 alloy 1050/AO alloy 1050/AO

Alloy

LME 3-month price LME grade remelt standard ingot on truck, EU duty paid LME grade sow or T-ingot on truck, EU duty paid Remelt standard ingot, 99.5%, in warehouse, EU duty unpaid Remelt standard ingot, 99.5%, on truck, EU duty paid

Primary aluminium remelt ingot (FOB LME warehouse)

Product

Appendix Table 1.2 Price relationships for aluminium products ($ per tonne)

254 1104

164 237 764 887 1637 2214 2364

150 250 300 450

94 87 -100 -2

Margin above LME primary

1904 2754

1814 1887 2414 2537 3287 3864 4014

1894 1994 2044 2194

1650 1744 1737 1550 1648

Product price

Part 1: Ferrous and non-ferrous metals

© Woodhead Publishing Ltd

© Woodhead Publishing Ltd alloy 356.2

Primary foundry ingot

alloy 356.2

Car wheel

Competitive prices of other materials Equivalent price of CR steel sheet, 0.9mm, by area Equivalent price of foundry iron, by volume Equivalent price of foundry zinc, by volume Equivalent price of foundry magnesium, by volume

alloy 380

Cylinder block casting

Aluminium castings (FOB foundry)

alloy 380 (LM24) alloy 319 (LM4/27) alloy 356.1 (LM25)

Secondary foundry ingot – LME grade Secondary foundry ingot – other grades

Foundry alloys (FOB producing mill in main consuming areas)

New cuttings Old cast Extrusion scrap Used beverage cans baled/densified loose, flattened loose, whole

Aluminium scrap (delivered to secondary smelter in main consuming areas)

per tonne per casting

per tonne per casting

489

825 547 608 2541

4639 39

4100 68

2139

1600 1668 1759

1034 959 884

-616 -691 -766

-50 18 109

1335 1164 1551

-315 -486 -99

Aluminium

Chapter 1 / page 29

1.4

Losses, stock change etc

0.257

Western countries only Semi-finished production Castings Semi-fabricated rolled products extruded products wire rod/wire other/errors

24.4 0.072

Scrap ratio to semi-finished

Scrap stock available for recovery recovery rate

3.7 1.9 1.8

Scrap supply for secondary new/prompt scrap old scrap

15.9 3.1 19.4 12.8 -1.4 11.5

14.5 2.5 12.0

Metal supply for semi-finished Secondary aluminium production secondary share (%) Primary aluminium production stock change etc. Primary aluminium consumption

14.3

Semi-finished production Castings Semi-fabricated rolled products extruded products wire rod/wire other/errors

1975

Semi-finished consumption

Item

40.0 0.069

0.274

5.4 2.7 2.7

21.0 4.6 22.0 16.4 -0.8 15.6

1.0

20.0 3.6 16.4

19.7

1980

17.5 3.6 13.8 7.5 4.2 1.6 0.5

57.4 0.053

0.274

6.0 3.0 3.1

21.8 5.3 24.1 16.6 0.4 16.9

-0.4

22.2 4.2 18.0

22.0

1985

21.6 4.4 17.1 9.0 5.2 1.5 1.3

71.6 0.073

0.332

8.8 3.6 5.2

26.6 7.2 27.1 19.4 -0.1 19.3

-0.0

26.6 5.4 21.2

26.5

1990

22.9 4.9 18.0 9.4 5.5 1.6 1.5

78.3 0.071

0.351

9.0 3.4 5.5

27.3 7.6 27.8 19.7 -1.6 18.2

1.4

26.0 5.6 20.4 10.3 6.2 2.3 1.7

25.5

1993

25.3 5.3 19.9 10.8 6.0 1.6 1.4

80.8 0.072

0.345

9.6 3.7 5.8

27.3 8.2 29.9 19.1 0.7 19.8

-0.9

28.2 6.1 22.1 11.6 6.7 2.2 1.6

27.7

1994

Appendix Table 1.3 Summary of world aluminium metallics (million tonnes)

25.9 5.6 20.3 11.0 6.3 1.9 1.1

83.7 0.071

0.341

9.9 3.9 6.0

28.2 8.5 30.0 19.7 0.8 20.5

-1.2

29.4 6.4 23.0 11.9 7.0 2.5 1.6

29.0

1995

86.5 0.072

0.347

10.2 4.0 6.2

29.7 8.7 29.3 21.0 -0.2 20.8

-0.2

29.9 6.7 23.2

29.4

1996

89.0 0.075

0.351

10.9 4.2 6.7

31.2 9.4 30.2 21.8 -0.1 21.7

-0.0

31.3 7.1 24.2

31.0

91.1 0.073

0.347

10.9 4.3 6.7

32.3 9.7 29.9 22.6 -0.6 22.0

0.4

31.9 7.2 24.7

31.6

1998

Forecasts 1997

0.344

11.2 4.4 6.8

34.3 10.0 29.1 24.3 -1.7 22.6

1.5

32.8 7.3 25.5

32.5

2000

93.1 94.7 0.073 0.072

0.347

11.0 4.3 6.8

33.3 9.8 29.3 23.5 -1.4 22.1

1.2

32.1 7.2 24.9

31.8

1999

29.6 6.5 23.1 12.6 7.2 1.9 1.5

97.2 0.070

0.337

11.4 4.6 6.8

35.2 10.4 29.4 24.9 -1.2 23.6

1.0

34.2 7.6 26.6 13.8 8.2 2.6 2.1

33.9

2001

0.372

16.6 6.0 10.6

44.2 14.3 32.4 29.9 0.5 30.3

-1.0

45.2 10.5 34.7 18.2 10.9 3.1 2.5

44.6

2011

33.7 7.6 26.1 14.3 8.1 2.0 1.6

38.0 8.6 29.3 16.1 9.3 2.1 1.8

109.1 120.2 0.082 0.088

0.363

14.2 5.3 8.9

38.2 12.3 32.1 25.9 1.1 27.0

-1.5

39.7 9.1 30.6 16.0 9.5 2.8 2.3

39.2

2006

42.6 9.6 33.0 18.1 10.5 2.3 2.0

133.2 0.094

0.383

19.3 6.8 12.5

50.6 16.6 32.8 34.0 -0.3 33.7

-0.5

51.1 12.0 39.1 20.5 12.4 3.4 2.8

50.3

2016

2.4

3.0

6.5

2.4 2.6 2.3 2.4 2.5 1.1

2.2

3.2 2.7 3.6

2.6

2.5

5.2 3.7 6.6

2.8 3.3

2.7 3.0 2.6 2.6 2.7 1.5 2.8

2.7

1995– 2016

3.2 5.3

3.7 5.0 3.4

3.6

1975– 1995

Annual % change

Aluminium

Appendix Table 1.4 Aluminium scrap consumption and trade, 1995 (000 tonnes scrap) Region/Country

Consumption

Exports

Imports

United States Japan Germany FR Italy China PR France United Kingdom Netherlands Spain Mexico Russia Taiwan Canada

3690 1389 838 642 500 408 314 225 166 151 147 147 114

434 10 479 11 .. 103 105 157 7 .. .. 24 237

433 176 294 244 .. 160 75 204 38 .. .. 138 56

2 -166 185 -233 .. -57 31 -47 -31 .. .. -114 182

Others

1134

310

282

28

Identified world total

9865

1878

2100

-221

© Woodhead Publishing Ltd

Net trade

Chapter 1 / page 31

Quarters 1988 Q1 Q2 Q3 Q4 1989 Q1 Q2 Q3 Q4 1990 Q1 Q2 Q3 Q4 1991 Q1 Q2 Q3 Q4 1992 Q1 Q2 Q3 Q4 1993 Q1 Q2 Q3 Q4 1994 Q1 Q2 Q3 Q4

Period

1859 2149 2098 2006 2069 1995 1664 1558 1440 1628 1602 1540 1426 1341 1319 1194 1268 1396 1312 1205 1279 1224 1238 1205 1352 1521 1646 1911

3.37 4.21 4.52 4.41 4.48 4.34 4.13 3.60 3.03 3.28 3.00 2.99 2.74 2.58 2.41 2.15 2.27 2.56 2.27 2.23 2.17 2.13 2.17 2.15 2.35 2.89 3.03 3.19

DM/kg

c/lb.

84.3 97.5 95.2 91.0 93.8 90.5 75.5 70.7 65.3 73.8 72.7 69.8 64.7 60.8 59.8 54.2 57.5 63.3 59.5 54.7 58.0 55.5 56.2 54.7 61.3 69.0 74.7 86.7

Alloy 226

Alloy 380

$/t

Germany

USA

2011 2491 2432 2572 2432 2256 2146 1959 1785 1961 1868 1977 1822 1498 1365 1310 1432 1561 1553 1474 1328 1329 1277 1285 1360 1721 1919 2078

$/t

1073 1187 1313 1262 1215 1194 1208 1125 990 1064 934 917 853 885 808 738 764 888 782 852 925 928 915 892 935 1142 1203 1187

£/t

1905 2195 2226 2218 2134 1966 1926 1779 1636 1761 1635 1773 1649 1526 1339 1317 1302 1579 1499 1357 1355 1426 1371 1329 1395 1707 1851 1891

$/t

Alloy LM 24

UK

Appendix Table 1.5 Prices of secondary aluminium

276 300 307 317 320 322 328 310 292 285 292 298 283 265 230 205 197 213 207 197 190 177 160 143 147 175 183 197

yen/kg

2146 2396 2344 2499 2011 1842 1948 2278 2011 1842 1948 2278 2132 1911 1664 1560 1559 1586 1583 1583 1559 1571 1483 1344 1350 1674 1833 2002

$/t

Alloy ADC 12

Japan

1068 1018 1039 976 1146 1358 1556 1824

$/t

Alloy

2064 2503 2568 2332 2192 2014 1750 1707 1525 1555 1799 1661 1537 1352 1286 1155 1266 1325 1320 1204 1209 1155 1185 1088 1265 1361 1531 1843

$/t

Primary

LME 3-month

-205 -354 -470 -326 -123 -19 -86 -149 -85 72 -197 -122 -112 -11 33 40 1 71 -8 2 70 68 53 117 87 160 115 67

Alloy premium $/t

80.5 94.2 95.5 90.3 91.5 87.5 72.0 66.3 60.8 63.2 67.8 64.7 59.3 55.3 51.7 44.2 51.8 53.7 48.7 47.3 50.0 46.0 42.5 38.0 45.2 49.7 55.5 66.2

c/lb. 1775 2076 2105 1991 2017 1929 1587 1462 1341 1393 1495 1426 1308 1220 1139 974 1143 1183 1073 1044 1102 1014 937 838 996 1095 1224 1459

$/t

New cuttings

Scrap USA

59.5 67.2 67.5 64.5 67.8 66.5 53.7 51.8 45.3 52.8 52.2 49.3 48.0 44.3 41.0 38.8 39.8 46.0 40.3 35.0 40.3 37.3 38.5 33.8 41.2 47.7 52.0 61.3

c/lb.

1312 1481 1488 1422 1495 1466 1183 1143 999 1165 1150 1088 1058 977 904 856 878 1014 889 772 889 821 849 746 908 1051 1146 1352

$/t

Old cast

1474 1689 1704 1621 1678 1628 1325 1255 1119 1244 1271 1206 1146 1062 986 897 971 1073 953 867 964 889 880 778 938 1066 1173 1389

Blend 35:65

385 460 394 385 391 367 340 303 321 383 331 334 280 279 333 297 297 323 358 338 315 335 359 427 414 455 473 521

$/t

Margin

Part 1: Ferrous and non-ferrous metals

Chapter 1 / page 32

© Woodhead Publishing Ltd

© Woodhead Publishing Ltd

70.7

66.8 51.3 53.4 66.5 92.0 82.6 70.4 59.9 58.8 56.1 72.9 81.9 66.4 74.1 63.2

Years 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Average 1988–98

95.3 80.8 79.5 71.8 69.0 67.7 65.3 63.6 72.0 75.2 74.3 75.0 70.8 66.8 58.3 57.5

1995 Q1 Q2 Q3 Q4 1996 Q1 Q2 Q3 Q4 1997 Q1 Q2 Q3 Q4 1998 Q1 Q2 Q3 Q4

1560

1472 1132 1178 1467 2028 1822 1552 1320 1295 1236 1608 1805 1464 1634 1393

2102 1782 1753 1584 1521 1492 1440 1402 1587 1657 1639 1653 1562 1472 1286 1268

3.01

4.19 3.74 3.01 2.91 4.13 4.14 3.07 2.47 2.33 2.15 2.86 3.16 2.55 3.24 3.01

3.58 3.42 2.97 2.69 2.57 2.57 2.54 2.52 2.94 3.31 3.36 3.37 3.31 3.14 2.96 2.67

1822

1495 1264 1371 1613 2377 2198 1898 1499 1505 1305 1770 2196 1701 1886 1705

2373 2439 2086 1887 1756 1688 1699 1659 1807 1946 1871 1919 1828 1742 1674 1601

990

957 895 805 923 1209 1185 976 821 821 915 1117 1165 907 959 820

1318 1243 1113 983 949 932 893 854 957 973 948 958 918 858 790 723

1631

1299 1162 1179 1513 2136 1952 1701 1458 1434 1370 1711 1840 1410 1575 1359

2081 1988 1755 1535 1455 1412 1387 1388 1576 1589 1567 1583 1502 1422 1310 1212

231

376 329 240 246 300 320 292 246 203 168 175 204 186 215

228 213 190 185 177 190 190 188 203 225 217 215 215 208 200

1870

1593 1349 1406 1679 2346 2020 2020 1817 1578 1489 1715 2181 1738 1794

2313 2483 2124 1805 1723 1776 1761 1693 1714 1857 1890 1741 1672 1581 1439

1025 1471 1687 1335 1483 1233

1916 1700 1676 1457 1409 1346 1275 1310 1522 1487 1477 1453 1365 1277 1184 1112

1596

1373 1123 1290 1561 2367 1916 1635 1333 1279 1159 1500 1832 1536 1619 1380

1963 1809 1861 1696 1623 1587 1479 1457 1625 1610 1616 1602 1484 1409 1344 1300

-36

99 9 -113 -94 -338 -94 -83 -13 17 77 108 -27 -73 15 12

138 -27 -108 -112 -101 -95 -38 -55 -38 47 27 52 77 63 -58 -33

59.5

52.4 40.9 47.2 61.0 90.1 79.3 64.1 52.6 50.4 44.1 54.1 62.0 51.3 57.5 48.5

71.8 63.2 59.8 53.2 54.5 52.7 49 49 56 58 58 58 56 53 43 43

1311

1155 902 1040 1346 1987 1749 1414 1160 1111 973 1193 1367 1131 1268 1068

1584 1393 1319 1172 1202 1161 1077 1084 1231 1279 1271 1268 1224 1171 944 944

49.2

42.3 32.4 35.1 45.3 64.7 60.0 49.9 43.0 40.3 37.5 50.5 56.7 45.5 52.2 41.5

65.5 56.7 56.2 48.5 46.7 48.2 43.3 43.8 52.2 53.7 53.3 50.7 48.8 45.1 37.0 36.0

1086

932 715 773 999 1426 1322 1100 949 888 826 1114 1250 1003 1150 914

1444 1249 1238 1069 1029 1062 955 966 1150 1183 1176 1117 1077 995 816 794

1165

1010 780 867 1120 1622 1471 1210 1023 966 878 1142 1291 1048 1191 968

1493 1299 1267 1105 1089 1097 998 1008 1178 1217 1209 1170 1128 1057 861 846

395

462 351 311 347 406 350 342 297 329 359 466 514 416 443 425

609 483 486 478 432 395 443 394 409 441 433 484 434 415 425 421

Aluminium

Chapter 1 / page 33

2 Copper Martin Thompson

2.1

Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties 2.1.2 Products and end-uses

2.2

Production processes and technologies 2.2.1 Pyrometallurgical process 2.2.2 Hydrometallurgical process

2.3

Market features, structure and operation 2.3.1 Production, exports, imports and consumption 2.3.2 Market pricing

2.4

The structure of the scrap recovery/recycling sector 2.4.1 Relative importance of secondary production 2.4.2 Forms and availability of scrap 2.4.3 Scrap recycling arrangements 2.4.4 Trade in scrap 2.4.5 Scrap pricing arrangements

© Woodhead Publishing Ltd

Copper has been produced and used for longer than any other industrial metal, since copper and gold were the first metals to be discovered, probably during the seventh millennium  in the Near East. Of the two original metals, copper, which could be beaten into all manner of weapons and tools, was by far the more important for the development of mankind. It was therefore logical that the many centuries which witnessed the gradual ending of the Stone Age should have been named the ‘Chalcolithic’ or Copper Period, and that after the discovery that the admixture of a small quantity of tin would result in a much harder metal, the period from then until the spread of the use of iron in the first millennium  should come to be known as the Bronze Age, after the modern name for this most ancient of alloys. Although the advent of iron brought to an end the supremacy of copper and its alloys among the known metals, they continued to be prized for their many qualities. In spite of the discovery of other metals, and also of the comparative rarity of its occurrence, today copper’s consumption is still only exceeded among the metals by that of iron and aluminium.

2.1 Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties Apart from gold, copper is the only metal to be coloured, being a brownish red when clean. Its density is 8.9g/cm3, making it lighter than lead (11.3g/cm3) but heavier than iron (7.9g/cm3) and of course much heavier than aluminium (2.7g/cm3); at 1083°C copper’s melting point is well below that of iron (1536°C) but higher than that of aluminium (660°C). Its atomic number is 29 and its atomic weight is 63.54. It is non-magnetic. Its chemical symbol is Cu, derived from its Latin name, cuprum. Copper’s most important property as regards its present-day applications is undoubtedly its electrical conductivity. As can be seen from Table 2.1, when related to mass it is well above iron and the other metals that are available in quantity, and is only marginally exceeded by silver; however, it should be noted that aluminium has better conductivity related to weight, being only 30% of copper’s weight but having 62% of its

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Chapter 2 / page 1

Part 1: Ferrous and non-ferrous metals

Table 2.1 Electric and thermal conductivity of copper relative to other metals

Silver Copper Gold Aluminium Zinc Iron Lead

Electric conductivity

Thermal conductivity

106 100 72 62 29 18 8

108 100 76 56 29 17 9

Source: Base Metals Handbook.

conductivity. Copper is equally successful as a conductor of heat, again far exceeding other common metals. These outstanding qualities as a conductor of electricity and heat are complemented by copper’s other attributes. It has excellent mechanical properties and can be easily worked, joined, forged, extended, rolled and drawn into very fine wire. It can be made harder or softer, more flexible or ductile or easier to cast or work either by treatment or by alloying with other metals. Alloying gives copper even greater adaptability, with a great range of mixtures and qualities available; the commonest alloy groups are bronzes with typically 3–6% tin and brasses which may contain more than 40% zinc. The colours of copper and its alloys, ranging from dark red to light yellow, make them uniquely suitable for many decorative and artistic uses. Finally, all copper’s attributes are enhanced by its durability. Its oxidation when exposed to the atmosphere is limited to the formation of a green patina on its surface; it can resist organic acids and alkalis apart from ammonia, and can normally be buried or immersed in water without risk of corrosion. This durability, to which many perfectly preserved ancient artefacts bear witness, is of particular importance to a metal which in many of its functions, particularly electric, is concealed from view and so cannot be visually checked for corrosion.

2.1.2 Products and end-uses Primary and secondary refined copper is usually produced by an electrolytic refinery in the form of cathodes or sheets, or in a few cases, wirebars (described below). These are cast into wire rod, billets, cakes

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Copper

Table 2.2 End-use distribution of semi-fabricated copper products, 1995 % Construction Electrical Machinery Transport Consumer and other

35 26 15 11 13

Source: CRU.

or other shapes according to the product for which the metal is to be used. The most important product by a considerable margin is wire, which is drawn from wire rod. Electrical wire, in a great range of gauges, is used for a wide variety of applications including generators, transformers, mains power lines, building, automobile and appliance wiring, electric motors and telecommunications. Although aluminium cable is used for overhead power lines, and fibre optics for telecommunication trunk lines, the shorter distance and domestic lines are generally still copper, which also, often as brass, provides other electrical equipment such as plugs, sockets and switches. The next most important application is non-electric use in construction, including plumbing tubes and tanks, air conditioning, and roofing, flashing and other architectural applications. There are many other smaller outlets for the metal, including valves and other fittings in machines, automobile radiators, condensers and heat exchangers, chemicals, coins, ordnance and consumer goods. Lack of statistics and commercial reticence on the part of manufacturers make an accurate division of refined copper consumption between the various applications impossible. However, estimated enduse distribution of semi-fabricated products (wire, tube, etc) in the Western World by market sector is as shown in Table 2.2. In fact, all the market sectors include copper in electrical applications, particularly building wiring which is included in construction, and which is probably the biggest single outlet for copper, both electric and non-electric. In Copper Development Association (CDA) Inc.’s analysis of the United States’ copper consumption in 1995 building wiring accounted for 15% of the total, and other overtly electrical applications, including power utilities (9%), automotive electrical and

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Part 1: Ferrous and non-ferrous metals

telecommunication (both 7%), totalled 35%, giving electrical outlets 50% of the total. Plumbing and heating accounted for 14%. The distribution in different countries varies considerably, but world-wide electrical application of all sorts accounts for more than half of total refined copper consumption.

2.2 Production processes and technologies Copper accounts for perhaps 0.005% or less of the earth’s crust, which is rare in comparison with aluminium (8%) or iron (5%). It can therefore only be extracted where it is heavily concentrated. Copper normally occurs in chemical combination with other elements in mineral forms, the most common being chalcopyrite, a sulphide of copper and iron, which accounts for perhaps 50% of total copper deposits. Bornite and chalcocite are also common copper sulphides. On the surface, copper sulphides oxidise, but copper may also occasionally be found in metal form. Nearly all the large deposits which are worked today are relatively low grade, often containing under 1% copper, since those with significantly higher concentrations tend to be too small to be economical. About two-thirds of total Western World copper mine production is concentrated in the western states of the Americas, where deposits follow the line of geological faults which stretch from Chile to British Columbia; other major mining countries include Indonesia and Papua New Guinea, Australia, Russia, Kazakhstan, China, Poland and Zambia (political turmoil has all but totally destroyed the Congo’s once substantial production). The low grade of most deposits requires open pit mining on a huge scale in order to obtain sufficient metal.

2.2.1 Pyrometallurgical process Two separate types of process are used to extract the copper from the ore; the first, which can treat sulphide ores and which accounts for around 80% of Western World production, is pyrometallurgy, by which copper is separated from the other elements with which it has been combined in the ore by heat (smelting). This process, which in its essentials has been used since copper was first extracted from rock, involves crushing the ore in mills until it has been reduced to the consistency

Chapter 2 / page 4

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of very fine sand, and then separating the particles of copper from the waste by flotation, thus concentrating the ore to contain usually between 20 and 40% copper. The concentrates, sometimes after drying, are then fed into a smelting furnace in which, after heating, copper matte is formed, consisting of 50–75% copper together with sulphur, iron and any precious metals. This is drawn off separately from the slag, which has been parted by gravity. In most modern smelters the primary source of heat in the furnace is the sulphur in the ore itself, which represents a major saving in energy. The molten matte is transferred to a converter, into which air is blown, removing the iron and sulphur by oxidisation. The resulting ‘blister’ copper, containing around 99% copper, is remelted and cast into sheets called anodes. Environmental regulations now usually require the sulphur dioxide generated by the smelting and converting processes to be recovered and converted into sulphuric acid; the production of one tonne of anode will usually result in the production of three tonnes of sulphuric acid. The acid is usually sold, and often used in neighbouring leaching operations. As explained below, some scrap may also be introduced at either the smelting or conversion stage. The final stage in the production of high-grade copper by this process is refining; for centuries this was done by further heating, but today the normal process is by electro-refining. This is effected by the transferring of copper from the anodes to thin sheets of pure copper lying between the anodes in a bath of electrolyte. Electric current is passed through the electrolyte, electro-chemically dissolving the copper in the anode, which is attracted onto the sheets of pure copper. The result is refined electrolytic cathode copper, of over 99.99% purity, in sheets weighing 110–125kg each, and ready to be drawn into wire rod or cast into shapes for fabrication.

2.2.2 Hydrometallurgical process The second process for extracting copper is hydrometallurgy, which accounts for a rapidly increasing proportion of production. This is used mainly on oxide ores which may be difficult to concentrate by flotation. The most widely used process today involves the ore being leached with sulphuric acid and the copper being extracted from the resulting solution by electrowinning. Occasionally, the material to be

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Part 1: Ferrous and non-ferrous metals

leached may be treated in situ, but usually previously mined low-grade ore or waste is treated where it lies, or it may be crushed and treated in a heap or in a vat, or stirred with the acid in a tank. A sulphuric acid solution is pumped onto or into the material to be leached and the copperbearing liquor is collected; the cycle time varies from a matter of days to years. The copper is usually recovered from the liquor by solvent extraction by selective organic reagents which extract only the copper from the leach liquor. The copper-bearing solution separates from the leachate by gravity (the leachate having lost its copper content), and is then mixed with sulphuric acid to produce a concentrated copper sulphate solution from which copper metal is extracted by electrolysis in a tank. Since the copper is already in the electrolyte, non-dissolving anodes, usually of lead alloy, are used. Cathodes of refined copper, similar to those from the pyrometallurgical process, are produced. Occasionally sub-standard cathodes are remelted and cast into wirebars (oblong ingots) for rolling into wire rod, but the continuous casting process for wire rod production has made the wirebar stage unnecessary in nearly all plants.

2.3 Market features, structure and operation 2.3.1 Production, exports, imports and consumption Mine production of copper in the Western World in 1997 totalled 9.43 million tonnes, according to the data at present available. Most of this came from countries in the Americas as is shown in Table 2.3. Table 2.3 Copper mine production, 1997 (’000s tonnes) Chile United States Canada Australia Indonesia Peru Mexico Zambia Other countries

3392 1940 660 558 548 503 393 331 1102

Total

9427

Source: World metal statistics (WMS).

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Table 2.4 Refined copper production, 1997 (’000s tonnes) United States Chile Japan Germany Canada Belgium Peru Mexico Other countries Total

2450 2117 1279 674 561 386 384 297 2658 10805

Source: WMS.

Refined production (i.e. metal which has been produced in a refinery by one of the processes described in the previous section) totalled 10.81 million tonnes, and it will be seen in Table 2.4 that its geographical distribution differs markedly from mine production. Many copper mines do not have their own integrated smelters and refineries, for a variety of reasons; many are too small (a smelter is unlikely to be financially attractive if of less than 100000 tonnes capacity); there is often a natural desire to avoid the large additional capital cost of a smelter; some may produce complex concentrates which are best blended with other feed; and, most importantly, a large market for ‘custom’ concentrates, that is to say concentrates which are not smelted at the mine, has grown up over the years. Some smelters have been built near the consumers of metal rather than the mines, as in South Korea and Germany; in other cases mines with integrated smelters have reduced their output or closed completely, thus leaving unused capacity in their smelters which must be filled with purchased concentrates if production is to be maintained at an acceptable level. In consequence, a substantial proportion of copper mine production, estimated in 1997 at 30%, is exported from its country of origin to be smelted and refined in another country. Table 2.5 shows the estimated concentrate imports and exports during 1997. It will be seen that Chile is by far the largest exporter of concentrates while Japan, with virtually no mine production of its own, relies heavily on concentrate imports to supply its large smelting and refinery capacity. Canada and the United States both import and export concentrates, largely for geographical reasons. Among the Eastern

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Chapter 2 / page 7

Part 1: Ferrous and non-ferrous metals

Table 2.5 Copper concentrate exports and imports, 1997 (’000s tonnes contained copper) Exports

Imports

Chile Indonesia Canada Australia United States Portugal Papua New Guinea Others

1107 429 498 245 128 113 95 191

Japan Spain Germany Philippines S Korea Canada Brazil Finland Eastern countries (net) Others/in transit

1159 222 189 173 155 139 132 116 229 292

Total

2806

Total

2806

Source: WMS, ICSG.

Table 2.6 Blister and anode exports and imports, 1997 (’000s tonnes) Exports

Imports

Chile Mexico Peru Finland Spain Others

158 121 57 39 34 89

United States S Korea Belgium Germany Canada Others/in transit

157 109 101 63 27 41

Total

498

Total

498

Source: WMS.

countries, China is becoming a major importer of concentrates owing to increasing smelting capacity which its domestic mine production cannot satisfy. In addition to concentrates and secondary material (which will be considered in section 2.4) blister and anode are also exported from countries with insufficient refining capacity; as with concentrates, this is a trade which has been encouraged by overseas demand. Estimated exports and imports of blister and anode copper in 1997 are shown in Table 2.6. Consumption of refined copper in 1997 totalled 11.25 million tonnes, as detailed in Table 2.7. Both the United States and Japan are major producers of refined copper as well as consumers, although both have to rely on imports to a

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Table 2.7 Refined copper consumption, 1997 (’000s tonnes) United States Japan Germany S. Korea Taiwan France Italy United Kingdom Others Total

2790 1441 1040 618 588 558 521 409 3281 11246

Source: WMS.

significant degree. The greatest concentration of demand is in western Europe, which is heavily dependent on imports; total consumption was 3.56 million tonnes compared with production of 2.03 million tonnes. The rate of growth in consumption varies considerably, but the slowest tends to be in countries with mature industrialised economies, particularly western Europe, while those with the fastest rates of growth in the Western World are to be found among the Asian countries apart from Japan. It is estimated that globally the consumption of copper is growing at an average of around 3% per year although inevitably the annual rate varies considerably, reflecting fluctuations in industrial output. For some years past the Western World’s copper consumption has tended to exceed its production, sometimes by a substantial margin; in 1997 it was 0.3 million tonnes. The market has been balanced by substantial net imports from Eastern countries. China, with fast-growing demand and limited domestic production, is a regular importer and sometimes a substantial one, probably receiving net over 0.2 million tonnes in 1996. However, the West receives very large tonnages from the CIS (well over 0.5 million tonnes in 1997) where consumption has fallen further than production since the break-up of the USSR, and nearly 0.2 million tonnes from Poland, although here domestic consumption is increasing, and in the longer term exports are expected to decline.

2.3.2 Market pricing With the exception of the United States, where the Comex quotation is used, copper in all its forms is usually bought and sold on the basis

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Part 1: Ferrous and non-ferrous metals

of the daily quotations of the London Metal Exchange (LME) settlement price, quoted in US $ per metric ton. Some countries have their own domestic prices, but these are also based on the LME level, and outside the United States imports and exports are almost invariably priced on the LME quotations, averaged over an agreed period. Much exported metal is sold on annual contracts providing for a premium over the LME price to be paid; this will vary from year to year but, as an example, in 1997 the usual premium was $30/tonne. Blister is sold at a discount to the LME to cover the cost of refining, and concentrates are sold at a larger discount since they have to be both smelted and refined by the receiver.

2.4 The structure of the scrap recovery/recycling sector Throughout its history, copper and its alloys have been remelted and the metal reused. Some major instances of this, such as the recovery of the massive remains of the Colossus of Rhodes (possibly the biggest single copper alloy object ever to be recycled) and the stripping of the bronze roof from the Pantheon in Rome in the seventh century , have gone down in history. No material lends itself to recycling better than copper. Only a tiny amount – mainly oxide powder for fungicides – is manufactured into a form which cannot be recovered after use; very little metal is lost in the remelting or resmelting and refining process and there is no loss of quality; and the energy required to produce secondary copper is much less than that required to produce the same amount from a mine.

2.4.1 Relative importance of secondary production Scrap has always played an important part in the copper industry, although its level of usage varies with market circumstances and also the type and provenance of the secondary material. Scrap can be divided into two categories based on the process by which it will be reconverted into raw materials for manufactured copper products. Very pure scrap, usually from off-cuts, spoilt products, etc., arising from the actual manufacturing process, requires no further refining and so can be used directly in the semi-fabricating process; it can therefore be fed into the melting furnace of, for example, a continu-

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Copper

Table 2.8 Copper raw materials, 1997 (tonnes) Mine production Loss in smelting process Net exports of ores, concentrates, and blister to Eastern countries Production from secondary materials Refinery output Implied change in stocks of ores, concentrates and blister

9440200 236000 165700 1601000 10793300 153800

ous casting rod mill, along with cathode. Less pure scrap, on the other hand, needs to be treated in a smelter (or by a hydrometallurgical process) and then electrolytically refined. Scrap may also consist of copper ashes and residues, and copper alloys, of which brass is the most common. Less pure scrap which goes through a refinery contributes to the ‘refined’ production described in sections 2.2 and 2.3 above. Table 2.8 provides, as an example, an estimate of the raw materials making up the 1997 Western World refined copper production. In that year, scrap accounted for nearly 15% of Western World refined copper production, although the level of scrap for refining fluctuates, for reasons explained in 2.4.2 below. The importance of secondary refined production varies considerably from country to country (as does the usage of direct scrap). Western world scrap usage is shown in Table 2.9. It will be seen that the distribution of refined production from scrap, i.e. secondary refined production, is very different from the distribution of primary production. Although individual countries’ circumstances vary widely, as a general rule the highest level of secondary production will be found in those countries where there is a high generation of old scrap, resulting from a high consumption of refined copper over a long period, and where primary production falls well short of demand for refined metal. Most of the scrap that is refined comes from old scrap which represents the recycling of copper in manufactured articles which were often made decades previously. It is no surprise, therefore, that the bulk of such scrap is generated in countries which have been fully industrialised for a long time. The obvious example is Western Europe, with over half total Western World secondary refined production. The distribution of production will also be affected by countries such as Belgium and Germany which have substantial

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Part 1: Ferrous and non-ferrous metals

Table 2.9 Western World scrap usage, 1997 (’000s tonnes) Refined production from scrap

Scrap as % of total refined production

Direct-use scrap

72 183 30 378 80 38 63 51 17 — 912

100 49 84 56 93 14 22 85 15 — 47

20 32 57 302 413 57 30 69 36 41 1057

121 26 147

9 4 8

639 360 999

Canada United States Brazil Mexico Other Americas Total Americas

99 380 — 15 20 514

18 16 — 5 1 9

39 1059 66 117 — 1281

South Africa Other Africa Total Africa

—

—

Austria Belgium France Germany Italy Scandinavia Spain United Kingdom Ex-Yugoslavia Other Europe Total Europe Japan Other Asia Total Asia

Australia Total Oceania Western World total China Russia Other Eastern countries Total World

4 4

1 1

24 9 33

24 24

9 9

22 22

1601

15

3392

379 65 55 499 2100

Source: ICSG, WMS.

capacity for treating scrap, and which draw in material from other countries. The distribution of consumption of direct-use scrap is in some respects similar to that of refined production from scrap, but there are differences, since direct-use scrap reflects current consumption of

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copper by manufacturers, which generate new scrap, rather than past consumption. Much of this is material which, having been discarded, is either remelted and reused in the same plant, or returned to the supplier for remelting. On the available figures (which are by no means wholly reliable), scrap in all forms used in the Western World in 1997 totalled 4.91 million tonnes and represented one-third of total copper consumption (refined consumption plus use of direct-melt scrap) of 14.54 million tonnes. Statistics for scrap in former Eastern bloc countries are highly uncertain, but the International Copper Study Group (ICSG) shows scrap as ranging between 30% and 38% of global consumption between 1965 and 1995, fluctuating according to availability and the level of consumption.

2.4.2 Forms and availability of scrap As mentioned above, copper scrap can be categorised according to its method of recovery, i.e. whether it requires treating in a smelter and refinery, or whether it can simply be remelted in the semi-fabricating plant. It is also divided between ‘new scrap’, which consists of pieces of waste metal generated in the semi-fabricating and manufacturing processes, and ‘old scrap’, which is recovered from manufactured articles that have come to the end of their useful life. While new scrap is likely to be recycled within at most a matter of months, old scrap will not be recycled until the product of which it forms a part becomes redundant. This will vary considerably; copper in automobiles is unlikely to be recovered in much less than ten years, and quite possibly more; household appliances have a similar life span, although the cables which feed them may last for 30 years or more and the plumbing even longer. Copper in roofing and other architectural applications can last for centuries. The availability of new scrap is largely a function of the level of semi-fabricating and manufacturing activity; the greater the activity, the more new scrap will be generated, although this may be modified by improved technology restricting the amount of scrap generated by the processes. Since new scrap is generally much easier and cheaper to recover than old scrap, its generation is much less likely to be affected by the copper price. Old scrap, on the other hand, is ultimately more affected by the

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Part 1: Ferrous and non-ferrous metals

copper price than by any other single factor (although the price of scrap is a function not only of the copper price level itself but also the level of discount below the copper price). It has to be recovered from a great variety of products – wires and cables in appliances, buildings, automobiles, machinery, or buried in the ground or, like plumbing tubes, fitted into buildings – and often in very small quantities. In spite of some technological advances, copper scrap recovery and collection is still labour intensive and low prices will reduce the rate of scrap recovery. Accordingly, owners of scrap may choose to hold onto it during periods of low prices and wait for the market to recover. Also, scrap for refining must compete with blister as feed (and in some cases with concentrates also), and if one is in oversupply, the price of the other raw material will suffer, while demand for scrap will decline if the differential between its price and that of refined metal gets too small. In the longer term, changes in the forms in which copper is used are likely to affect the cost of recovery of old scrap and therefore its usage. The downsizing, wherever possible, of copper products (such as tubes with thinner walls and wire of smaller gauge) which has been a feature of the past 20 years or more, is likely to have some adverse effect on costs, as is the dissipation of much copper in minute quantities in electrical appliances such as computers and screens. Increasingly strict environmental regulations are also having an effect on recovery costs. Finally, during the past 30 years the cost of primary copper production, with which scrap for refining must ultimately compete, has declined markedly in real terms owing to technological advances, more economical operations and increasing low-cost electro-won production, while there is no evidence of a comparable decline in secondary recovery costs. There are indications that in the West the rate of increase of secondary refined production is lagging behind that of primary production, and this could be indicative of future problems. The marked (and perhaps increasing) sensitivity of scrap supply to the copper price can act as a valuable moderating influence on the fluctuations of the copper market. As the price falls, supplies of old scrap shrink, and with lower secondary production, total refined copper production is also restricted. For example, in 1998, when the LME copper price fell 27%, although primary production rose by 4.7%, secondary production fell by 13.4%, restricting the increase in total refined production to 1.9% (according to the ICSG). In addition, low metal prices tend to reduce supplies of direct-use scrap to fabricators

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who are then forced to use additional cathode instead, thus bolstering refined consumption.

2.4.3 Scrap recycling arrangements Scrap recycling starts at a relatively early stage in the process, the first, ‘home scrap’, being damaged anode or cathode returned from the electrolytic refinery to the anode furnace for recasting into anode. Likewise, in the semi-fabricating stage, off-cuts or spoilt products are returned as scrap from wire, tube and brass mills and foundries to the relevant casting plants. Scrap from the manufacturing stage (new scrap), such as discarded lengths of wire and cable, is collected by scrap dealers. This scrap may require preparation: for example, wire must be separated from its insulation. Unalloyed copper scrap, if pure enough for direct use, will be sent to a casting plant to be remelted and cast into wire rod or some other shape, while the rest will be sent to either a firerefining plant, an anode furnace, a secondary leaching plant or a smelting furnace, according to its level of purity. Alloyed scrap, if pure, may be sent direct for remelting in a brass mill or foundry, or for fire refining in an ingot-casting plant, or to a smelter. Old scrap recovered from manufactured products follows similar routes, except that, being much more widely distributed, its collection is more complicated, and it may pass through the hands of more than one dealer before it is recycled. In most countries environmental regulations restrict the methods by which scrap can be prepared, and some practices, such as burning electric wire to separate the insulation from the metal, may not be allowed. The regulations resulting from the Basel Convention (see Part Four, Chapter 1) also seriously restrict the transport of some grades of scrap between certain countries, classifying them as waste rather than recyclable material. In general, while legislation tends to act as a discouragement to the recycling of copper products, profit is likely to be the only incentive.

2.4.4 Trade in scrap Although statistics for imports and exports of copper and copper alloy scrap are far from complete, Table 2.10 provides estimates for 1996. As can be seen from Table 2.10, China is the biggest net importer of

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Part 1: Ferrous and non-ferrous metals

Table 2.10 World copper and copper alloy scrap, 1996 (’000s tonnes)

Austria Belgium France Germany Italy Netherlands Scandinavia Spain United Kingdom Other Europe Total Western Europe Canada United States Mexico Other Americas Total Americas South Africa Other Africa Total Africa India Japan South Korea Other Asia Total Asia Australia Other Oceania Total Oceania Total Western countries China Russia Other CIS Other Eastern countries Total Eastern countries TOTAL WORLD

Imports

Exports

Net imports/(exports)

91 200 88 571 260 101 81 68 58 29 1547 174 212 3 3 392 5 — 5 145 194 120 109 568 4 2 6 2518 797 — — 27 842 3342

23 96 133 342 58 106 101 44 132 85 1120 126 380 41 20 567 12 17 29 — 80 28 246 354 33 2 35 2093 12 350 24 79 465 2558

68 104 (45) 229 202 (5) (20) 8 (74) (56) 427 48 (168) (38) (17) (175) 5 (17) (12) 145 144 92 (137) 214 (29) 1 (29) 425 785 (350) (24) (52) 359 784

Source: ICSG.

copper scrap; inadequate supplies of domestic copper and plentiful treatment capacity are the reasons. Recently tighter environmental requirements have contributed to the reduction of China’s net scrap imports to 710000 tonnes. Germany and Italy are the next biggest net importers, supplies coming not only from other European countries but also from the CIS countries, which have become major exporters since the break-up of the USSR. The largest single net exporter in 1996 was the United States and, in spite of its own substantial consumption of scrap,

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Copper

large exports were made to China. Otherwise scrap is usually drawn from developing regions to the more industrialised ones.

2.4.5 Scrap pricing arrangements The price of copper-based scrap and residues varies according to its purity, cleanliness, contents, how it has been prepared and how costly it will be to process. There are a number of widely used specifications of copper scrap, the most basic being ‘No. 1’ scrap, which may be used directly in place of refined copper, and ‘No. 2’ scrap, which requires processing. These grades are subdivided, and in the internationally recognised Institute of Scrap Recycling Industries Inc. (ISRI) specifications code names such as ‘Berry’, ‘Birch’ and ‘Barley’ are used. The detailed scrap specifications may be obtained from the ISRI at 1325 G Street NW, Washington DC, DC 20005, USA. The basis on which scrap is usually sold is the domestic copper price of the relevant country with a discount determined by grade and market conditions. In the United States this is ultimately based on Comex; in most other countries and for international trade it is, directly or indirectly, the London Metal Exchange. For example, in the United States, the average Metals Week quotation for No. 1 ‘Bare Bright’ scrap during 1998 was 74.6 c//lb, and for No. 2 scrap was 61.4 c//lb compared with a Metals Week US Producer Refined price of 77.2 c//lb. The discount of scrap below the copper price will fluctuate according to supply and demand: the differential between the Producer Refined and No. 2 scrap prices during the last 10 years has fluctuated from about 15 c//lb to over 30 c//lb. The more impure or difficult to treat the material is, the greater will be the discount below the refined copper price. There is no universally used standard form of contract for scrap sales, but certain provisions will be found in most, if not all contracts.

Appendix 2.1 Description of material: high grade scrap will conform to an ISRI specification. Price basis: a specified discount above or below one of the published prices, e.g. LME, Comex, Metal Bulletin quotation, etc. Delivery basis: Normally in warehouse, FOB or CIF. Delivery dates:

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Price fixing : the valuation may be based on the specified quotation averaged over a period, e.g. the month of shipment, or on a predetermined date. Procedure in event of a dispute: usually LME or Comex arbitration services are used. Governing law : Penalties: if material is not up to specification. Procedure for determining assays is sometimes included.

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3 Lead Vincent Rich

3.1

Physical characteristics, properties, products and end-uses 3.1.1 Characteristics and properties 3.1.2 Products and end-uses 3.1.3 Lead batteries Battery weight Battery lifetimes

3.2

Production processes and technologies

3.3

Market features, structure and operation 3.3.1 Industry structure 3.3.2 Market institutions and operation

3.4

The structure of the scrap recovery/recycling sector 3.4.1 The relative importance of secondary production 3.4.2 Forms and availability of scrap 3.4.3 Scrap recycling arrangements The scrap collection chain Battery collection and recycling schemes

3.4.4 International trade in scrap 3.4.5 Scrap pricing arrangements

Notes References

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3.1 Physical characteristics, properties, products and end-uses 3.1.1 Characteristics and properties When freshly cast, lead has a shiny silver lustre, but on exposure to air rapidly acquires a dull, dark grey appearance due to the film of lead carbonate that forms on the surface. It possesses a number of unique properties that distinguish it from other common metals and which make it useful in a broad range of applications. Lead has a relatively low melting point (327°C), high density, low electrical conductivity and is the most corrosion-resistant of all the major metals. In addition, it is soft and malleable (in its pure, unalloyed state), and can be readily formed into almost any shape. Lead can be rolled to most thicknesses and extruded as pipe, rod or wire, while a low melting point means that it is also easily cast. It can be alloyed with antimony, arsenic or tin, which raises dramatically its strength or hardness. When added to steel, aluminium and copper alloys (in quantities up to 0.3%) lead improves their machinability. While the softness of lead provides certain advantages, such as ease of use and formability, its lack of strength (and tendency to deform, creep and fracture under stress) means that it is rarely used in engineering applications in pure metallic form. However, this problem can be overcome by alloying lead with other materials or through the use of composite materials. Lead is an extremely reactive metal, which provides effective and long-lasting corrosion resistance in the face of most environmental elements. In air, metallic lead reacts first with oxygen, and then carbon dioxide, to form a strong and cohesive lead carbonate film; this film then protects the lead from further corrosion. Lead is very resistant to attack from sulphuric and phosphoric acids because both similarly form a protective film which adheres closely to the metal and is itself insoluble, preventing further corrosion. Metallic lead is insoluble in pure water, unless air is present. The combination of dissolved oxygen and carbonic acid cause the formation of lead hydroxide, which is fairly soluble, but only with soft water or rain water. Hard water contains calcium or magnesium salts which form a protective film on the surface of the lead. Despite a number of unique and valuable properties, lead is also a

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highly toxic metal which can be severely damaging to human health. The incidence and symptoms of lead poisoning are well known and stretch back to at least the time of the Roman Empire. More recently, heightened concern over the well-being of workers in the lead industry, and about the possible impact of lead in its various forms on the health of the population in general, has given rise to a growing body of government legislation which is now being more systematically implemented. Measures extend to controls on the introduction of new lead-using products, reductions in (or elimination of) the lead content of existing products and restrictions on the movement of lead raw materials (scrap and residues) destined for recycling.

3.1.2 Products and end-uses The smelting and fabrication of lead dates back some 8000 years, to before the time of the Egyptians, but it was the Romans who discovered and identified most of its useful properties. Lead ore would have been relatively simple for ancient man to smelt, requiring significantly lower temperatures than other metallic ores, and a straightforward extraction process. Lead’s corrosion resistance, malleability and imperviousness were recognised by the Romans, and they used this knowledge to manufacture sheet, piping and storage vessels that have survived to this day. The emergence of lead as an important industrial metal dates back to the latter part of the nineteenth century. Increasing urbanisation in Europe and North America, and the expansion of the chemical industry, brought with them growing requirements for lead piping systems and fittings. However, the invention of the lead storage battery in the 1850s, and its commercial introduction in the 1880s and 1890s (first in telegraphy and later in trolley cars and locomotives), was of much greater significance for the subsequent development of the industry. From about 1900, lead-acid batteries began to be used for automobile lighting and ignition, while in 1911, battery-started automobiles appeared for the first time. Lead is now used in a wide range of industrial sectors (transport, construction and electrical goods, in particular), as Table 3.1 indicates. It is used as unalloyed metal in applications such as cable sheathing, pipes and sheet. After melting and casting, lead metal can be rolled, extruded, shaped, pressed or stamped, depending on product requirements. Lead

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Lead

Table 3.1 Lead use by major consuming industries Transportation

Construction

Capital goods

Electrical/communications

Others

Grid alloys and oxide pastes in SLI batteries and some traction batteries Solders in vehicle manufacture Lead alkyl ‘anti-knock’ compounds Building materials (sheet, pipes, tubes for roofs, surfaces and waste piping) Composites for sound insulation and radiation shielding Lead chemicals for paints/stabilisers Solders Grid alloys and oxide pastes in industrial batteries (for standby power) Industrial equipment (pipes and linings) for chemical manufacture and processing Lead coatings (e.g. terne metal) Bearings and solders for machinery Grid alloys and oxide pastes in stationary batteries (e.g. for peak load supply) Cable sheathing (for power/telephone cables) Printing types Lead chemicals for glass, enamels, pigments, dyes and plastic stabilisers Ammunition and weights

Source: Rich (1994).

is also used in alloyed form, most importantly for battery grids, and in smaller (declining) uses like solders (most commonly alloyed with tin), bearings and type metal. It is also used in various chemical compounds, including lead oxide paste in batteries, anti-knock additives in petrol, and as pigments and stabilisers. Over the past 40 years, the demand for lead has been affected by a number of, often conflicting, influences. While, on the one hand, general economic expansion and the growth of vehicle ownership have stimulated lead usage, competition from other materials, tighter environmental controls on some products and pressure for economisation in use have served to limit the rise in demand. The main consequence has been that lead consumption has become increasingly concentrated in a single application, the lead-acid battery, even as overall lead demand growth has slowed. The underlying growth in the automotive battery market has been more rapid (and is likely to remain so), because of the importance of replacement battery demand from the growing worldwide vehicle population.1 As Figure 3.1 illustrates, lead use in batteries rose from under 30% of total consump-

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3500 3000

’000s tonnes

2500 2000 1500 1000 500 0 1960 Batteries

1970 Cable sheathing

1980 Pipe/sheet/shot

Chemicals

1990 Alloys

Gas additives

1998 Others

3.1 Trends in lead use, 1960–98. Source: ILZSG.

tion in 1960 to almost 70% in the late 1990s. However, wide regional differences are apparent, with the proportion varying from as low as 40% or so in the UK (and some other European countries), to over 80% in the USA. In some newly-industrialising countries (e.g. Brazil and South Korea) as much as 75% of lead consumption may now be accounted for by the battery sector. The vast majority of lead-acid storage batteries (some 90% or more) are used in SLI (starting-lighting-ignition) applications for cars and commercial vehicles, and for a range of other vehicles (motor cycles, tractors, and various leisure and utility uses). The remainder are used as stationary batteries, which provide standby power for computer systems, for essential services at hospitals and airports, and in loadlevelling (where the batteries are used by electricity companies to supply peak power demand). There are, at present, no technically or commercially feasible alternatives to the automotive SLI battery, and none seems likely to be developed in the near future. The production of industrial batteries is also expanding rapidly, prompted by the growing requirements of the telecommunications industry, and expanding demand for non-interruptible power supplies.

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Lead

Lead use in cable sheathing, pipe and sheet has, in contrast, dropped dramatically. In 1960, these end-uses were more important than batteries in Japan and some European countries; since then, substitution by other materials (mainly aluminium and plastics) and economisation have undermined consumption. Pigments and chemical compounds are now a rather more important end-use in a number of countries, despite the erosion of markets for tetraethyl lead (as an antiknock additive) and lead-based paints. Principal uses of lead by country are shown in Table 3.2. In common with other basic materials which constitute a small part (in value terms) of the finished product of which they are a constituent, the short-term price elasticity of demand for lead is low. It will be higher in the medium to long term because of the possibilities of economisation and substitution, as we have seen, but here technical and environmental factors are also important. Various uses of lead (petrol additives and household paint, for instance) have suffered because of their perceived health risks, and this will remain an important influence. Nevertheless, the use of lead compounds and pigments in television and computer screens, where they reduce electrical conductivity, will continue to expand. There are also several potential new (non-battery) markets for the metal, particularly in nuclear waste disposal or environmental protection. However, the problem is that all of these uses are essentially dissipative, and so will not add to future scrap supplies.

Table 3.2 Principal uses of lead by country, 1998 (% of total consumption) France1 Batteries Cable sheathing Pipe/sheet/shot Chemicals Alloys Gasoline additives Others Total

Germany

Italy1

UK

Japan2

USA

Total ‘6’

72 5 9 7 2 0 5

57 1 17 22 2 0 2

64 3 13 14 1 0 4

38 2 37 6 4 8 3

86 0 5 4 4 0 1

73 1 4 10 3 0 9

74 1 10 8 3 1 3

100

100

100

100

100

100

100

Notes: 1. Based on 1997 data. 2. Includes primary and secondary metal only; others include remelt. Source: ILZSG.

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3.1.3 Lead batteries Given the overwhelming importance of the SLI battery for lead consumption, and for lead recycling, some further consideration of the structure and dynamics of this end-use seems essential. The technology of the lead-acid battery has remained basically unchanged for over 80 years. Despite wide variations in size, weight and complexity, all lead-acid batteries utilise the same basic technology, operate on similar principles, and use lead in both chemical and metallic lead (alloy) forms, in roughly equal amounts. Nevertheless, changes in SLI battery design over the last 25 years have had a major impact on the quantity and types of materials used in manufacture. The first major imperative was to reduce battery maintenance requirements; the second was to reduce battery weight and volume, while at the same time improving battery performance and lifetimes. SLI battery technology is shown in Table 3.3. Battery weight Technical changes have resulted in a large reduction in lead content per battery over the past 25 years. In the USA, for example, average lead usage per SLI battery fell by over 40% between the mid1970s and late 1990s (from about 12–13kg/battery to 7kg/battery at present). Although most SLI battery production is now based around these lighter weight units, increasing car electrical needs may soon prompt a reversal of this trend (with a possible move to 24 volt or even 36 volt units). The lead content of SLI batteries represents, on average, about 60–70% of total battery weight, while accounting for only about 10% of their volume. Battery lead content increases with vehicle size; while small commercial vehicles (vans and trucks) use batteries containing about 10–15kg of lead, the largest trucks could typically require over 70kg of lead in batteries.2 Battery lifetimes Battery longevity, and therefore battery failure, is related both to product technology and operating conditions (most importantly, temperature extremes, driving patterns, road conditions, maintenance practices and variations in vehicle electrical demands). Modifications to battery design have extended operating lifetimes

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Lead

Table 3.3 SLI battery technology Component

Materials

Grids or plates Connectors (linking grids of same polarity) Production from strips of lead sheet or by continuous casting Move to thinner grids (now <1mm)

Lead-antimony alloy (now with 1% or less antimony)1 Lead-tin-calcium alloys (0.5–1.2% tin and 0.04–0.08% calcium) (increasingly) Lead-strontium alloy (rarely)

Separators (for insulation) Increasingly low resistance, envelope structure

Plastic

Lead oxide paste (high density coating on grids for electrochemical properties) Essentially the same for both positive and negative plates

Litharge (PbO) and fine lead particles (addition of small amounts of expanders and inhibitors)

Electrolyte

Dilute sulphuric acid (H2SO4) (Battery operation based on reversible reaction between electrolyte and active material, the lead and lead oxide, in the plates)

Battery case

Moulded polypropylene (or other plastic) case2

Notes: 1. Use of antimony in grids was associated with battery water loss, shorter life and battery failure. Thus from the 1940s to 1970s the average antimony content of grids fell from 12% to 5%. New ‘low maintenance’ batteries in the 1970s used 2–3% antimony. Introduction of lead-calcium grids allowed development of ‘maintenance-free’ batteries and commercial introduction in the USA from the mid-1970s. 2. Replaced heavier hard rubber cases in common use until the 1970s. Source: Various (see Rich, 1994).

in recent years. Average SLI battery life in western Europe and Japan is now 4–5 years, but is much shorter than this in the USA, and with marked regional variation (ranging from just over 2 years in some Southern states to over 3 years in the North East). Battery life in most developing and emerging economies is currently relatively poor (typically, 1–2 years), but this is likely to lengthen with the worldwide diffusion of new battery technologies and production techniques.

3.2 Production processes and technologies Lead is one of the scarcer non-ferrous metals in the earth’s crust; copper, for instance, is 5–6 times more abundant, and zinc 7–8 times.

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Old scrap

Purchased drosses and residues

Slag and new scrap

Scrap batteries

Battery breaker

H2SO4 Plastic Rubber/PVC

Battery grids Battery paste

Smelting furnaces (blast, rotary, reverberatory, Bergsoe, Isasmelt)

Slag

Smelting reagents (Limesone, coke, scrap iron, natural gas, rubber/PVC)

Lead bullion (90–99% purity)

Refining kettles (Harris Process)

Refining reagents

Dross Hydrometallurgical/ Electrowinning processes*

Speciality alloys

Soft lead (99.99%+)

Antimonial lead

Oxide plant Calcium-lead alloys

Market

Market

Market

Market

Market By-product sales (plastic, PVC, rubber and sodium sulphate after acid neutralisation) or waste dump

3.2 Simplified secondary lead production flowchart * See Rich (1994) for an explanation of these, including a comparison with pyrometallurgical processes.

The majority of lead ores occur in unoxidised primary sulphides (galena), but cerussite (lead carbonate) and anglesite (lead sulphate) are also significant lead ore minerals. Lead ores are often accompanied by zinc ores, and normally both metals will be recovered.3 There are some similarities in processing technologies employed by primary and secondary producers,4 but also a number of significant differences. Secondary lead production (see Fig. 3.2), like primary pro-

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Lead

Table 3.4 Energy requirements for primary and secondary production (GJ/ton of product) Primary Hard lead by blast furnace process Soft lead by reverberatory/blast furnace process Hard lead by reverberatory/blast furnace process Cast lead by pot melting process

39 11.22 9.36 11.17 0.71

Source: Henstock (1996), p. 172.

cessing, has traditionally involved (in most cases) three main stages. The first stage is scrap or residue preparation, which includes battery breaking and dismantling. The next stage involves smelting, using a blast furnace or reverberatory furnace (of stationary or rotary design), or both, to produce lead bullion. Newer technologies (the Bergsoe, Isasmelt, QSL or Kivcet processes) achieve the first two stages in one step. The third stage is pyrometallurgical refining; as in the primary sector, the process involves a series of refining kettles to which reagents are selectively added to upgrade the lead bullion (which varies between 90% and 99% purity) to soft (pure) lead or alloys. Producers are now beginning to turn to hydrometallurgical or electrowinning techniques5 (in place of conventional smelting and refining) to achieve metal separation directly. The differences between secondary and primary production6 are greatest at the feed preparation and smelting stages, although the refining process can also vary widely in complexity. Recycled raw materials are, on average, of a higher lead content, secondary feed preparation is more complicated, and the volume and types of by-products are very different. Finally, the scale of operation is relatively much smaller at secondary plants. These technical factors have important implications for the economics of lead recycling, and for the organisation and operation of the lead market, as we discuss later. The costs imposed by increasingly stringent environmental controls have been offset by technical innovation and higher efficiency at secondary lead plants, keeping processing costs for batteries fairly constant over the past 15 years.7 Lead recycling offers the potential for major energy savings when compared to primary extraction of lead metal from ore (see Table 3.4), providing cost savings for producers and wider environmental benefits for society through a reduction in (fossil) fuel usage and pollution.

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3.3 Market features, structure and operation 3.3.1 Industry structure The production side of the lead industry is oligopolistic in structure, with half a dozen large transnational firms having a combined share of about a half of Western capacity.8 However, there is in addition a competitive fringe of about 10–15 medium-sized companies (each accounting for 1–2% of industry capacity). The degree of concentration in mining is comparable to that of zinc, but lower than that of copper; however, concentration is much less pronounced in lead refining because of the relatively larger role of secondary producers in the industry. The past few years have seen a further consolidation in lead production, including the scrap collection ‘chain’ itself, and the degree of integration between smelters/refineries and their raw material suppliers (mines and/or scrap generators) has increased markedly. Most refineries have a range of products in addition to refined metal, including various lead alloys, chemicals, composite materials and semi-fabricated (rolled, cast or extruded) goods. Although some refiners may also make intermediate or end-use products (like cable sheathing, proprietary chemicals, lead roofing sheet), most are not integrated forward as far as this. However, a growing number of battery companies have themselves integrated backwards into secondary lead production. The secondary lead sector (including both scrap collection and smelting/refining stages) is characterised by a larger number of participating companies, which are both of a smaller average size and more geographically dispersed than those in the primary sector. The plants they operate tend to service local markets and are located closer to endusers, which also constitute the main source of scrap. However, this requires some qualification. Firstly, a number of secondary plants in Europe and the USA are comparable in size to those in the primary sector. Secondly, the traditional distinction between primary and secondary plants (based on feed intake) is now much less clear cut; indeed, several important companies operate in both sectors. According to the ILZSG, a little over two-thirds of Western secondary refining capacity is in plants with an annual capacity of less than 15000t/y. Environmental pressures have tended to push companies to raise plant capacities because of the need to hold down unit costs and rationalise production. However, the spread of secondary production to emerging economies

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Lead

(in Asia and Latin America, in particular), itself reflecting changing consumption patterns, tends to limit the economic scale of operation (to 30–40000t/y capacity, at most), because these plants must increasingly rely on locally generated battery scrap for feed. Although systematic information on market shares of individual companies producing lead intermediate or finished products is not as easily available, it is clear that the extent of concentration among leadconsuming companies is less marked than that of producers. However, several of these consuming sectors have recently undergone major organisational changes which have invariably left them more concentrated than before. In structural terms a distinction may need to be drawn between the battery manufacturing companies that, in the industrialised countries at least, tend to be large commercial concerns and those firms involved in other product markets that tend to be much smaller. Indeed, the rising share of lead consumption taken by the battery sector, together with recent organisational changes in this sector, suggests that the overall market power of lead buyers has grown, and will grow further. The process of consolidation in the automotive battery industry, which has been underway since the early 1970s (first in the USA and Japan, and later in Europe) has intensified recently, driven both by increasing global competition and environmental pressures. Large transnational companies have replaced many of the small and mediumsized enterprises that traditionally characterised the industry; these changes in market structure have occurred, as we have seen, at a time of rapid market growth. Technological innovation, in both manufacturing processes and battery design, and increased price competition have forced battery manufacturers to increase scale to cut costs. This has been achieved partly by internal expansion and partly through takeovers or mergers. On a worldwide basis, the degree of market concentration exhibited by battery manufacturers is now much greater than that in lead refining (compared to a rough equivalence in the early 1990s), suggesting a growth in market power of the former. While, in 1988, the four largest battery companies (Exide, Yuasa, Matsushita and Varta) accounted for 25% of the total worldwide market, by 1998 their combined share exceeded 60% (with Exide alone accounting for 25%). The extent of market dominance is even greater at the regional level; in Europe for instance, two companies (Exide and Varta) held two-thirds of the market in 1998 (up from about 45% in 1991).

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Many battery manufacturers have also directly acquired secondary lead production facilities. This process of backward vertical integration has gone furthest in the USA, where up to three-quarters of secondary lead production is now controlled directly or indirectly by the battery industry. In Europe, the equivalent figure is about 15–20%.

3.3.2 Market institutions and operation The London Metal Exchange (LME) constitutes the only terminal market for lead, and therefore provides a reference price for sales of refined lead, and a pricing basis for lead raw materials (both scrap and concentrates) throughout most of the Western World. Futures trading is possible up to 15 months forward, and traded options are available. There are LME warehouses for lead throughout Europe, in Singapore and in the USA (Baltimore, Detroit, Long Beach, Los Angeles, New Orleans and St Louis). Other important trading centres include New York, Toronto, Melbourne and Tokyo. The LME contract specifies refined pig lead of minimum 99.97% purity for good delivery, but this has become increasingly out-of-line with industry requirements. Battery makers, in particular, require metal of 99.985% purity or better for the manufacture of high-quality alloy grids. In practice, therefore, producer list prices (and therefore physical market prices) will build in a premium to reflect this quality differential, as well as other standard elements. A North American producer price (NAPP, as published by Metals Week) is quoted for (99.97% purity) common grade lead, with premiums for better quality metal. The NAPP (which is normally at a substantial premium to the LME) is based on the average list prices of a number of US and Canadian producers, weighted by their production levels for the previous year. The two markets often move in parallel, largely because of the influence of US secondary producers, many of whom base their quotations on the LME price. There is a well-recognised link between refined lead prices and the stock/consumption ratio, but the relationship is an unpredictable one, partly because industry stock holdings are by no means fully reported. Stocks held directly by users (as opposed to smelters/refineries, merchants or those in LME warehouses) are relatively more important for lead than for other major metals mainly because battery manufacturers’ stocks and work in progress consist largely of metal. The short-term responsiveness (or elasticity) of refined lead supply

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Lead

to price changes has traditionally been very high, largely because of the relative importance of secondary production in total output; with the secondary refineries acting as ‘swing producers’ during price rallies or downturns. The effect has been to reduce the volatility of lead prices, at least when compared to other non-ferrous metals. However, the growing importance of secondary production, an increasing amount of which is now taking place at (nominally) primary plants, and the ‘enforced recycling’ that results from legislative pressures (rather than in response to market signals) suggests that the traditional price sensitivity of secondary output may no longer hold.

3.4 The structure of the scrap recovery/recycling sector 3.4.1 The relative importance of secondary production The recycling of lead is relatively well developed when compared to most other non-ferrous metals. This is partly due to the efficiency of scrap collection systems in many countries and the impact of environmental legislation, but it is also because of lead’s particular technical characteristics and demand patterns. Secondary production now accounts for about 60% of total Western refined output, up from 50–55% in the early 1990s (and compared to 30–35% in the early 1970s). In addition, large quantities of lead scrap (about 400000t/y in recent years, see Appendix Table 3.1) are remelted directly to produce secondary ingots of metal or alloy (the particular features of this sector are dealt with separately, later). Although from the consumer’s viewpoint it makes very little difference whether the metal they receive has been rerefined or simply remelted, most industry statistics (covering production, consumption, trade and stocks) exclude remelted material, as does the data presented here, unless otherwise indicated. Figure 3.3 shows the growth of Western World secondary production. The rising share of batteries in total consumption and intensifying environmental pressures will ensure that the secondary sector increases further in importance. Most scrap recovery is still carried out at specialist secondary lead plants, a few of which can use a small volume of lead concentrates. However, more importantly, new smelting techniques are allowing primary smelters (particularly custom plants in Europe and Japan) to take more of their feed in the form of secondary materials, and

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6000 5000

’000s tons

4000 3000 2000 1000 0 1960 1965 1970 1972 1975 1978 1981 1984 1987 1990 1993 1996 1998 Mine production

Secondary production

Total refined production

Total refined consumption

3.3 The growth of Western World secondary lead production, 1960–98. Source: ILZSG.

indeed encouraging them to switch entirely to scrap feed. While in 1980, primary smelters accounted for an estimated 3% of Western ‘secondary’ production, by the late 1990s this share had risen to 10% or more and is likely to rise further. There is both a commercial and an environmental logic to this strategy. On the one hand, it recognises the inherent economic advantages of using locally-generated scrap, compared to imported concentrates. The use of scrap feed (like battery paste, for instance) also helps to reduce potential SO2 emissions and slag disposal problems. The future emergence of integrated (or combined) primary and secondary plants has also been proposed; this would achieve cost savings through greater economies of scale and benefit from close synergies between the two parts of the operation. These developments will mean, however, that the statistical distinction between the ‘primary’ and ‘secondary’ sectors, already rather imprecise, will become even more unclear. The ratio of mine to secondary lead raw materials is shown in Fig. 3.4. On a regional basis, secondary production (perhaps not surprisingly) is concentrated in those countries that are also the largest consumers of lead, namely the developed, industrialised economies. However, Asia has seen the most rapid growth in secondary capacity and

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Ratio of mine to secondary production

Lead

2.50

2.00

1.50

1.00

0.50

0.00 1960 1965 1970 1972 1975 1978 1981 1984 1987 1990 1993 1996 1998 3.4 Lead raw materials. Source: ILZSG.

Table 3.5 Pattern of Western World secondary lead production (% of total refined production)

North America Europe Japan Other Asia Africa Latin America Oceania Overall average

1992

1995

1998

68 50 34 58 28 34 9 50

66 58 49 59 38 37 13 56

72 59 52 62 53 43 18 60

Source: EIU; ILZSG.

output in recent years. The secondary sector has generally grown in importance, but there remains a wide variation in the share of lead recycling (relative to refined production and consumption) between particular countries or regions (as Table 3.5). Compared with the Western World, the former communist bloc countries have low lead recycling rates. The ILZSG estimates that secondary lead accounts for under 25%, on average, of total refined supply in these countries.9 Several have sizeable, if neglected, primary lead industries, but the main factors are low levels of car ownership (and scrap battery availability) combined with poorly developed recycling systems.

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3.4.2 Forms and availability of scrap For lead, as with all materials, we can distinguish between two broad categories of scrap, ‘new’ scrap and ‘old’ scrap.10 The main components of these two scrap streams, together with their normal processing options, are presented in Table 3.6. Within the new scrap category a further distinction should be made between ‘home scrap’ (which is remelted and recycled in the plant from which it arises) and ‘prompt’ scrap. Prompt scrap includes material that arises from metal fabricators and is returned (directly or through dealers) to metal recycling plants, as well as defective or reject articles returned immediately after purchase

Table 3.6 Forms of lead scrap New scrap1 Battery manufacturing – Defective grids – Off-cuts from wrought grids Battery manufacturing – Defective pasted grids – Oxide sludge – Faulty batteries Sheet and pipe off-cuts Cable sheathing off-cuts Solder and other alloys – Metallic off-cuts – Drosses Anti-knock compounds – sludge Old scrap2 Whole batteries

Sheet and pipe Cable sheathing Wheel weights Type metal Sinkers

Remelted in-house Reprocessed by smelter

Remelted in-house Remelted in-house Remelted in-house Reprocessed by smelter Reprocessed by smelter Cases removed with polypropylene recycled (and sodium sulphate solution from desulphurised acid), lead materials smelted and refined Melted and refined (sometimes recast into lowgrade products, e.g. sinkers) Tar and organics burnt off with lead melted and refined Melted and refined, or recast Melted and refined (used as a source of tin and antimony) Usually lost

Notes: 1. Produced during manufacturing; uncontaminated; metallics usually remelted in-house; oxides and compounds smelted in secondary lead plant. 2. Consumers’ discards; mixed and contaminated with a range of alloys and other materials; often require smelting and refining. Source: Various; modified by author.

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Lead

by consumers (to fabricators or smelters) to be reworked. The statistical treatment of home and prompt scrap flows is very different: while the former is not usually covered by official metal statistics the latter, which often represents a market transaction, generally is. The supply of old lead scrap has traditionally been highly priceelastic (responding directly and often dramatically to refined metal price movements), but is arguably now rather less so as suggested above. The underlying availability of old scrap supply depends upon the type of products in which the metal has been used, product lifetimes, past levels of metal consumption and the efficiency of recycling systems. Comprehensive and accurate data on the relative amounts of old and new scrap lead is available for very few countries. However, relatively slowly growing demand for refined lead, greater manufacturing efficiency and the increased emphasis on mandatory battery recycling schemes will have increased the quantity of old lead scrap relative to new in most industrialised countries in recent years. In the USA, for instance, the share of old scrap in total lead scrap supplies rose from 85% to 93% between 1970 and 1993.11 Batteries, cable sheathing and lead sheet and pipe make the major contribution as recycled old lead scrap. Other lead uses (like chemicals, pigments and even ammunition) tend to be dissipative, or like solders have a small per-unit metal usage. For lead, as we have seen, there has been a shift of consumption towards the battery sector, and to the automotive (SLI) battery in particular; this is a product with a relatively short and predictable lifetime (of 2–5 years, on average), and for which scrap collection and recovery systems are generally well developed. Battery scrap (mainly from automobiles) now accounts for upwards of 70–80% of old scrap arisings in many countries, and more than 90% in the USA. Lead product life cycles and recoveries are shown in Table 3.7. A significant outlet for lead scrap is for remelting to produce secondary ingots of metal or alloy. However, while in most industrialised countries the larger secondary producers tend to be both melters and smelters, the specialist remelting companies are invariably small-scale operations. The quality of available data on this sector is in consequence relatively imprecise, but the ILZSG provides aggregate statistics on Western World remelt and alloy production. (See Appendix Table 3.1.) In general, secondary ingots retain more of the intrinsic value in the scrap, and cost less to produce, then resmelted and refined metal. In

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Table 3.7 Lead product life cycles and recoveries Product recovery %

Recoverable lead1 %

90+

95–97

Up to 100 50 40

80–90 70–80 50

98–100 98–100 98–100

Varies with product in which used Indefinite – constantly recirculating

20–30

98–100

5% of annual consumption2

98–100

Product

Life cycle (years)

Batteries: Automobile (SLI) Traction Stationary

2–5 5–6 20

Spree: Sheet Pipe Cable sheathing Alloys: Solder Bearings Type metal

}

Notes: 1. Specific recovery depends on quality of metal received. 2. Returned as skimmings and residues from melting operations. Source: ILZSG.

consequence, the higher the quality of the scrap, the more likely it is to be simply remelted and recast to produce secondary ingots. However, the lead remelters will often be in competition with secondary smelters for scrap supplies, and efficient operation of these plants requires highly developed scrap buying and blending skills. To produce pure (soft) lead, the remelters must process large quantities of high-purity lead scrap, normally in the form of sheet and pipe. A feed intake of battery scrap, on the other hand, will produce battery lead alloys and residues from the battery oxides. Usually, however, battery scrap must be treated in a blast furnace in order for contained oxides and sulphates to be effectively removed.

3.4.3 Scrap recycling arrangements The scrap collection chain Until recently the lead scrap collection process (as with most metals) was organised around a competitive, merchant-based system, with relatively little government intervention or direct regulation of activities. Collection, preliminary sorting and storage was based on smallscale operations, dealing with a range of scrap metals. The lead scrap collection chain is comparatively well developed and covers a wide range of scrap types, but is becoming increasingly

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Lead

dominated by the recycling of large volumes of used car batteries. Industrial batteries, because of their higher unit value and limited numbers, are also easy to recycle, normally directly to battery makers. The automotive battery recycling chain can involve a large number of participants and stages (customer, service station, battery retailers, scrap merchants, battery breakers) before the failed battery reaches the secondary smelter and is transformed into metal and various by-products. However, in response to competitive and environmental pressures there has been a tendency in recent years for the scrap collection system to become much more streamlined and truncated, with fewer ‘stages’, and declining numbers of small operators. The changes happened earliest in the USA, where the battery recycling system was at its most developed. From the late 1970s onwards, secondary lead smelters began to install in-plant battery breakers (which displaced existing independent operators), battery distributors initiated return arrangements for used batteries with customers/service stations (thereby eliminating some merchant activity) and battery manufacturers began themselves to integrate backwards into smelting/refining. Low metal prices and increasingly stringent (and targeted) environmental legislation, which has raised the administrative, handling and transport costs of scrap collection, accelerated these trends. During the early 1980s legitimate concerns were expressed over a possible breakdown of the entire scrap collection system, and the uncontrolled disposal of spent batteries. According to the Battery Council International (BCI), US battery recycling rates (recycled batteries/total scrapped batteries in any year) fell to below 70% in 1983, but by 1990 had risen again to almost 98%,12 a period over which US producer-refined lead prices more than doubled. An increasing proportion of batteries are now being sold through mass retailers and specialist battery outlets, and these companies are being encouraged to participate in the recycling process itself. As a consequence, battery recycling is now becoming a much more coherent and well organised industry. The larger secondary smelters often enter into long-term contracts with battery manufacturers, through which they supply lead and lead alloys and receive (in turn) used batteries. These may be processed on a tolling basis (with metal returned to the battery maker). Many battery manufacturers have agreed collection arrangements with the battery retailers themselves.

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Part 1: Ferrous and non-ferrous metals

Battery collection and recycling schemes Once scrap batteries enter the collection chain they will eventually be recycled. The need to encourage consumers to return failed batteries, and to channel them more effectively into the recycling/recovery system, has been widely recognised in legislation passed in a number of countries since the early 1990s.13 This legislation has tried to address two issues. First, the need to balance an improvement in environmental safety throughout the recycling chain (including the operation of secondary smelters/refineries), with the need to maintain adequate scrap supplies and processing capacity. Second, to provide adequate incentives to encourage the entry of scrap into the collection chain, at the point at which it is generated. Most of the schemes that have been introduced use a mix of central directives and market-based initiatives. Subsidisation of the battery recycling process by government can occur directly (through funding deposit schemes, tax incentives or financing the provision of recycling infrastructure, like collection points) or indirectly (through landfill levies, for instance). Underlying all these approaches is the recognition that an efficient recycling system has intrinsic value in eliminating, or at least reducing, the environmental costs of improper battery waste disposal.

3.4.4 International trade in scrap International trade in lead scrap and wastes (see Table 3.8) has been a significant supply-side factor in recent years, involving the movement of large tonnages of material in response to (often temporary) local supply shortfalls or surpluses. International movements of lead scrap and wastes have traditionally shown wide year-to-year variation, and have been a much more volatile element than other trade flows. This largely reflects the tendency for scrap and waste to be sold in smaller parcels, often on a spot basis rather than under long-term contract. However, tighter international environmental regulation (embodied in the Basel Convention, and other initiatives14) has increasingly restricted the operation of the market and has resulted in reduced crossborder movements of lead scrap since the early 1990s, particularly between OECD and non-OECD countries. However, the evidence from Table 3.7 is far from conclusive. A 1997 study by the ILZSG concluded (on the basis of detailed trade

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Lead

Table 3.8 International trade in lead scrap, waste and residues, 1990–95 (tons)

1990 1991 1992 1993 1994 1995

Lead waste and scrap1

Lead ash and residues2

OECD– non-OECD

Intra non-OECD

OECD– non-OECD

Intra non-OECD

80211 79567 49537 34796 12060 64686

52299 35012 71362 35574 58582 41070

4922 3663 9199

2615 1793 2410

Notes: 1. Lead waste and scrap (including spent lead-acid batteries); HS780200/SITC28824. 2. Ash and residues containing mainly lead; HS-262020/SITC-28810. Source: UNCTAD; ILZSG.

data for 1995 and reports from member countries) that the impact of the Basel Convention (and subsequent legislation) on the lead industry would be as follows: 1 Based on statistical evidence, the short-term impact in both OECD and non-OECD countries was unlikely to be significant. 2 In the longer term the ‘ban’ will result in a decrease in the amount of secondary raw materials being recycled in the non-OECD, and an increase in the OECD. 3 There is a danger that higher quantities of secondary raw materials may be sent to landfills, dumped or not collected for recycling in both groups of countries. 4 Non-OECD countries may be forced to develop (further) their primary industries and/or increase their imports of refined metal or products which contain refined metal. 5 For both OECD and non-OECD countries, the environmental outcome of the ban may ultimately be in direct conflict with its desired goals. The key problem is that all this legislation has tended to define old lead batteries and other forms of lead scrap as ‘waste’, with associated stricter controls on its collection, storage, transport and disposal. There have been continuing attempts to differentiate between those materials (like battery scrap) which have an intrinsic value and are destined for recovery, and those that have no further value or use. The ultimate inten-

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tion of this and other legislation, it appears, is that recycling should take place as far as possible within national boundaries.

3.4.5 Scrap pricing arrangements Lead scrap prices are determined, as in any market, by the actions of buyers (scrap consumers, generally smelters) and sellers (merchants, or increasingly, scrap generators themselves). While LME metal prices (often a combination of cash and three-month) provide a reference point, each market transaction is likely to be unique. The prevailing ‘price’ for any form of scrap is a function of a range of factors including its metal content and quality, collection and processing margins and costs, underlying market conditions, as well as the refined lead price itself. Representative lead scrap prices are shown in Table 3.9. Scrap prices (and scrap availability), as might be expected, are closely related to refined (LME) lead prices, and indeed often follow a similar cyclical trend, as Figure 3.5 shows. The relationship between scrap prices and lead concentrate prices, as competing raw material supplies for an increasing number of smelters, is more complicated. We would normally expect the two price series to move in parallel, but there may be instances where instead they move in opposite directions. Traditionally, the supply of secondary raw materials (or scrap) has been more price-sensitive (exhibiting a greater price elasticity of supply) than that of concentrates. Indicative lead scrap prices are published by a variety of trade publications. Metal Bulletin, for instance, provides these for both UK and European markets, on a weekly basis. The prices quoted are intended to be representative of business between the largest merchants and scrap

Table 3.9 Representative lead scrap prices, October 1999 European free market Soft lead scrap (‘Racks’) Drained batteries (‘Rains’) LME cash

Representative price (8/10/99) $270–278/tonne (54–56% of LME cash) $97–103/tonne (19–21% of LME cash) $498/tonne

US free market Whole used batteries Secondary lead (producer range)

Delivered Midwest works 5.00–5.50c/lb ($110–121/tonne) 22.00–25.00c/lb ($485–550/tonne)

Source: Metal Bulletin (Monday 11 October).

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180 160

(Index: Q1/1992=100)

140 120 100

LME Average Cash Price Refined Metal

80

UK Price Whole Batteries

60

US Price Whole Batteries

40

UK Price Soft Lead 20 92 Q 92 1 Q 93 3 Q 93 1 Q 94 3 Q 94 1 Q 95 3 Q 95 1 Q 96 3 Q 96 1 Q 97 3 Q 97 1 Q 98 3 Q 98 1 Q 99 3 Q 1

0

3.5 Lead: refined metal and scrap prices, 1992–99. Source: Metal Bulletin (UK price); American Metal Market (US price); LME (refined lead prices); author’s records.

consumers, and are based on a specific LME session. For the UK market, Metal Bulletin provides quotations for the following types of lead scrap (all on delivered consumer basis); soft scrap, battery plates and whole batteries. Additionally, a reference price is quoted for lead ashes and residues which is based on the LME price, net of a treatment (or processing) charge. For the European market, prices are published for soft lead scrap and drained batteries (on a cif Rotterdam basis). American Metal Market and Metals Week provide regular price data for heavy soft lead, mixed hard lead, undrained whole batteries, wheel weights, type metal and cable lead. A similar range of lead scrap price information is provided for other national markets by locally-based publications. Realised prices for lead scrap will also depend on local supply and demand conditions. In North America, large transportation distances can cause wide regional variations in scrap prices. Scrap battery prices have traditionally been higher in the North East because the close proximity of a number of secondary smelters has meant greater competition for material, which was exacerbated by high export demand. Prices have also been at a premium on the West Coast because of substantial scrap exports to Mexico and South-East Asia. Growing restrictions on international waste shipments will have tended to narrow these differentials.

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In Europe, there are often variations in scrap prices across national markets, but this is partially tempered by cross-border movements of material.

    1. The Society of Motor Manufacturers and Traders (SMMT) estimates that there were 697 million vehicles (511 million cars and 186 million commercial vehicles) in use, worldwide, in 1997. The rate of growth from year to year depends on the number of new vehicle sales or registrations, minus the number of vehicles scrapped (which is very difficult to estimate accurately). SMMT figures suggest that the world vehicle population has been growing at 3–4% annually, but with marked regional variations. The most rapid growth has been in South-East Asia. 2. The lead-acid battery systems used to power prototype electric vehicles (like GM’s Impact model) have been many times larger and heavier than SLI batteries, weighing up to 400kg. However, the mass production of electric vehicles is still some way off, and the technological choices seem now to have moved towards ‘hybrid’ vehicles (with battery and auxiliary power sources) and, in the longer term, hydrogen fuel-cell-powered vehicles. 3. Over 70% of mined lead is produced at zinc main-product or multi-metal mines, where it is increasingly considered a by-product of higher-value zinc or silver output. 4. Secondary production is defined here as the re-refining of scrap, residues and wastes. 5. See Rich (1994) for an explanation of these, including a comparison with pyrometallurgical processes. 6. Primary production typically involves: (1) roasting and sintering of lead sulphide concentrates, to produce lead oxide sinter and sulphur dioxide (SO2) gas; (2) reduction of the lead oxide to bullion in a blast furnace; and (3) pyrometallurgical or, less commonly, electrolytic refining of lead bullion to metal of >99.97% purity, by extracting precious metals, other by-products and impurities. 7. Processing costs for scrap batteries in the USA were put at 15c/lb (or $330/ton) in the early 1990s. Henstock 1996, p. 168. 8. Four firms (Quexco, Renco Group, Exide and Metaleurop) accounted for almost 40% of Western refined lead capacity in 1999, compared with a share of 25% held by the four largest companies in 1990. 9. According to the ILZSG, this share varied from less than 15% in Kazakhstan and about 25% in China to over 60% in Poland in the mid-1990s. 10. See Part 1 and Glossary for a definition and general discussion of terms. 11. Metallstatistik, 1983–93, quoted in Henstock (1996). 12. The recycling rate fell to about 70% in Japan, but declined more modestly in Europe. The estimation of battery recycling rates is based on data series of variable quality and is highly sensitive to assumptions on average battery weight. 13. Among the earliest were those in the USA, Sweden (Returbatt), Italy (Cobat) and France (Protocole). 14. The Basel Convention on the ‘Control of Transboundary Movements of Hazardous Wastes and their Disposal’, ratified in 1992, subsequent EU legislation and that banning movement from OECD countries of ‘hazardous wastes’ destined for recovery operations in non-OECD countries from 31 December 1997.

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 Battery Council International (BCI), http://www.batterycouncil.org/ Economist Intelligence Unit (EIU), World Commodity Profiles: industrial raw materials, 2000/2001, London, 2000. Henstock, M E, The Recycling of Non-Ferrous Metals, ICME, Ottawa, 1996. Hoffmann U, A Statistical Review of International Trade in Metal Scrap and Residues Part II/Part III, UNCTAD/ICME, Ottawa, 1996. ILZSG, Lead and Zinc Statistics (Monthly Bulletin), London, various issues. ILZSG, Principal Uses of Lead and Zinc, 1960–1990, London, 1992. ILZSG, Impact of Basel Convention and Basel ‘Ban’ on Lead and Zinc Industries, Report of the Economic Committee, London, 1997. Rich V, The International Lead Trade, Woodhead Publishing, Cambridge, 1994. SMMT, World Automotive Statistics, London, 1999.

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Appendixes

Appendix Table 3.1 Recovery of secondary lead in the Western World, 1995–98 1995 Refined lead and lead alloys1 Europe Austria Belgium France Germany Greece Ireland Italy Macedonia Netherlands Portugal Slovenia Spain Sweden Switzerland UK

1996

1997

1998

913 23 30 168 164 4 11 135 5 21 8 14 82 41 7 200

915 24 31 163 150 5 12 144 4 22 6 13 91 42 7 201

944 22 27 159 198 6 12 146 4 19 6 15 88 43 10 189

940 23 33 158 192 6 13 142 4 17 6 14 90 48 10 184

54 3 32 19

53 4 32 17

64 4 43 17

69 4 50 15

1253 26 40 104 67 984 23 9

1344 28 48 119 66 1046 25 12

1405 29 53 133 80 1074 25 11

1409 30 48 124 87 1083 25 12

Asia India Indonesia Japan South Korea Malaysia Saudi Arabia Taiwan Thailand Other

396 26 30 140 51 33 6 36 11 63

432 25 30 147 52 37 15 40 13 73

443 17 30 154 61 36 17 40 15 73

424 17 22 158 47 29 18 40 19 74

Oceania Australia New Zealand

32 26 6

30 24 6

31 25 6

34 28 6

2648 2116

2774 1997

2887 2029

2876 2019

Africa Morocco South Africa Other America Argentina Brazil Canada Mexico USA Venezuela Other

Total Total Westem World primary output

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Appendix Table 3.1 Continued 1995

1996

1997

1998

Remelted lead and lead alloys2 France Germany Italy UK Other Europe USA Japan Other countries

16 44 4 45 36 136 40 80

16 44 4 43 36 136 40 80

16 44 4 39 36 136 40 80

16 44 4 36 36 136 40 80

Total

401

399

395

392

3049

3173

3282

3268

Total secondary recovery

Notes: 1. Refined lead and lead alloys produced from secondary materials (scraps, wastes and residues). 2. Recovery of secondary materials by remelting without undergoing further treatment before reuse. Source: ILZSG.

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4 Iron and steel James F King

4.1

Physical characteristics, properties, products and end-uses 4.1.1 Characteristics and properties Strength High melting point Ductility Corrosion resistance Weight

4.1.2 Products and end-uses 4.2

Production processes and technologies 4.2.1 Iron and steel production processes Steelmaking pig iron Foundry pig iron Blast furnace technology New ironmaking technology Direct-reduced iron

4.2.2 Iron and steel recycling processes Internal (home) scrap collection and processing External scrap collection and processing New industrial scrap Old scrap

4.3

Market features, structure and operation

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4.4

The structure of the scrap recovery/recycling sector 4.4.1 Relative importance of secondary production 4.4.2 Forms and availability of scrap 4.4.3 Scrap recycling arrangements 4.4.4 Trade in scrap 4.4.5 Scrap pricing arrangements Steel scrap Pig iron DRI Semi-finished steel Finished steel Long-term trends Future prices

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4.1 Physical characteristics, properties, products and end-uses 4.1.1 Characteristics and properties Steel is an alloy of iron and carbon in which the carbon content, lying within the range 0.04 to 1.00%, is critical to the performance qualities of the steel. The product of the steel furnace is crude steel in molten form. Crude steel can be classified as carbon steel, special steel or alloy steel. Carbon steel has a carbon content generally up to 1% and a manganese content up to 0.8%. Within the classification of carbon steel mild steel has a relatively low carbon content, below 0.2%, with manganese content below 0.7% and maximum contents for silicon of 0.6%, phosphorus 0.05% and sulphur 0.05%. This type of steel offers high ductility and moderate strength and is the type used in flat rolled steel sheet for car and appliance bodies, general steel sheet, etc. Carbon steels with a low carbon content (0.15–0.25%) and an increased manganese content of up to 1.5% are suitable for highstrength applications requiring weldability. This type of steel is used to make steel structures (beams and sections), railway rails and flat rolled steel for welded tubes. Higher carbon content increases the strength of the steel, but reduces its ductility and weldability. Steels with carbon content of 0.2–0.3% are used for concrete reinforcement. Steels with higher carbon content, up to 1.0%, are used for engineering applications and are often heat treated to obtain desired properties. Bars from these steels are referred to as ‘merchant bar’, ‘special bar’ or ‘engineering steel’. Medium carbon steels with a higher content of silicon (0.6 to 2.3%) and manganese (0.5 to 1.2%) are used for springs and other engineering purposes. They may also be described as special steels. Alloy steel contains substantial quantities of other metals, such as manganese, chromium or nickel, and combines strength with other properties such as corrosion- or heat-resistance. Stainless steel, containing chromium and (in some alloys) nickel, is a form of alloy steel. Steel is the most widely used industrial metal (with world consumption at over 630 million tonnes in 1996) and is believed to be second only to cement among all materials in tonnage of consumption on a world-wide basis. Like all industrial materials, steel products are useful

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because of a combination of characteristics. Steel in the form of finished steel products (plate, sheet, sections, bars, etc, as described later) competes with a wide range of alternative materials in various applications, including rolled, cast and forged aluminium, forged titanium, nickel superalloys, concrete, timber, asbestos sheet, glass and plastics such as PVC and PET. In any application steel is selected against competing materials on the basis of a balance of cost and functional characteristics. The characteristics include strength, high melting point, ductility, corrosion resistance and weight. Strength Steel is by far the most important structural metal. For loadbearing purposes in construction steel has essentially no competition from other metals and the main competition in structures is between steel sections and concrete which is reinforced with steel. Steel remains the dominant material in engineering applications, for load bearing, transmission of forces, etc. In applications where lighter loads are involved, combined with other factors such as light weight or corrosion resistance, steel comes into competition with aluminium, timber and plastics (e.g. in windows or aircraft). High melting point The melting point of steel is over 1500°C. This is high in comparison with structural metals such as aluminium (660°C) and makes steel more suitable for very high temperature applications. The high melting point also makes it difficult to use processes available to other metals for casting directly into finished products in the form of continuous-cast sheet or rod. Technology for this type of product using steel is relatively new, see Chapter 1, Table 1.2. Ductility Steel when heated to high temperatures becomes ductile, allowing it to be worked with rolling mills using steel rolls, but the high temperatures required to soften the metal do not permit steel to be easily extruded into complex shapes, unlike aluminium. Steel is therefore rolled to sheet or structural shapes, which have to be welded together or formed to make more complex products. The rolling process also imparts physical qualities to the steel, making it suitable (when com-

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Iron and steel

bined with heat treatment through annealing) for a wide range of applications from the most flexible to the hardest and stiffest. Grades of flat-rolled steel are suitable for pressing into complex shapes with a smooth finish, as widely used in the domestic appliance and automotive industries. Corrosion resistance On contact with the atmosphere a coating of iron oxide (rust) is formed and prolonged exposure to the air or to moisture will result in damage to the steel surface and eventual degradation of the steel’s strength. This does not occur in steels with a high content of chromium or nickel (stainless steels). Steels other than stainless steel must therefore be coated in almost all applications, either permanently by galvanising, organic coating or tinplating, or by periodic painting. Weight Steel has a density of 7.9 grams per cubic centimetre, lower than that of copper (8.9g/cc) but almost three times greater than that of aluminium (2.7g/cc). Iron and steel are therefore clearly at a disadvantage where light weight in relation to strength is important. This has always been a major factor in aircraft, but is now important also in road vehicles which have been a major market for steel products.

4.1.2 Products and end-uses Crude steel from the furnace is cast at the same site into semifinished steel (semis) in the form of ingots (large blocks) or by continuous casting machines into slabs, blooms, billets or tube rounds. Steel cast as large ingots must subsequently be reheated and rolled on one or more primary rolling mills in order to produce slab, bloom or billet. Continuous casting therefore avoids the process of primary rolling and has, as a result, been widely introduced since the early 1970s. Some special or alloy steels cannot obtain their required properties from continuous casting and must be cast as ingots and primary rolled. A conventional slab is a block of steel of rectangular cross-section, typically over 200mm thick, over 1000mm wide and perhaps 4 metres long. This is used as the feedstock for conventional hot rolling mills (hot strip mills) producing flat-rolled steel. Since 1989 processes have been in commercial operation for the production of thin slab, a block of steel

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with rectangular cross-section produced by continuous casting but with a thickness as low as 50mm. This is used as the feedstock for much smaller hot rolling mills (compact strip process) than conventional hot rolling mills. A bloom is a block of steel of square or near-square cross-section, typically around 200mm square and perhaps 6 metres long, normally used for rolling into steel sections or for further rolling into billet. Blooms of special shapes for rolling into sections are sometimes referred to as beam blanks. Blooms are sometimes also rolled into narrow flat products. A billet is a block of steel of square or near-square cross-section, typically under 200mm square and perhaps 10 metres long, for rolling into steel bars and wire rods. Tube rounds (blanks) are billets of circular cross-section for use in the production of seamless tubes. Steel semis are sometimes sold or shipped between plants for processing, but are normally further processed at the same site to finished steel products. These are the forms in which steel is shipped to consumers for further use. Finished steel products are broadly divided into flat products and long products. Flat products comprise plate and sheet products. Plate is flat steel generally over 3mm thickness, usually hot-rolled from reheated slab. Plate can either be produced on special mills (known as plate mills, reversing mills or quarto mills) as discrete plates (separate, flat plates) or in the thinner gauges can be rolled on conventional hot rolling mills as a continuous strip which is coiled and later decoiled and cut into lengths (strip mill plate or coil plate). Steel sheet is produced by hot rolling re-heated slabs into hotrolled coil. HR coil is hot-rolled sheet in coil under 3mm thickness for sale as a finished product or for further rolling. About half of all HR coil is further processed by cold rolling to produced cold-rolled sheet in coil (CR coil ). HR coil or CR coil may also be further processed by galvanising (to apply a coating of zinc or zinc alloy by hot-dip immersion in a bath of liquid metal or by electrolytic processes) or by tinplating (treating by electrolytic processes to apply a coating of tin or chromium oxide). Long products comprise rails, sections, bars, wire rod and seamless tubes. Rails are used as railway tracks. Sections (profiles) range from large beams for construction to light sections for the engineering indus-

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Iron and steel

try. Rails and heavy sections are rolled on special mills from reheated blooms. Light sections are rolled from reheated billets on mills often used also for bars. Bars comprise steel bars for concrete reinforcement (rebar) and merchant bars, covering a wide range of bars for engineering and other applications. Depending on their application bars may be produced in straight lengths (e.g. much engineering bar and largerdiameter bars) or may be wound into coils (e.g. much reinforcing bar). Wire rod is small-diameter bar for use in the manufacture of wire by drawing. Rod is rolled from billets, often on mills also used for bar. Some concrete reinforcing steel is also made in the same diameters as wire rod, but this is in principle classified as bar. Seamless tube, made by piercing and rolling tube rounds in a hot condition, is considered for statistical purposes as a finished steel product. Downstream products beyond the stage of finished steel include welded tube, made by welding HR or CR strip (known as skelp) or plate, and wire. Steel is the most important material for the purposes of recycling, but cast iron is also significant. Cast iron is produced in foundries by melting scrap iron or pig iron from blast furnaces. It may be alloyed with other materials and is then cast into shapes such as engine blocks for vehicles, components for machinery, water pipes, etc. Cast iron is a source of recycled material and the production of cast iron also provides a demand for scrap iron and steel. The demand for iron and steel has depended on the development of applications to take advantage of the positive features and minimise negative features of the product. So wide is the range of steel applications, however, that competition from other materials must, in total, be considered a relatively minor aspect of the development of the market. Cast iron does not compete greatly with steel and the most significant direct competition for steel (and for cast iron) from another metal can be considered as aluminium. Even on an equivalent surface area basis, recognising that aluminium is only one-third the weight of steel for a piece of the same dimensions, the consumption of aluminium would be the equivalent of 86 million tonnes, only 14% that of steel. The loss of competitive position to other metals has therefore been very minor in comparison to other factors. These include the loss of markets for steel sections to reinforced concrete in some countries and

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the growth of many countries where reinforced concrete is the normal form of construction. But far more important for the development of the steel industry have been general economic trends which include: • the growth of the world-wide automotive industry (positive); • general economic growth and the construction of infrastructure, industry and commercial buildings in many countries, including the developing regions of the world (positive); • the decline in the importance of rail transport and railway construction (negative); • the shift in industrial economies away from manufacturing towards service industries (negative); • the emphasis in consumer goods on electronic and lightweight products (negative); • the emphasis in investment towards labour-saving, computerisation, etc, and away from heavy investment in infrastructure and basic industries (negative). Further discussion of the particular iron and steel products relevant to the scrap and recycling industries follows below.

4.2 Production processes and technologies Scrap and recycling are critical to the iron and steel industry and their role can be appreciated only within the total structure of the industry.

4.2.1 Iron and steel production processes Current world production capacity for crude steel is estimated at 1052 million tpy (tonnes per year, all data referring to the end of 1997). Crude steel is produced by three main processes: 1 The melting of steel scrap and/or direct-reduced iron or pig iron in electric furnaces (world capacity 370 million tpy in 1075 plants). 2 The refining of molten iron to remove carbon in a basic oxygen furnace (BOF process, world capacity 581 million tpy in 215 plants). 3 The refining of molten iron to remove carbon in an open-hearth

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Iron and steel

furnace (Siemens-Martin process, world capacity 101 million tpy in 89 plants). The first of these processes requires a supply of scrap, pig iron or direct-reduced iron. The other two processes require a supply of molten pig iron, almost always from a blast furnace. The Siemens-Martin process can also use a widely variable mixture of molten iron and scrap, but the manpower and energy requirements of this process are great and it is now obsolete in most Western countries, but still widely used in the Eastern countries. World direct-reduced iron (DRI) capacity is 48 million tpy in 68 plants, while pig iron capacity is 704 million tpy, of which 692 million tpy are from blast furnaces in 341 plants and 7 million tpy are from electric pig iron furnaces and other processes such as Corex ironmaking in 31 plants. Both DRI and pig iron are primary iron, i.e. produced from iron ore by the removal of oxygen and waste materials. In the DRI process the ore is reduced without melting using natural gas or steam coal as a reductant. In the blast furnace and electric pig iron furnace metallurgical coke is used as the reductant, the coke being produced in coke ovens by the partial combustion of coking coal. In the Corex and other new ironmaking processes which produce molten iron steam coal is used as the reductant. Iron ore is a naturally occurring mineral ore, containing 25–70% iron, and is usually mined by straightforward open pit methods. World iron ore capacity is around 1.1 billion tpy. Iron is the most commonly occurring metal in the earth’s crust and iron ore is found in many countries. In countries such as the USA, former USSR, India and China largescale production is for the domestic steel industry, often involving the processing of relatively low-grade natural ores. In countries without large-scale iron ore deposits, such as Japan and most countries of Europe, iron ore is imported from several areas with high-grade ores, including Brazil, Australia, Canada, Venezuela, parts of North and West Africa, South Africa and Sweden. In almost all cases the economics of the process determine that blast furnaces are located at the same site as steelmaking. In the great majority of cases the location of steel plants is determined by the availability of local markets for steel products. This means that iron ore, and in some cases steel scrap, are transported from their points of origin over long distances to steel plants, often by ocean going ships.

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Part 1: Ferrous and non-ferrous metals

Each steelmaking process has a requirement for raw materials, in the form of primary iron (pig iron or DRI) or steel scrap. In the case of electric steel the main raw material is steel scrap, with direct-reduced iron or pig iron being a substitute in some cases depending on local conditions of scrap availability and prices. For the manufacture of BOF steel the overwhelming requirement is for liquid pig iron produced in the same plant, since the process functions by the thermal reactions caused by removing the carbon from pig iron. In some countries, however, substantial quantities of steel scrap are added to the BOF converter using modifications of the process. For the manufacture of open hearth/Siemens-Martin steel combinations of pig iron and scrap are used. The future requirements for feedstock will be affected by several technical trends in the industry. Steel is made by various processes which are designed to take raw materials and then refine them to the point at which they have the appropriate combinations of iron, carbon and other elements. Appendix Table 4.1 shows the typical specifications of steelmaking pig iron, foundry pig iron, DR iron and steel. These are relevant to the discussion of technology which follows. Steelmaking pig iron Pig iron is produced by the reduction of iron ore to molten iron in the presence of a carbon reductant. This generally takes place in a blast furnace using coke (or charcoal) as a reductant. Small quantities of pig iron are produced from prereduced iron ores in electric furnaces. The product in both cases is molten iron for use in nearby steel furnaces or iron cast from the furnace into pigs of weights varying from 7 to perhaps 25 kilograms for shipment to other locations. The great bulk of pig iron is used in BOF furnaces for the production of steel. Where they still operate, pig iron is used in SiemensMartin (open hearth) furnaces. In some countries, pig iron is also used in electric steelmaking furnaces. Pig iron offers the electric furnace producer precisely known composition, as does DRI, and higher iron content than DRI. The main difficulty is the carbon content of pig iron, at around 4%, which seriously limits the quantity of pig iron which can be introduced into the furnace unless special procedures are in place. The oxidising of the carbon raises the heat of the furnace, but the quantities of carbon which remain in the steel are significant. Unless the steelmaker is seeking a high-carbon steel product, or unless the known car-

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bon content of his scrap feed is compensatingly low, it is difficult to use more than a small proportion of pig iron in the feed (perhaps up to 15% maximum). In practice pig iron is used as a substitute for scrap only where its price is directly comparable or lower. This has limited its use to certain locations where imported pig iron is available at low prices in relation to scrap which must otherwise be brought in at significant transport cost. Such low-priced pig iron has come into certain Far East markets, particularly Japan and Korea at marginal prices which the local integrated steelmakers would not consider economic in relation to their costs of blast furnace operations. Foundry pig iron Pig iron for steel production is the bulk of requirements in most countries, but in a few cases there is substantial consumption of primary iron in iron foundries. For certain countries there is also substantial import or export of pig iron. For a country such as Brazil, for example, the export of foundry and steelmaking pig iron is a large business. In the major industrial countries the raw materials requirements of the iron foundry industry can be met from scrap with the addition of some quantities of primary iron. Such demand for primary iron is met either by one or two local producers using blast furnaces dedicated to this market or by imports, particularly from Brazil, China, Russia and Ukraine. The prospects for the foundry iron market are, we believe, for a continued downward trend in production volumes, as the same longterm trend to substitution of other materials against cast iron will continue in the automotive and other markets. Producers selling into the industrial countries will therefore have to offer specialised foundry iron products produced with proprietary inoculants and requiring a dedicated small-scale production operation. Brazilian producers have found in recent years that the increased costs which result from environmental restrictions on the wood supply for their charcoal blast furnaces have raised production costs, and the balance of supply of low-priced steelmaking pig iron has shifted to China, Russia and Ukraine. The largest volume of steel in the Western World is made by the basic oxygen process in which molten pig iron is treated with oxygen to oxidise the carbon and other impurities. Steelmaking pig iron (so-called

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Part 1: Ferrous and non-ferrous metals

‘basic’ pig iron) is therefore the key input to the basic oxygen process and steel plants using this process invariably have their own ironmaking capacity. The specifications for individual irons depend on the raw materials and processes used at specific plants, but the overriding feature of the specifications is the metallurgical necessity for a quantity of carbon in the pig iron and the need to minimise certain other impurities in order to permit the production of steel of given qualities. The blast furnace operator is not able to have any significant control over carbon content which is inherent in the process. Sulphur and silicon content can be controlled in opposite directions by furnace temperature, coke rate and slag composition. Phosphorus content cannot be controlled and depends on raw materials. Manganese content can be modified by additions of manganese units to raw materials. Blast furnace technology In 1997 world pig iron production was 544 million tonnes, of which under 4 million tonnes was from processes other than blast furnaces. The blast furnace (BF) therefore accounted for over 99% of total pig iron production. Blast furnaces operate by reducing iron ore by blowing hot air through a charge of iron ore, metallurgical coke and a flux such as limestone and/or dolomite. Other materials which may be used include steel scrap, sand and pulverised/granulated coal, oil or natural gas through fuel injection. In the process the carbon in the coke/coal reacts to produce carbon monoxide which in turn removes the oxygen from the iron ore. The products of the furnace are: molten iron which is tapped from the bottom; blast furnace gas which contains some hydrocarbons; and molten blast furnace slag which contains the impurities in the coke and iron ore. The molten iron is moved in liquid form to steel furnaces or cast into pigs, the BF gas is generally used elsewhere in the plant as a source of energy and the molten slag is allowed to solidify before being crushed and either dumped or sold as a product for roadstone or cement. Blast furnaces consume around 500kg of coke per tonne of molten pig iron (hot metal) produced. Coke is produced by the partial combustion of metallurgical (coking) coal in coke ovens. These are usually part of steel plants. In general, producers in the Western countries have ageing coke ovens and are under pressure to reduce pollution from these. It is therefore possible that in the longer term the pressure of coke supply

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could induce a major reduction in the quantities of iron which can be produced by blast furnaces, with major implications for the requirements for iron ore and coking coal. Operators of blast furnaces can overcome the problems of coke supply by various means: • They can rebuild the ovens, if environmental permits can be obtained. • They can try to produce iron with less coke. • They can buy coke in the market. Up to now the option of buying coke in the market has been used by relatively few producers and there has been a general feeling in the industry that the environmental difficulties of coke production would reduce rather than increase the future supply of ‘merchant’ coke of this kind. In the 1990s some US producers closed steelmaking but retained coke capacity, and this has permitted other US steel producers to buy coke rather than operate their own coke ovens. The supply of coke from China has increased markedly and this has met some coke requirements in Europe, India and Latin America. There is also substantial coke capacity in Eastern Europe which is available to supply third parties. Japanese steel mills also regularly sell surplus coke on the international market. In addition, in certain countries new coke capacity could be developed to supply the merchant coke market. This could apply to coke production in Australia or other countries with large deposits of coking coal which is now exported. It may therefore be possible to develop substantial trade in coke. Such a development will take the pressure off decisions about coke supply for Western steel companies. In the medium term, however, the same environmental pressures will develop in Eastern Europe and eventually in China. These will set limits on the scale of coke production. Also, steel companies in major industrial countries will not wish to become heavily dependent on purchases of an essential raw material such as coke from a limited number of potentially unstable sources. An alternative to buying coke is to install coal injection (commonly referred to as pulverised coal injection – PCI) on existing and new blast furnaces. In this process pulverised or granulated coal is injected into the furnace as a substitute for other fuels (such as oil or gas) and coke. Up to 150kg of coal per tonne of hot metal is being injected in blast furnaces,

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reducing the consumption of coke by a similar amount. The coal used in this process is not coking coal, but is a quality of steam coal which is generally lower in price than coking coal. Our analysis of costs and review of coal injection technology have concluded that coal injection can offer several advantages to the blast furnace operator: • Additional production from a given furnace by permitting higher operating temperatures and quicker throughput of iron. • Additional production of iron from a given quantity of coke. • Constant production of iron while reducing coke production for environmental reasons. • Lower operating costs. From our information about the situation at individual plants, we estimate that at the end of 1997 there were over 850 blast furnaces capable of operation in the world with a total capacity of 692 million tpy. Of these about 140 can be considered large furnaces, with over 2000m3 internal volume. We also estimate that about 135 of the world’s furnaces (and mainly these larger ones) have installed coal injection equipment, accounting for 245 million tpy of BF capacity. The largest installed PCI capacity is in Japan. Production of iron using coal injection will continue to increase rapidly, with several installations already planned. Progress is already under way in Europe and is being followed by adoption in North America and Brazil, as well as installation on virtually all new blast furnaces which will be built in future years. Decisions to invest in coal injection are determined by a combination of these factors specific to individual companies. They will be strongly influenced by the situation in the supply of coke for each company. It therefore seems likely that steel companies with follow a mixed policy of reducing their coke requirements by installing coal injection on all their larger blast furnaces, modernising their own coke capacity where they are permitted to do so, and purchasing some proportion of their requirements on the merchant market when prices are low. Cases where coal injection will not be installed are: • producers with small blast furnaces where the capital cost of coal injection equipment would probably not be justified;

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• companies which are financially weak and may not be able to make any significant investments in their basic steelmaking facilities; • plants where coke capacity has been modernised and meets current environmental restrictions and where coking coal can be purchased without balance of payments problems. The trade in coke and the installation of coal injection will permit the steel industry of many countries to meet the forecast steel requirements without a major coke constraint. This means that the potential limits on the production of pig iron caused by coke supply may be less severe than expected, and will not force large-scale closure of blast furnaces. New ironmaking technology Pig iron which is produced by processes other than blast furnaces includes electric pig iron furnaces, pig iron produced as a by-product of titanium and vanadium processing and new direct-smelting processes such as Corex and HIsmelt. These new processes offer the potential advantage of producing iron without coke by the reduction of iron ore with non-coking coals. There are savings in capital costs on the coke ovens and potentially significant savings in operating costs, if the large quantity of off-gas (available from the Corex process) can be used. Corex uses lump ore or pellets with non-coking coal. The first Corex process plant started production in 1988 in South Africa. The scale of this unit was small, at 300000tpy, but the next unit built (at Posco in South Korea) started up in 1995 with capacity of 720000tpy. Large blast furnaces, by comparison, produce around 4 million tpy. The latest proposals for construction of Corex units combine them with DRI plants so that the off-gases from Corex can be used in the DRI plant. This provides a particularly economical source of iron where there is abundant coal but limited natural gas. The HIsmelt process, developed by Hamersley Iron/CRA in Australia uses iron ore fines and non-coking coal. This is still at the stage of a demonstration commercial plant. We expect significant growth in the use of these processes, with individual operators finding them suitable to their particular circumstances of scale, coke supply, quality requirements, financial strength, etc.

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Part 1: Ferrous and non-ferrous metals

Direct-reduced iron Direct-reduced iron (DRI) is used almost entirely as a substitute or supplement for steel scrap in the manufacture of steel. Small quantities are also used in iron foundries, as a minor iron additive (coolant) in oxygen steelmaking or as an almost pure iron charge (an alternative to scrap) in order to raise productivity in blast furnaces. DRI can compete with scrap only if it has a high iron content and low levels of impurities. This depends on a combination of lower cost and/or higher quality than is available from steel scrap in the particular circumstances of individual producers. The great majority of electric steelmakers do not have their own iron production and produce steel by melting steel scrap in furnaces in which the heat to melt the steel is generated by passing electric current through graphite electrodes. Whereas in the BOF the quantity of carbon remaining in the steel can be closely controlled by a precise knowledge of the pig iron which is produced and by adjustment of the quantities of oxygen fed to the furnace, electric steelmaking cannot easily vary the quantities of carbon which are contained in the raw materials. As a result, electric steelmakers normally produce either bulk products in which the fine control of steel quality is not vital, such as concrete reinforcement steel, or special steels which require low-volume batch processing where the metallurgical properties can be monitored in the furnace or by treatment outside the furnace. Being produced from iron ores of known specifications, DRI can be manufactured with relatively low levels of carbon and other undesirable elements, and may therefore be of better quality than some steel scrap. Because the iron is not fully reduced in the process and impurities are not removed in slag, as in the blast furnace, DRI has a high level (3–5%) of oxides (silica, alumina) which must be removed into slag in the steel furnace. Also, not all of the iron content in DRI is fully reduced (perhaps only 90% being ‘metallised’, the remainder still being combined with oxygen). This remaining oxidised iron must therefore also be reduced in the steel furnace. All this adds to cost for the steelmaker, mainly in the form of additional electric power to achieve the same quantity of production. Unless there is a particular problem of scrap quality, such as affects electric steelmakers seeking to produce low-carbon steels for use in flat-

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rolled products, for most electric steelmakers DRI is regarded as a direct substitute for common grades of scrap, and would in practice have to sell at a delivered price discount to scrap in order to compensate for the steelmaker’s extra processing costs. DRI is therefore an attractive material only where there is a particular scrap quality problem in relation to the types of steel being produced, or where the price of DRI is low in relation to the price of scrap. This latter condition occurs essentially in two types of market areas – those where DRI can be produced cheaply from a combination of local high-quality iron ore and local gas and/or coal; and those where steel scrap is either not available or highly priced because of government restrictions, etc. Thus we find that DRI has been strongly developed in certain countries, such as: Venezuela, where both iron ore and gas are available, while local scrap supplies are moderate; South Africa, where iron ore and coal are available and imported scrap sources were potentially restricted by trade embargoes; India, where iron ore and coal are available and much scrap must be imported over high tariffs; and Indonesia and Malaysia, where local gas (but not iron ore) is available and scrap supply limited. DRI has not been widely used outside those areas, although there are a few DRI plants which operate on a merchant basis (Trinidad, Venezuela, Malaysia), selling material in the USA, in parts of Europe where scrap is short (Spain, Italy, Turkey) and in some countries in the Far East. In 1997 and 1998 US steelmakers moved to secure supplies of iron units from DRI production, installing capacity in the US Gulf where natural gas prices became attractive. A fall in scrap prices in 2000 called into question the economics of these new plants. Much DRI will be consumed in steel plants integrated with the DRI operation, in such areas as the Persian Gulf, India, Mexico and Venezuela, but there is a growing trade in ‘merchant’ DRI. The basis for this is a physical shortage of steel scrap in certain countries and, more importantly, the need for pure iron units to dilute impurities in steel scrap. This becomes important as the impurity levels which can be tolerated in finished steel products are reduced, as occurs when electric steelmakers produce steel for flat-rolled products. DR iron is produced by the reduction of lumps or pellets of iron ore without melting, using carbon monoxide from coal or natural gas as a reductant. The product is in the form of lumps of solid sponge iron.

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As these break down in transport and can also entrap moisture, leading to the danger of explosion, DRI is in some cases further processed (compressed) into the form of briquettes (HBI – hot briquetted iron) for shipment. Since there is no melting process which removes impurities into a slag, the DRI process is limited in its ability to reduce impurities which come in the iron ore. Hence iron ores for all DRI processes need to have low impurities (particularly silica) and high iron content. The conventional DRI processes (supplied by Midrex, USA and HYL, Mexico) function only with lump ores or pellets which meet these requirements. DRI depends for its economics on low energy costs. In the Midrex and HYL processes this is provided by natural gas in plants with modules which were of 600–800000tpy but have now been expanded in the case of the Midrex Megamod to over 1 million tpy. The world’s largest DRI plant is at Ispat in Mexico, with around 4 million tpy of capacity from a number of modules of different gas-based technology. The alternative reductant for DRI production is non-coking coal, used in Lurgi’s SL/RN and other rotary kiln processes. The scale of these is much smaller, at around 150000tpy, and the quality of the product is generally lower because of impurities entrained from the coal. This material is consumed generally in small, local steelworks and is not internationally traded. Because of the abundant availability of fine iron ores, research has been devoted to developing a DRI process which can use fines. The Fior process developed in Venezuela in the 1970s uses fine ores, and variants of this process, or new processes such as Lurgi’s Circored, were built in the late 1990s. An alternative process using fine ore employs iron carbide, a powder material produced by the reaction of natural gas with fine iron ore. This product will be fed by special handling equipment into the electric furnace and will offer the steelmaker known impurities and the opportunity to save energy by burning the carbon content of the iron carbide. Iron carbide technology was developed by the Pact group in Australia. Iron carbide is viewed as a direct alternative to DRI as a substitute for steel scrap in the production of electric furnace steel for use in flat-rolled products. The first commercial plant for this process was opened by Nucor in Trinidad in 1994 with nominal capacity of 320000tpy. By the end of 2000 this process had not reached stable operation.

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Table 4.1 Steel scrap production and consumption, 1997 (million tonnes, world) Production

Consumption

At steelworks At foundries At steel processors

100 0 100

350 40 0

Total

200

390

4.2.2 Iron and steel recycling processes Our information on steel capacity indicates that at the end of 1997 there were over 1200 plants producing crude steel. All of these consume steel scrap in the process. Over 1000 plants use electric furnaces which consume mainly steel scrap in the production of steel. Iron and steel scrap is also consumed in foundries making iron and steel castings. Although these are generally much smaller than steelmaking plants, there are several thousand such plants around the world. Hence, there are thousands of plants with the capacity to melt iron and steel in some form, i.e. to recycle iron and steel. Using information on the estimated consumption of steel scrap in all countries, and an assessment of the balance of scrap sources, we estimate that quantities of steel scrap which were produced and consumed at various stages of the iron and steel industry in 1997 were as shown in Table 4.1. This indicates that steelmaking plants consume about 350 million tonnes of scrap, but generate 100 million tonnes in their internal operations (internal or home scrap). Foundries consume about 40 million tonnes. The processing of steel generates scrap (new external scrap) of about 100 million tonnes. As a result, about 190 million tonnes of scrap had to be collected from used items (old external scrap) in 1997. The main processes which are involved in the recycling of steel scrap within the various stages of the industry described above include the following. Internal (home) scrap collection and processing Scrap is generated within plants at all stages of the steel industry. Molten steel from furnaces is cast into semi-finished steel in the form of ingots, slabs and billets. Ingot casting, followed by primary rolling, yields

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significant quantities of scrap in the form of scale (oxidised surfaces which have to be removed by ‘scarfing’), ends of slabs and billets which are cut off, etc. Most steel in the Western countries is now continuously cast into slabs and billets, omitting the stage of primary rolling and producing a more uniform product with less wastage. Even continuously cast slabs and billets must be scarfed, however, with some loss. There are further significant scrap losses in the processes of rolling, with ends of slabs and billets, trimmings from rolled products, off-specification or misshapen material, etc. This scrap can easily be collected within the plant and segregated by type of alloy. Taking total world statistics, the ‘yield’ of crude steel into finished steel (sheet, bars, etc) improved from about 80% in 1976 to over 87% in 1997. The largest contributor to this was the spread of continuous casting. Since most steel rolling is carried out by companies which have crude steelmaking capacity, virtually all of this type of scrap is recycled within the steelworks and does not enter the scrap market. This internal scrap is essentially material circulating within the steel industry, which is generally not recorded in industry statistics and is not recycling in the normal sense of the term. It is, however, a large quantity of metal and its reprocessing is essential to the economics of the industry. External scrap collection and processing External scrap which is available for recycling is of two types: 1 ‘New industrial scrap’ (new production or prompt scrap) being scrap generated by the users of finished steel products, such as scrap from the processing of sheet into car bodies, bars into tools, sections into bridges or wire rod into nails. This is scrap of known quality and commands a premium in the market because of this. 2 ‘Old scrap’ (or post-consumer scrap) recovered from steel products which have completed their life in service, such as the return of a used food can or the dismantling of a scrapped car. New industrial scrap Much new industrial scrap is similar in principle to internal scrap from the rolling stage. It may be off-cuts of sheet and bars, damaged products, etc, which are easily identifiable by type of alloy and are

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uncontaminated by processing. This type of scrap is regarded as premium quality material because of its known composition. Among this type of material are ‘auto bundles’ from car manufacturers which are among the most sought scrap products. Major generators of this type of scrap may, as in the USA, hold auctions for the sale of this material to the market, or may have longstanding arrangements with scrap merchants or steel mills to purchase it. Other forms of new industrial Rind are machine turnings, swarf and other material from the milling, boring or cutting of metal. This material may be of mixed alloy composition and will almost certainly be contaminated with oil, other metals, paint, dirt, etc. This scrap would normally be collected by merchants. Old scrap Old scrap is the kind which we generally associate with the scrap metal trade – material collected from products which have finished their useful lives. Old scrap iron and steel is recovered from several major types of product and is accordingly processed by different types of operation. As in the processing of internal scrap and new industrial scrap, described above, the key factor is the segregation of clean scrap into identifiable qualities and reasonable quantities. If this is possible special processing arrangements can be made. The major sources of old scrap are: scrap cars (end-of-life vehicles – ELVs – in a new terminology entering the industry), scrap domestic appliances (refrigerators, etc), demolished buildings, bridges, etc. Various types of iron and steel are recovered and they can be processed in various ways. Steel sheet can be flattened, compressed and bundled to produce bales or bundles (e.g. No. 1 and No. 2 bundles which are major items in the US scrap trade). Heavy steel girders (sections) or bars can be cut into short lengths (e.g. No. 1 heavy melting scrap, which is the principal scrap indicator in the US market). Cast iron engine blocks can be segregated. Car bodies and other scrap can also be fragmentised (shredded into small pieces) in special equipment (fragmentisers or shredders). This permits residues of other materials, such as plastics, to be separated by flotation for disposal through incineration or landfill and yields a product which is easily handled for international trade. The range of iron and steel scrap products identified in the trade includes:

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• • • • • • •

from processors to steel plants old heavy steel fragmentised steel new steel bales heavy steel turnings heavy cast iron cast iron cylinder blocks light cast iron

• • • • •

from collectors to processors old light steel old light compressed steel new production steel new loose light steel cuttings cast iron borings

Merchants therefore require a range of equipment to process steel scrap. For those offering a full range of services this will include: • • • • • • •

baler press fragmentiser/shredder guillotine shear magnetic handler cranes and loaders road vehicles

A major advantage of iron and steel is its magnetic properties. This means that steel can be separated from general household waste more cheaply and effectively than other metals by passing a powerful electromagnet over the waste, which attracts the scrap. Steel is recovered from household waste, mainly in the form of steel food cans. In principle all scrap within a steel plant will be recycled internally and all new industrial scrap which can be segregated into economic quantities will be separated by scrap merchants so that it can be supplied to the steel industry as a premium product with low levels of impurities (‘low residual scrap’). Whether in practice this type of segregation is commercially attractive for the scrap merchant depends largely on geography – the transport cost of moving the segregated scrap to a consumer with a requirement for this grade of scrap who will pay a higher price compared to a closer, non-specialist consumer who will pay a lower price.

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In practice the consumers requiring low residual scrap are those using electric furnaces to produce flat rolled products or bars and sections with special quality requirements. As noted earlier, the use of electric furnaces to produce higher quality steels depends on the quality of feedstock which can be provided. If the quality of scrap deteriorates, electric furnace operators need alternative sources of iron units which do not contribute unwanted elements (‘tramp’ elements). To illustrate this issue Table 4.2 compares some typical values for tramp elements (the total of copper, chromium, nickel, molybdenum and tin) in various types of feedstock with the limits which are acceptable for various grades of steel product. Steel for reinforcement or other lower-grade purposes can be produced from the lower grades of scrap because they can tolerate tramp elements which exceed those of the products in the table, ranging up to 0.7%. Merchant bar (products such as light sections and bars for some engineering purposes) can be produced from a blend of scrap which contains mainly the better quality No. 1 heavy melting scrap (HMS). Special quality bar (bar with closely controlled properties for engineering and automotive uses) and wire rod (for fasteners, mechanical wire or tyre cord) require low levels of impurities which need a careful blend of scrap or which may require some additions of primary iron with No. 1 HMS. In flat products sheet for the construction market requires a level of impurities which can be achieved with a careful blend of high quality scrap, but the higher qualities of sheet (deep-drawing quality material with a smooth surface for exterior car bodies or tinplate) require very low levels of impurities, which can be achieved only by at least a partial feed with primary iron.

Table 4.2 Tramp elements in feedstocks and steel products (Cu + Cr + Ni + Mo + Sn, percent by weight) Feedstock DRI BF pig iron Scrap: No. 1 bundles No. 1 HMS shredded No. 2 bundles No. 2 HMS

Steel product 0.02 0.03 0.13 0.36 0.40 0.61 0.70

Auto body sheet Wire rod SBQ bar Building sheet Merchant bar

0.08 0.18 0.25 0.30 0.50

Source: Information published by Midrex Corporation.

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There is a general view that the trends in the steel market towards more coated sheet will mean that the scrap of the future will have higher levels of impurities than the scrap which has been available up to now. This means that in order to produce even the same products as at present the electric steelmaker will need to buy higher grades of scrap, or the scrap industry will have to engage in further processing and sorting to ensure that scrap with low residuals is available. This will add to costs. It may also mean that the residuals in the average quality of scrap will make it impossible to produce the higher qualities of sheet product without a greater input of primary iron. These are the considerations behind the decisions of electric steelmakers to use DRI or other primary iron units in electric furnaces. Old scrap which cannot be technically or economically segregated, together with new industrial scrap which is in inconvenient form (swarf, turnings, etc.) are collected and processed by merchants and moved to consumers with less demanding requirements. At the consuming steelworks or foundry the incoming scrap is unloaded in the plant’s scrap yard according to its quality, into which it will have been sorted by the scrap supplier. Various grades of scrap are then loaded by magnetic cranes or front-end loaders in predetermined proportions into scrap baskets, which are transported by cranes or special vehicles and emptied into the steel furnace to provide the feed for steel melting.

4.3 Market features, structure and operation As described above, recycled iron and steel is from various sources, only part of which enter the market outside steel companies. Figure 4.1 shows world production of crude steel by process, with a long-term forecast. This shows that electric steelmaking, a heavy user of steel scrap, has made steady progress, while open-hearth (Siemens-Martin) steelmaking, also a significant user of steel scrap, has declined sharply. Almost all the remaining open-hearth capacity is now in Eastern Europe and China and a further rapid decline in this process is expected in the next few years. Figure 4.2 shows the consumption of steel scrap and the production of crude steel over the same period. Although electric steelmaking has expanded substantially, the simultaneous closure of open-hearth

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1200

million tonnes

1000 800

Other Oxygen

600

Electric 400 200 0 1976

1981

1986

1991

1996

2001

2006

2011

2016

Years 4.1 Crude steel: world production by process, 1976–2016.

1200

million tonnes

1000 800 Crude steel Scrap

600 400 200 0 1976 1981 1986 1991 1996 2001 2006

2011

2016

Years 4.2 Crude steel: world production and scrap consumption.

steelmaking, the growth of oxygen steelmaking using pig iron and improvements in performance to recover more usable steel in the melting process has meant that total scrap consumption has increased less than total crude steel production. Table 4.3 shows the totals for 1977, 1987 and 1997. Appendix Table 4.2 shows the relative importance of internal scrap, external new scrap and external old scrap in the total supply of scrap over the period. Improved yields from continuous casting have reduced the supply of internal scrap. General levels of activity in steel-using industries determine the supply of new external scrap. The balance is

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Table 4.3 Crude steel production and scrap consumption (million tonnes, world)

Crude steel production Scrap consumption Scrap per tonne steel (kg)

1977

1987

1997

675 350 519

737 385 523

798 389 488

Table 4.4 Metallics for the world steel industry, 1996–2016 (million tonnes) 1996

2016

Annual growth %

Crude steel Electric

749 247

1047 459

1.7 3.1

Total primary iron Total pig iron Blast furnace iron Other pig iron DRI

551 518 514 4 33

744 654 634 21 90

1.5 1.2 1.1 8.7 5.1

Total scrap Internal External new External old

364 97 95 172

502 97 140 266

1.6 0.0 2.0 2.2

provided by the collection of old scrap, which has had to increase significantly to meet demand.

4.4 The structure of the scrap recovery/recycling sector 4.4.1 Relative importance of secondary production The quantities of scrap used to produce steel were shown earlier. For the future several trends will affect the relative importance of scrap in the steel industry. Table 4.4, summarising Appendix Table 4.2, shows our forecasts of the requirements for metallics in the steel industry. Within a total crude steel production which is forecast to increase at around 1.7% per annum, electric steelmaking will continue to take an increasing share. Primary iron production is forecast to increase by 1.5% per annum. Within this production the output of new ironmaking technologies from processes other than blast furnaces will increase substantially but

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remain minor in absolute volumes in comparison with blast furnace pig iron production, which is forecast at over 630 million tonnes in 2016. Production of direct-reduced iron (including processes such as iron carbide) will continue to grow rapidly, at over 5% per annum, to reach 90 million tonnes by 2016. Growth of consumption of DRI is expected to continue in the countries which are now major producers (Mexico, Venezuela, Middle Eastern countries), because the development of their electric steelmaking depends on the local production of DRI. But there will also be a widespread increase in the use of DRI in countries which are not currently large producers, but where scrap availability and quality will be significant issues in the production of flat rolled steel. Consumption is therefore forecast to expand in the USA, Japan, Korea, Thailand, Turkey and elsewhere. Relatively few countries have the iron ore supply, the availability of low-cost energy or the right local market conditions to be in a position to produce large quantities of DRI. A large increase in production is expected in Venezuela and India, with significant growth in existing producers such as countries in the Middle East, a large increase in the USA and the emergence of a number of new producers, such as Mozambique, Bahrain and Australia. Growth in the production of electric steel has implications for the demand for steel scrap. The forecasts take account of this demand and of demand for scrap from BOF and open-hearth steelmaking. The quantities of scrap required for domestic consumption, minus imports, plus exports, are the quantities which must be collected in the local economy (‘scrap collection’). For each country we also assess the availability of scrap. This is done by considering the approximate quantities of scrap available from each of the three sources described above: home scrap, new production scrap and old scrap. Within each country the total scrap requirement (net of international trade) must be consistent with the quantities of new production and old scrap which are available for collection. Because of steadily improving yields in steel production, the quantities of scrap generated within the steel industry itself have become relatively smaller over the years. The quantity of scrap which must be provided from outside the steel industry itself is market scrap. Steel scrap is extensively traded and certain countries are large net importers (Japan, Korea, Italy, Spain) while other countries are regular net exporters (UK, Germany). The most important scrap exporter has for years been the USA. A balance in the international scrap market

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Table 4.5 Major consumers of iron and steel scrap, 1996 m tonnes USA Japan China Russia Germany S Korea Italy France Spain Turkey Ukraine United Kingdom World total

73.0 45.1 30.4 21.8 20.4 19.7 17.1 10.1 9.6 9.6 9.4 8.0 364.0

therefore requires that the USA exports sufficient to supply the quantities not available from other countries. Forecasts of scrap requirements must therefore also not lead to implausible demands on the leading exporting countries (USA, Germany, UK, etc). Table 4.5 shows the major consumers of iron and steel scrap.

4.4.2 Forms and availability of scrap The forms in which iron and steel becomes available as scrap and the methods of collection were described in a previous section. We estimate that some 267 million tonnes of external scrap were consumed in 1996. As noted, a further 97 million tonnes of scrap or more were consumed in the form of internal scrap circulating within the steel plants. Of the 275 million tonnes of external scrap consumed, we estimate that 95 million tonnes was new industrial scrap and 172 million tonnes was old scrap. The availability of scrap to meet the demand for recycled metal is a constant issue for debate. Certain countries feel themselves permanently short of scrap and this leads commentators to suppose that there is a general worldwide shortage. New industrial scrap can only be recovered from products which are being manufactured, i.e. which are going into current consumption. In industrial countries a very high proportion of new industrial scrap is recovered. This will continue, and the scope for increases in this type of

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recycling is limited. It depends essentially on the volume of production of steel-using products and the trend to reduced scrap losses in the fabrication process. For the numerical estimates we assume that new industrial scrap amounts to 15% of the quantity of material taken into the fabricating industry and that all of this is in principle available for recycling. Old scrap can only be recovered from iron and steel products which have been sold into the economy, i.e. from past consumption. The cost of remelting steel scrap is less than the cost of producing crude steel from iron ore. The cost of remelting steel scrap and casting a standard billet or slab is of the order of $100 per tonne, including some profit for the steelmaker. The cost of producing crude steel and casting a billet or slab from iron ore is of the order of $180 per tonne, including profit, for the lowest-cost steel producers. A scrap-based electric furnace producer can therefore afford to pay at $80 per tonne for steel scrap and be competitive on the end-product with the lowest-cost integrated steelmaker, FOB at the plant. Since the lowest-cost integrated plants are close to iron ore sources in countries like Brazil and must therefore transport their steel to major consuming markets, scrap-based steelmakers in the USA or Western Europe also have a transport cost advantage of perhaps $20 per tonne. This means that they can pay at least $100 per tonne for steel scrap and be competitive with the lowest-cost integrated steelmaker on a delivered basis. Iron and steel scrap generally costs less than $100 per tonne to collect, sort and transport to a consumer in the same country. For any level of market demand for the products which can be made from scrap, it will therefore usually be commercially attractive for merchants and consumers to recycle the maximum quantities of scrap. Consequently, steel scrap is a material which is capable of longdistance, international transport. For these reasons there is an incentive to collect it, and large quantities of easily recyclable metal will not be allowed to remain uncollected anywhere in the world. However, when steel markets are depressed the price of scrap can fall below $100, and there are also areas where the costs of transport raise the delivered price of scrap to levels which may not be economic for the collector and processor. We estimate that the minimum cost for collecting, processing and delivering acceptable scrap to a consumer or port in the local area is approximately $60 per tonne. When the price to merchants falls to this level, scrap collection will be uneco-

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600

million tonnes

500 400

External old External new

300

Internal 200 100 0 1976

1981

1986

1991

1996 Years

2001

2006

2011

2016

4.3 Steel scrap: world consumption by type.

nomic and the supply of scrap will fall. At these times scrap will remain uncollected. Our forecasts indicate that the demand for external scrap will grow from 287 million tonnes in 1997 to 406 million tonnes in 2016, an average growth of 2.1% per annum. This is a large absolute increase in the quantities of scrap which will need to be recovered and traded in the market (see fig 4.3). Of the external scrap required in 2016 266 million tonnes will be old scrap. Taking account of the quantities which have entered the world economy over the past 100 years or more, and allowing for various lengths of life of steel in use, we have an approximate estimate of the quantity of old scrap which is available for recovery in any year. This shows that in 1996 349 million tonnes of old scrap were available for recovery and 172 million tonnes (49.4%) were recovered. Over the period from 1979 this estimated recovery rate has been in the range of 47% to 61%, and the collection rates in 1994–96 were the lowest in this period. Our forecasts indicate that the recovery rate will increase gradually in the future, but that it will not exceed 60% at any time. This leads us to the conclusion that the balance of metallic feedstocks for steelmaking in our forecasts, which include the increase in DRI and pig iron consumption in electric steelmaking, are consistent with a the available supply of steel scrap. As noted earlier, particular qualities of steel scrap may experience higher growth in demand or lower growth in supply than the total for all types of scrap. An alternative benchmark indicator of the availability of scrap is to consider the quantities of scrap which will have to be collected each year

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in relation to the quantity of steel entering the economy in that year. On this measure the external scrap collected in 1996 was equivalent to 42% of the steel entering the economy (finished steel consumption). This proportion has remained steady since 1970 in the range of 40–44% and our forecasts imply that this will continue.

4.4.3 Scrap recycling arrangements The recycling of iron and steel scrap is a huge industry operating in virtually every country of the world. Iron and steel scrap is by far the most important form of metal scrap collection and most scrap collectors and processors base their business on ferrous scrap, with collection and processing of non-ferrous metals as a secondary activity. The typical structure of the ferrous scrap industry is for a large number of small scrap collectors to operate in an area, collecting new and old scrap from industry, consumers and waste processors. These small collectors may then deliver their scrap to larger merchants with varying types of processing equipment. The larger merchants may then supply processed scrap of known quality to steel plants in their area, or deliver processed scrap to docks for export. Large steel companies often have a requirement to purchase millions of tonnes of scrap each year. In this situation there is sometimes a tendency for the steel companies to operate their own scrap merchant business. In France, for example, the national steel company Usinor also controls the largest scrap merchant, CFF – Compagnie Française des Ferailles. In general steel companies have found that the scrap trade is more effectively handled by independent, entrepreneurial companies with a trading mentality rather than as part of a production-oriented steel company. One alternative is then to set up commercial arrangements between a large scrap merchant and a steel company, under which the merchant is the sole or main supplier of scrap to a company or plant. This type of arrangement is growing in popularity because it is seen as offering the combination of stability of supply from reputable merchants with the flexibility of dealing at arm’s length. From the late 1990s there has also been a further tendency in the scrap trade, in North America and Europe at least, towards the consolidation of scrap merchants through takeovers and mergers. The aim of this has been to create larger companies with greater financial stability, greater technical ability to deal with the increasing environmental

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issues, and therefore better prospects to become steel company partners in scrap supply. With steel plants also beginning to use larger quantities or purchased pig iron and DRI, some scrap merchants have also started to reposition themselves as suppliers of a full range of ferrous raw materials, trading in pig iron, DRI and other raw materials. The difficult market conditions of 1998 proved harmful to some of these consolidations, which had been financed by debt, and there may be a slowdown in this process in the next few years. It remains to be seen whether the larger corporate scrap merchants can compete with the nimble and enterprising small scrap traders in the long term. The ferrous scrap industry is one of the best examples of the working of free enterprise in an open market, with fluctuating prices reflecting very rapidly the balance of supply and demand. Government assistance or incentives for the recycling of iron and steel are not needed. Government regulation of the international trade in ferrous scrap exists in many countries, in the form of tariffs or export/import quotas. Examples are tariffs on scrap imports into India or attempts at quotas on exports of scrap from Ukraine. These have generally not been successful in promoting the efficient operation of the domestic steel industries concerned and have led to smuggling or corruption. Like other recycling industries the iron and steel scrap industry is concerned about the general problem of regulations which define ferrous metal scrap in ways which make its collection, transport and processing difficult. This general issue is covered elsewhere. (see Part Four, Chapter 1) A further significant long-term development in the structure of the ferrous recycling industry will be the establishment of organised car recycling. With the car manufacturers becoming responsible for programmes to recycle their end-of-life vehicles (ELVs), they will establish links with the larger scrap merchants. This development could be a further element favouring the growth of larger companies in the industry.

4.4.4 Trade in scrap The major importers and exporters of iron and steel scrap are shown in Tables 4.6 and 4.7, while estimates of the trade in ferrous scrap in relation to consumption for some of the major countries are shown in Appendix Table 4.3, and world consumption by type in Figure 4.3.

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Table 4.6 Major importers of iron and steel scrap, 1996 m tonnes Turkey Italy S Korea Spain Belgium/Luxembourg Netherlands USA France Canada China World total

6.9 6.3 5.0 4.9 3.4 3.1 2.1 1.7 1.6 1.4 49.2

Table 4.7 Major exporters of iron and steel scrap, 1996 m tonnes USA Germany France Netherlands UK Canada Belgium/Luxembourg Russia Japan Czech Republic Hungary

10.4 8.0 3.7 3.7 3.4 2.1 1.9 1.7 0.9 0.8 0.8

World total

43.8

The United States is largely self-sufficient, but has significant trade. Scrap imports come to the midwest and the east coast mainly from Canada, while exports go from the west coast to the large importing markets in Asia, Taiwan and Korea; from the southern states to Mexico; and from the east coast to Turkey. The rapid growth in electric steel capacity in the USA in the late 1990s raised the domestic demand for scrap and correspondingly reduced the supply for the export market. This created a realignment of supply sources for the international steel scrap market which may be permanent. In Asia Japan is self-sufficient and at times exports to other countries in Asia. Korea, Taiwan and other countries in the region, except China, are large importers.

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In Europe the flow of material is essentially from Germany, France and UK into Italy, Spain and Turkey. Russia and Ukraine have recently become large exporters of scrap. Most international scrap trade is relatively short distance and results from local geographical imbalances, but there are also large ocean movements from North America to Asia and Europe and from western Europe to Turkey and other smaller markets.

4.4.5 Scrap pricing arrangements In order to place scrap prices in the wider context of the steel market, Appendix Table 4.5 shows information for some key prices. These are steel scrap, pig iron, DRI, semi-finished steel and finished steel. Steel scrap For steel scrap we show a key indicator: the price of steel scrap in the USA (No. 1 heavy melting scrap, buying prices delivered to steelworks). Pig iron The largest Western exporter of pig iron is Brazil. Much of this is for foundry purposes, but there is also a trade in steelmaking pig iron. The past trend of pig iron prices can be illustrated by the estimated market prices for steelmaking pig iron over the past few years. List prices for pig iron have been published in the USA, but these bear little relation to market prices. In the absence of regularly published market prices for pig iron, we show in the table our assessment of representative average prices of steelmaking pig iron, FOB* Brazilian port. Since 1992 Brazilian exports of pig iron have been reduced by restrictions on the use of charcoal in blast furnaces. Other sources of pig iron have therefore become relatively more important. The market prices for pig iron in this table have in later years been established CIF Far East (adjusted for freight) and then FOB Black Sea, but are comparable with the FOB Brazil figures for the earlier years.

* FOB (free on board) price means the price including loading on a ship at the port of origin. CIF (cost, insurance and freight) price means the price on a ship at the port of destination, including transport cost and insurance but excluding unloading.

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DRI The largest supplier of DRI to the world market is Venezuela and the largest buyer of traded DRI is the USA. We show our assessment of DRI prices FOB Venezuela and CIF US port. Semi-finished steel For semi-finished steel we show prices for billet and slab, FOB Latin American ports. Finished steel For finished steel we have information on international prices for the major steel products. Large tonnages of steel products are traded internationally and it is possible to speak of international prices for steel products. In the absence of reliable price indicators for realised prices in domestic markets, we believe that the trends of steel prices can be observed from such international prices. These are the prices at which export sales are made from the major suppliers, FOB at ports in the producing area. Such prices would normally be lower than domestic market prices by at least the amount of the freight cost from the exporting country to the consuming market, plus any import duty or quality premium for domestic supplies. The table also shows the ‘King Steel Average’. This is the average of the prices for individual finished steel products (heavy plate to wire rod) weighted by the volumes of production of each product in the Western World in each year. This therefore provides a single indicator of ‘the price of steel’. The table also shows that price expressed in 1998 US dollars, using the US GDP price deflator as the measure of price inflation. Long-term trends Steel prices in historical dollars were at their weakest in 1982–3 and 1985 and peaked in 1989 and again in 1995. Steady prices in 1996 and 1997 were followed by a dramatic decline in steel prices in the second half of 1998. Steel scrap prices are extremely sensitive to actual and expected movements in the steel market and generally move in the same direction as, and usually ahead of, steel prices. Scrap prices peaked in 1995 and declined sharply by the end of 1996. Scrap prices recovered in the second half of 1997, but fell in early 1998 before an exceptional fall from August 1998 to levels last seen in the early 1990s.

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Part 1: Ferrous and non-ferrous metals

500

500

400

400

300

300

200

200

100

100

0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Years

Price ($/tonne FOB)

Price ($/tonne FOB)

The pricing of traded pig iron for sale to electric steelmakers, who constitute the great bulk of the regular market at present, is linked to the pricing of steel scrap and most particularly to the international price of scrap, which is set under current conditions by the export prices from the USA. Pig iron prices respond with a time lag, because high scrap prices for a few months induce EAF operators to switch to pig iron, which then works through into the price of pig iron. Pig iron prices also appear to have a floor, below which prices will not follow the price of scrap. Under current conditions this appears to be around $100/tonne FOB major origins. The price of DRI is also linked to the price of scrap, but has remained more stable than scrap in the range of $125–130/tonne FOB Venezuela, yielding a premium over scrap delivered USA of around $20/tonne. Price relationships between steel scrap, steel slabs (semi-finished steel) and finished steel are shown in Appendix Table 4.5 and Figure 4.4. A scheme of price relationships for iron and steel products at all stages of the market is shown in Appendix Table 4.4. This shows our assessment of typical relationships between all the products, starting from a given level of steel product prices. We believe that product prices move in a relatively stable relationship, based on the costs of production and transport at various stages. This includes the prices for steel scrap. The pricing scheme in Appendix Table 4.4 indicates, for example, that if the market price of a common product such as reinforcing bar (rebar) is $275/tonne, billet will be $225 and No. 1 heavy melting scrap will be $115

Scrap Slab Steel

0

4.4 Iron and steel prices.

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per tonne, with new production scrap in bales at $125 and fragmentised scrap at $125. The scrap processor can pay a local collector $75 per tonne for old steel at that time. When rebar prices drop to $200, however, No. 1 heavy melting scrap is potentially in the range of $60 and the processor can pay virtually nothing for scrap from a local collector. At that point collection of old scrap and some new scrap stops. Future prices Steel scrap is the most important cost factor for the electric steelmaker, and the integrated steelmakers have for years felt themselves under competitive pressure in most countries from the electric furnace sector. Hence, developments in scrap prices are of vital concern for the future both of the steel industry and the iron ore industry. As noted above, the steel scrap market is in most countries highly competitive, with many participants. In the short term the price of scrap is highly volatile, responding to small changes in demand and supply. In the longer term, however, the price of scrap steel in the international market will be determined by the price at which the largest supplying countries will be prepared to export the material. Scrap is by definition surplus material which has ended its useful life in its original form. The minimum price which scrap can command is that which covers a minimum payment to the owner (which may be negative if collection saves the owner the cost of disposal), the cost of collection, transport, processing and handling, plus a reasonable return to the scrap processor/shipper. The minimum cost at which a scrap processor can collect and process material ready for sale and remain in business is probably about $60/tonne, FOB scrapyard. The maximum price which scrap can command in the longer term is the level which justifies steelmakers switching from electric furnace processes to integrated processes based on iron ore and coking coal in the lowest-cost locations. Unless there is an absolute shortage of scrap of particular qualities in relation to, demand over a long period scrap prices will tend to reach a level somewhat below the point at which new integrated steelmaking capacity is generated in such quantities that electric steelmakers are driven out of business. Historically, scrap prices have been sufficiently below this critical level for the growth of electric steelmaking to be encouraged, steadily increasing its share of world production.

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Part 1: Ferrous and non-ferrous metals

Our earlier conclusion was that our base forecasts do not imply a serious shortage in the total supply of scrap, although scrap of particularly high quality may be in short supply in some areas. The international scrap price therefore seems likely to remain in the longer term at levels below those which encourage a major switch to integrated steelmaking. Sales of products which compete with scrap (DRI and pig iron for electric steelmakers) will therefore depend either on having costs of production which are significantly lower than those of other blast furnace operators, or on selling to customers who have particular quality requirements or who are in geographical markets where the delivered price of scrap is exceptionally high in relation to international levels. Over the period 1988–98 the price of steel scrap (No. 1 HMS as in our tables) has averaged 30% of the price of finished steel. In 1998 this ratio was 31%. The position in 1998 was low relative to recent years because scrap prices fell more quickly than steel prices, but the trend of this ratio is upwards. We expect a further small upward shift in this ratio over time, so that the average price of No. 1 HMS would be 34% of the price of finished steel, equivalent to an average of $123/tonne in 1998 dollars. DRI and pig iron compete with scrap in the production of higher quality steels, and these require a blend of scrap which contains higher quality material. There is a premium for higher quality scrap and this has been around $10/tonne. We would expect this quality premium to widen under the pressure of demand for this type of low residual material. The price of high-quality scrap would therefore average $137/tonne over the period in 1998 dollars.

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Appendixes Appendix Table 4.1 Specifications of iron and steel products Product

Pig iron – steelmaking Pig iron – foundry Direct-reduced iron Heavy plate – ordinary Heavy plate – high strength Hot rolled plate in coil Hot rolled strip CQ Cold rolled strip CQ Cold rolled strip DQ Cold rolled strip DQ killed Cold rolled strip for tinplate Reinforcing bar Sections

Element

minimum maximum minimum maximum typical maximum maximum maximum maximum maximum maximum maximum maximum maximum maximum

S

P

0.020 0.080

0.060 0.200 0.050 0.080 0.070 0.040 0.040 0.040 0.040 0.035 0.025 0.025 0.020 0.040 0.025

0.050 0.020 0.040 0.040 0.035 0.035 0.035 0.035 0.035 0.033 0.050 0.035

Al

Si

Mn

C

0.065

0.600 1.300 2.590 3.000 0.900 0.35 0.35 0.50 0.01 0.01 0.01 0.01 0.02 — 0.01

0.300 1.500 0.250 0.750 0.030 1.10 1.60 0.60 0.60 0.60 0.50 0.50 0.60 — 0.60

4.300 4.800 4.000 4.500 0.210 0.21 0.18 0.15 0.15 0.15 0.10 0.10 0.13 0.45 0.15

0.010

Notes: S sulphur P phosphorus Al aluminium Si silicon Mn manganese C carbon CQ DQ

commercial quality drawing quality

© Woodhead Publishing Ltd

Chapter 4 / page 37

Part 1: Ferrous and non-ferrous metals

Appendix Table 4.2 Summary of iron and world steel metallics (million tonnes) Item

1976

1981

1982

1983

1984

1985

1986

Finished steel consumption % Finished steel consumption Finished steel production – Est Unexplained production Hot-rolled steel production – actual flat products long products seamless tubes Steel castings Losses/Scrap Yield: finished/crude Crude steel production electric BOF other Primary iron ratio Metallics demand Primary iron Pig iron – blast furnaces Pig iron – other processes DR iron Scrap for steel and other uses steelworks/home scrap market scrap new/prompt scrap generation old scrap collection Old scrap available for recovery recovery ratio

5.4 526.1 521.6

-1.0 552.1 550.5 -3.4

-7.4 511.1 508.0 3.9

2.4 523.3 524.7 1.7

8.3 566.6 568.8 -5.1

1.4 573.9 577.6 -1.5

1.3 581.5 576.9 0.7

521.6

20.0 133.8 0.802 675.4 125.3 350.6 199.6 0.728 839.4 491.7 485.5 3.2 3.0 347.7 133.8 213.9

547.2 287.7 232.8 26.7 18.4 138.3 0.804 707.3 161.3 384.4 161.6 0.715 876.2 506.0 494.9 3.2 7.8 370.2 138.3 231.9

511.9 265.0 223.8 23.1 18.2 119.0 0.816 645.2 153.2 344.0 148.1 0.714 805.5 460.6 450.6 2.9 7.1 344.9 119.0 225.9

526.4 274.6 230.7 21.0 18.2 120.8 0.818 663.7 162.6 355.8 145.3 0.703 824.7 466.5 455.9 3.0 7.6 358.2 120.8 237.4

563.7 293.3 246.3 24.1 18.3 123.2 0.827 710.3 180.1 386.9 143.3 0.706 877.3 501.2 488.7 3.5 9.0 376.1 123.2 252.9

576.1 296.0 255.4 24.6 19.0 122.4 0.830 719.1 183.0 395.4 140.6 0.712 897.9 511.9 497.1 3.6 11.2 386.0 122.4 263.6

577.6 295.2 260.4 22.0 18.7 118.1 0.834 713.7 187.7 390.0 136.0 0.713 886.4 509.0 492.9 3.6 12.5 377.4 118.1 259.3

78.9 134.9

82.8 149.1

76.7 149.3

78.5 158.9

85.0 167.9

86.1 177.5

87.2 172.0

216.2 0.624

266.3 0.560

276.3 0.540

282.4 0.563

305.5 0.550

297.0 0.598

297.0 0.579

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1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

3.0 598.7 597.2 -0.2

6.9 640.0 636.2 0.1

1.3 648.5 649.6 -2.8

-2.4 633.0 642.1 -6.2

-4.2 606.2 615.3 -1.5

-2.7 589.7 606.4 0.4

2.8 606.4 621.7 0.4

1.8 617.4 626.8 13.3

3.9 641.3 648.7 15.6

-1.5 631.9 643.8 20.7

597.0 308.3 265.9 22.9 19.3 120.1 0.837 736.7 197.4 404.0 135.4 0.708 906.5 521.6 504.2 3.6 13.8 384.9 120.1 264.8

636.3 330.6 280.9 24.9 24.2 119.9 0.846 780.3 210.0 433.1 137.2 0.707 956.6 551.9 533.6 3.9 14.4 404.7 119.9 284.8

646.7 338.0 285.5 23.2 17.4 119.2 0.848 786.2 214.3 444.6 127.3 0.712 959.3 559.5 539.8 3.8 15.9 399.8 119.2 280.6

635.9 323.6 290.2 22.0 16.6 112.0 0.855 770.6 218.2 434.8 117.7 0.712 938.7 548.4 526.4 3.4 18.6 390.3 112.0 278.3

613.9 316.6 275.9 21.3 16.6 101.8 0.861 733.7 212.6 424.7 96.5 0.715 894.2 524.7 502.1 2.9 19.7 369.5 101.8 267.6

606.8 307.1 281.5 18.2 14.5 98.7 0.863 719.7 215.1 421.7 82.9 0.721 879.2 519.0 495.6 3.0 20.4 360.2 98.7 261.4

622.1 310.6 294.3 17.2 12.8 93.0 0.872 727.5 227.3 428.7 71.5 0.722 887.6 525.1 498.3 3.1 23.7 362.5 93.0 269.5

640.1 326.3 297.9 15.9 10.0 88.5 0.878 725.3 230.9 436.3 58.2 0.739 894.3 536.1 505.6 2.9 27.5 358.2 88.5 269.7

664.2 341.0 306.6 16.7 8.5 95.2 0.873 752.3 247.1 449.7 55.5 0.736 924.3 553.6 519.4 3.0 31.2 370.7 95.2 275.5

664.4 339.7 308.1 16.5 8.4 97.0 0.870 749.2 247.3 452.1 49.8 0.735 914.8 550.8 514.1 3.9 32.8 364.0 97.0 266.9

89.8 175.0

96.0 188.8

97.3 183.3

94.9 183.4

90.9 176.7

88.5 173.0

91.0 178.5

92.6 177.0

96.2 179.3

94.8 172.1

295.3 0.593

303.4 0.622

327.3 0.560

324.6 0.565

325.8 0.542

326.7 0.530

342.8 0.521

358.0 0.495

355.1 348.8 0.505 0.494

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Part 1: Ferrous and non-ferrous metals

Appendix Table 4.2 Continued Item

Finished steel consumption % Finished steel consumption Finished steel production – Est Unexplained production Hot-rolled steel production – actual flat products long products seamless tubes Steel castings Losses/Scrap Yield: finished/crude Crude steel production electric BOF other Primary iron ratio Metallics demand Primary Iron Pig iron – blast furnaces Pig iron – other processes DR iron Scrap for steel and other uses steelworks/home scrap market scrap new/prompt scrap generation old scrap collection Old scrap available for recovery recovery ratio

Chapter 4 / page 40

Forecasts 1997

1998

1999

2000

2001

2002

2003

6.8 674.6 687.3

-0.1 674.1 687.0

1.1 681.6 694.4

1.7 693.2 705.9

3.1 714.3 727.0

4.0 742.9 737.9

2.0 757.8 752.8

687.3 352.1 335.2

687.0 352.6 334.4

694.4 357.0 337.4

705.9 363.6 342.3

727.0 375.1 351.9

737.9 381.5 356.4

752.8 389.9 362.8

8.4 101.9 0.872 797.6 269.5 477.3 50.7 0.725 967.5 578.4 540.1 3.7 34.6 389.1 101.9 287.2

8.6 99.0 0.875 794.6 277.7 469.1 47.8 0.728 968.7 578.3 534.4 4.0 40.0 390.4 99.0 291.4

8.6 98.3 0.877 801.3 281.6 472.0 47.7 0.730 976.4 584.7 537.8 4.1 42.7 391.8 98.3 293.5

8.6 97.9 0.880 812.4 288.5 477.7 46.3 0.730 988.4 592.9 543.0 4.7 45.2 395.5 97.9 297.6

8.6 98.6 0.882 834.3 301.2 489.0 44.1 0.728 1012.5 607.1 554.1 4.8 48.3 405.3 98.6 306.7

8.6 88.1 0.884 834.6 306.2 488.6 39.8 0.728 1012.0 607.6 551.7 5.9 50.0 404.4 88.1 316.3

8.5 87.7 0.887 849.0 316.4 496.4 36.2 0.728 1028.8 618.5 558.8 7.0 52.7 410.3 87.7 322.6

101.2 186.0

101.1 190.3

102.2 191.2

104.0 193.7

107.2 199.6

111.4 204.9

113.7 208.9

347.2 0.536

361.8 0.526

330.4 0.579

371.6 0.521

366.1 0.545

375.9 0.545

383.5 0.545

© Woodhead Publishing Ltd

Iron and steel

2004

2005

2006

2007

2008

2009

2010

2011

2016

1.3 767.6 762.6

2.5 786.8 771.5

-0.3 784.1 796.6

2.0 799.8 803.8

0.5 803.8 807.8

1.0 811.9 815.9

2.5 832.2 836.2

3.4 860.1 872.4

1.4 930.5 942.5

762.6 395.8 366.8

771.5 401.2 370.3

796.6 415.1 381.6

803.8 419.6 384.2

807.8 422.5 385.3

815.9 427.5 388.3

836.2 439.0 397.2

872.4 458.9 413.5

942.5 500.5 442.0

8.5 86.7 0.889 857.8 324.7 500.9 32.1 0.729 1038.7 625.2 562.0 8.2 55.0 413.4 86.7 326.8

8.5 85.4 0.891 865.4 332.7 504.8 28.0 0.729 1047.1 631.1 564.4 9.3 57.4 416.0 85.4 330.6

8.4 95.6 0.894 900.6 351.5 524.6 24.5 0.730 1088.8 657.1 584.9 10.4 61.7 431.7 95.6 336.2

8.4 85.0 0.896 897.2 355.9 521.3 20.0 0.729 1084.0 653.9 579.4 11.4 63.1 430.1 85.0 345.1

8.4 83.4 0.898 899.6 362.7 521.4 15.6 0.728 1086.2 655.0 577.8 12.4 64.9 431.2 83.4 347.8

8.4 82.2 0.900 906.5 371.2 524.0 11.2 0.727 1093.8 659.4 579.0 13.3 67.0 434.5 82.2 352.3

8.4 82.3 0.902 926.9 385.6 534.4 6.9 0.727 1117.8 673.5 589.0 14.3 70.2 444.2 82.3 361.9

8.4 93.4 0.904 974.2 411.5 560.2 2.5 0.726 1174.0 707.2 616.2 15.3 75.6 466.8 93.4 373.4

7.8 96.7 0.908 1047.0 459.3 585.9 1.8 0.723 1258.2 756.5 646.2 20.7 89.5 501.7 96.7 405.0

115.1 211.6

118.0 212.6

117.6 218.5

120.0 225.1

120.6 227.3

121.8 230.5

124.8 237.1

129.0 244.4

139.6 265.5

363.2 0.583

393.9 0.540

396.3 0.551

404.9 0.556

412.2 0.551

404.8 0.569

422.6 0.561

432.3 0.565

472.3 0.562

© Woodhead Publishing Ltd

Chapter 4 / page 41

Part 1: Ferrous and non-ferrous metals

Appendix Table 4.3 Iron and steel scrap consumption and trade, 1996 (thousand tonnes scrap) Region/country

Consumption

Exports

Imports

Net trade

United States Japan China PR Russia Germany FR Korea Republic Italy France Spain Turkey Ukraine United Kingdom

72958 45053 30449 21782 20357 19721 17110 10101 9642 9566 9418 8009

10439 912 66 1742 7965 21 33 3705 19 14 194 3449

2119 1209 1393 91 1195 5027 6337 1690 4883 6853 181 182

8320 -297 -1327 1651 6770 -5006 -6304 2015 -4864 -6839 13 3267

Others

89806

15282

18087

-2805

363972

43841

49247

-5406

Identified world total

Chapter 4 / page 42

© Woodhead Publishing Ltd

Iron and steel

Appendix Table 4.4 Price relationships for steel products ($ per tonne) Product

Margin above base

Product price

-148 -143

127 132

-155

120

No. 1 heavy melting scrap New production steel bales/No. 1 bundles No. 2 bundles Fragmentised steel Heavy steel turnings Heavy cast iron

-160 -150 -179 -150 -180 -169

115 125 96 125 95 106

(delivered to scrap merchant/processor) Old light steel New production steel New loose light steel cuttings Cast iron borings

-200 -167 -182 -191

75 108 93 84

-45 -50

230 225

65 65 160 270

340 340 435 545

90

365 275 303 308

Pig iron (FOB Brazil) Steelmaking (basic) grade Foundry grade Direct-reduced iron (FOB Venezuela) Hot-briquetted iron (HBI) Steel scrap (delivered to steel plant in main consuming area)

Semi-finished steel products (FOB producing mill in main consuming areas) Slab Billet Finished steel flat products (FOB producing mill in main consuming areas) Plate HR coil CR coil Galvanised (hot dip) Finished steel long products (FOB producing mill in main consuming areas) Heavy sections Rebar Merchant bar Wire rod – low carbon

© Woodhead Publishing Ltd

28 33

Chapter 4 / page 43

Part 1: Ferrous and non-ferrous metals

Appendix Table 4.5 Price relationships for iron and steel ($ per tonne) Period

Years 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Average 1988–98 Quarters 1989 Q1 Q2 Q3 Q4 1990 Q1 Q2 Q3 Q4 1991 Q1 Q2 Q3 Q4 1992 Q1 Q2 Q3 Q4 1993 Q1 Q2 Q3 Q4

HM scrap USA $/t d/d

Pig iron Black Sea $/t FOB

DRI Venezuela $/t FOB

USA $/t CIF

62 73 85 73 72 84 108 106 105 92 84 110 125 132 126 124 107

100 110 100 90 98 110 115 130 125 130 102 124 124 145 138 136 123

79 73 73 77 80 83 113 101 107 100 97 118 123 129 128 123

93 90 93 94 95 97 126 112 118 114 110 134 142 147 143 139

111

127

111

113 98 93 104 115 126 131 128

110 110 115 116 100 100 99 105 107 106 111 103 106 97 98 98 94 97 98 99

113 111 103 97 101 108 109 104 100 92 89 87 84 84 83 84 100 102 110 129

Chapter 4 / page 44

Billet S America $/t FOB

Slab S America $/t FOB

Plate Europe $/t FOB

187 192 246 260 230 220 207 234 224 237 222 228 220

180 165 184 196 260 250 212 212 180 214 242 271 221 247 229

319 280 278 268 273 293 416 458 417 405 380 356 369 482 461 452 404

126

230

231

418

121 121 131 129 111 110 110 116 116 119 125 114 119 111 112 113 105 107 114 113

272 273 254 240 226 226 237 232 228 228 222 203 206 208 197 217 232 242 232 229

282 260 238 221 217 201 210 219 223 214 210 200 200 188 165 167 189 227 224 218

485 467 445 433 424 407 420 417 417 421 399 385 390 387 375 368 357 357 360 352

© Woodhead Publishing Ltd

Iron and steel

HR coil Europe $/t FOB

CR coil Europe $/t FOB

Galvanised Europe $/t FOB

Sections Europe $/t FOB

Rebar Europe $/t FOB

Merch. bar Europe $/t FOB

Wire rod Europe $/t FOB

King steel Average Current $ $/t FOB

1998 $ $/t FOB

279 245 250 228 241 274 408 414 340 331 303 290 334 434 335 330 278

351 319 318 280 318 364 525 525 436 416 385 373 400 545 437 423 376

396 336 360 324 371 436 627 709 581 476 446 446 460 655 585 623 558

280 232 225 224 250 261 347 424 355 359 328 332 334 373 378 401 396

209 186 196 201 238 254 293 316 288 280 258 272 278 286 260 289 250

265 221 224 212 246 261 319 381 308 295 284 306 305 316 282 302 278

264 240 250 233 250 265 332 356 323 314 296 280 293 328 286 302 283

293 258 262 244 272 302 415 446 376 357 332 327 347 434 375 386 344

479 406 398 360 390 420 559 577 468 424 386 373 377 459 388 392 344

345

440

561

366

279

307

309

376

432

445 430 403 377 356 329 338 338 338 345 324 318 323 314 290 283 282 293 297 287

550 541 522 487 452 428 440 423 424 433 405 400 400 387 380 373 368 378 382 365

717 718 725 676 617 575 582 550 525 483 448 448 445 445 452 442 442 450 452 442

453 443 420 380 367 348 345 360 367 367 351 350 350 333 315 315 323 334 337 333

337 333 303 290 287 278 293 295 297 280 273 270 270 267 250 247 258 277 278 273

423 408 368 325 312 305 308 305 305 303 285 285 285 275 290 287 298 308 311 306

370 365 355 335 327 317 325 325 322 318 313 305 310 300 290 283 275 283 285 278

471 462 440 411 388 368 377 372 371 367 348 343 345 337 326 321 320 331 333 325

© Woodhead Publishing Ltd

Chapter 4 / page 45

Part 1: Ferrous and non-ferrous metals

Appendix Table 4.5 Continued Period

1994 Q1 Q2 Q3 Q4 1995 Q1 Q2 Q3 Q4 1996 Q1 Q2 Q3 Q4 1997 Q1 Q2 Q3 Q4 1998 Q1 Q2 Q3 Q4

HM scrap USA $/t d/d

Pig iron Black Sea $/t FOB

DRI Venezuela $/t FOB

USA $/t CIF

Billet S America $/t FOB

Slab S America $/t FOB

Plate Europe $/t FOB

134 116 120 128 133 131 134 128 130 131 127 114 117 121 130 130 125 118 110 77

128 128 119 120 135 148 150 146 148 143 134 131 133 133 133 148 145 128 119 102

118 118 118 117 117 123 126 126 125 128 133 129 128 129 122 133 124 124 133 110

132 133 140 132 141 140 143 145 143 147 151 145 144 144 136 148 142 140 148 126

225 225 222 224 238 239 240 233 235 230 213 221 228 228 229 229 224 226 228 200

214 241 250 264 278 292 278 237 261 218 225 232 237 240 250 260 260 254 223 180

345 348 370 412 454 486 505 484 494 478 440 448 448 452 455 455 450 423 410 333

Chapter 4 / page 46

© Woodhead Publishing Ltd

Iron and steel

HR coil Europe $/t FOB

CR coil Europe $/t FOB

Galvanised Europe $/t FOB

Sections Europe $/t FOB

Rebar Europe $/t FOB

Merch. bar Europe $/t FOB

Wire rod Europe $/t FOB

King steel Average

283 305 343 405 441 457 458 379 421 349 310 321 325 330 333 331 328 300 270 212

358 367 395 482 536 573 587 486 540 455 410 416 415 422 430 427 422 398 373 312

437 440 452 512 592 675 708 643 676 630 515 557 598 632 635 628 620 573 550 488

330 333 335 338 352 378 383 378 381 372 369 395 395 401 405 405 405 408 410 360

272 278 280 283 290 295 293 265 280 242 257 285 285 292 295 285 280 278 248 192

303 305 305 308 316 326 324 297 312 277 267 294 295 302 305 305 305 305 287 213

277 283 297 317 327 342 342 302 324 282 273 294 295 300 305 308 310 307 285 229

322 331 348 389 423 450 458 405 434 384 351 371 378 387 391 388 384 366 343 282

© Woodhead Publishing Ltd

Current $ $/t FOB

1998 $ $/t FOB

Chapter 4 / page 47

1 Gold Tony Warwick-Ching

1.1

Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties 1.1.2 Products and end-uses

1.2

Production processes and technologies 1.2.1 Direct use 1.2.2 Refining

1.3

The gold market

1.4

The structure of the scrap recovery/recycling sector 1.4.1 The relative importance of secondary production 1.4.2 Forms and availability of scrap 1.4.3 Scrap recycling arrangements 1.4.4 Trade in scrap 1.4.5 Scrap pricing arrangements

© Woodhead Publishing Ltd

1.1 Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties Gold is a relatively heavy metal, exceptionally malleable and ductile, a good conductor of heat and electricity, and immune to tarnish. Impervious to corrosion by air or water, it is also resistant to the strongest acids. One of only two metals that is not a shade of grey, gold is of course distinguished by its attractive colour and appearance. To its properties of beauty and versatility, gold adds that of relative scarcity. As a result it is among the most valuable metals in common use. Gold is not a toxic or deleterious material, but its intrinsic value naturally reinforces the incentive to recycle, and for this reason alone its reclamation from scrap receives a very high priority.

1.1.2 Products and end-uses From time immemorial the main uses of gold were decorative and monetary. Decorative applications have retained their importance, with personal jewellery being much the most significant end-use. But monetary uses for gold have almost disappeared. Circulating coin has not been produced since the inter-war period, and dollar convertibility ended in 1971. Gold retains merely a residual role as a reserve asset, in the form of bullion, for central banks. Investment and commemorative coins are still produced each year, though here too the trend has been downward. Other uses for gold draw on its qualities of durability (e.g. dentistry) and good conductivity (e.g. electronics). The amount of gold consumed in the manufacture of finished goods has been on a rising trend since supply began to grow with the birth of a mining boom at the start of the 1980s. Global fabrication offtake reached a peak at almost 3900 tonnes in 1997, before falling back under the impact of the Asian economic crisis. Out of a total of over 3750 tonnes of gold consumed in 1998, jewellery accounted for just over 85%. The overwhelming importance of jewellery has grown fairly steadily in both absolute and relative terms over the years. Demand for jewellery has benefited from stagnant or declining real prices for gold over much of the period

© Woodhead Publishing Ltd

Chapter 1 / page 1

Part 2: Precious metals

Table 1.1 Gold consumption by end-use, 1970–99

Jewellery Electronics Dentistry Other industrial Medals, etc Official coin Total

1970

1975

tonnes % tonnes % tonnes % tonnes % tonnes % tonnes %

1006 73.1 89 6.5 59 4.3 62 4.5 54 3.9 46 3.3

516 52.9 66 6.8 63 6.5 59 6.0 21 2.2 251 25.7

tonnes

1376

976

1980 513 50.3 95 9.3 64 6.3 62 6.1 41 4.0 245 24.0 1020

1985

1990

1995

1999

1212 77.0 116 7.4 54 3.4 56 3.6 14 0.9 123 7.8

2188 87.2 216 8.6 62 2.5 73 2.9 22 0.9 123 4.9

2792 84.7 204 6.2 67 2.0 110 3.3 35 1.1 87 2.6

3178 84 248 6.5 65 1.7 102 2.7 49 1.3 136 3.7

1575

2508

3295

3722

Note: Former Eastern Bloc countries are only included from 1990 on. Source: CGF, GFMS, Virtual Metals.

since the early 1980s. Table 1.1 shows gold consumption by end-use from 1970 to 1999. Jewellery includes a multitude of products, with grades ranging from 8 carat (33.3% gold) to 24 carat (100% gold). The other metals with which gold is commonly alloyed include copper, silver, zinc and nickel. One of the most popular classes of jewellery is 18 carat (75% gold). This is standard in Italy, the world’s second largest producer of jewellery, and in most of western Europe. In North America, Germany and the UK jewellery is typically of lower fineness. The markets of Asia, which are the biggest consumers of jewellery, prefer products with a fineness of 22 carats or higher. The second largest application for gold is electronics, where gold is used for plating lead frames, contacts, connectors and other components, and for making bonding wire. After a period of intense thrifting and economisation in the 1970s the demand for gold by the electronics industry has grown fairly steadily, and future prospects in this area remain promising. Apart from some decorative and industrial uses, this is less true of other traditional applications for gold. Dental offtake, for example, has stagnated as economies in the state funding of dental health schemes and the advance of alternative materials take their toll. Sales of official coins, including bullion coins, have declined and gold consumption in

Chapter 1 / page 2

© Woodhead Publishing Ltd

Gold

this area has greatly shrunk from the peak levels of the 1970s and early 1980s. Medals and imitation coins have dwindled into insignificance as end-uses for gold.

1.2 Production processes and technologies 1.2.1 Direct use Gold occurring in scrap can follow one of two main routes in the course of being recycled. The simplest is that of direct use in the manufacture of end-products. Many articles such as carat jewellery (as distinct from costume jewellery) and coin have a high gold content and do not require separation or segregation, so they are very easy to recycle in this way. A substantial proportion of scrap arisings is of appropriate grade and consistency to be used as raw material by goldsmiths and jewellerymakers in the output of new finished products. Large amounts of jewellery are recycled, the main limitation on this being the consistency and grade of the secondary material involved and the caratage of the articles being produced. Though some selection and segregation of material may be required, and blending with virgin metal may be necessary to achieve the desired specification for the finished item, no refining is involved in direct use and processing costs are low. In essence, the material will be melted and formed directly into the semi-finished or finished article. However, for many other materials, particularly if they are of more complex composition, a very different approach is required and metallurgical refining is employed.

1.2.2 Refining With material which goes for refining, preliminary sorting, segregating, concentrating and other preparatory stages may be necessary, particularly for bulky items which contain more than one recoverable metal. When the material is in appropriate form it is then sent to a specialist refinery for recovery of the gold – and other precious metals if present – as high-purity metal. In the case of copper-bearing scrap, such as discarded electronic equipment, the material is sent to a copper smelter for recovery of base

© Woodhead Publishing Ltd

Chapter 1 / page 3

Part 2: Precious metals

metals prior to the reclamation and refining of the precious metals. The latter are recovered in the form of sludges and slimes which settle in the electrolytic tankhouse of the copper refinery. These residues are then processed by one of the standard precious metals refining techniques. There are two main gold refining technologies – pyrometallurgy, the traditional approach, and hydrometallurgy, often seen as the more modern method. The classic method of pyrometallurgy is the Miller process, invented at the Royal Mint in Sydney in the 1880s. The Miller process is typically employed to treat high-grade raw material of either primary or secondary origin, and the starting point will often be dore bars containing gold, silver and small amounts of base metal. The process makes use of the different temperature reactions of gold to chlorine, and of silver and base metals to chlorine. The silver and base metals react to form gaseous or liquid chlorides which are readily removable from the melt. The gold does not react but forms a dense pure metallic residue at the bottom of the vessel. Once separated out the gold can be recovered in a form acceptable for commercial use. The Miller process is ideal for the production of bullion with 995 fineness (a purity of 99.5% gold), and is therefore suitable for making bars which meet the traditional requirements of the international market. A growing proportion of output has to be sold with a fineness of 9999 (a purity of 99.99% gold), however, and to achieve this gold is processed in an electrolytic refinery, in a process analogous to that undergone by copper. A number of the major gold refiners and most of the small operations now favour hydrometallurgical refining methods. The main advantage of these is that they can readily cope with a wide range of metallic feedstocks, including material containing deleterious or toxic elements. They are therefore particularly appropriate for treating scrap and lower-grade or complex materials of any origin. Moreover they are suitable for refining on both small and large scales. Once the gold has been recovered in refined form, either from a Miller process or from a hydrometallurgical circuit, it is ready to be turned into marketable form. The bulk of newly refined gold is cast into bars, of which the commonest is the classic 400-ounce good delivery bar. But a large and growing proportion is cast into one of the smaller bar forms which are now popular. Other refinery products include gold grain, for use in jewellery manufacture, and various semi-manufactured forms such as tube, sheet and strip.

Chapter 1 / page 4

© Woodhead Publishing Ltd

Gold

1.3 The gold market Refined gold in the form of high-purity bullion is sold on a retail basis in many towns and cities around the world. London, Zurich and New York are the main locations for the professional and wholesale trading of gold, however. Zurich is perhaps the most important wholesaling centre for the supply of bullion to markets around the world, and New York has the most important futures exchange. London attracts the bulk of the business in forward trading and derivatives, as well as retaining a substantial role in the physical market, and is pre-eminent as the pricesetting centre for the international market. Five members of the London Bullion Market Association (LBMA) meet twice each day to agree a price which clears their positions, in a minor ritual known as ‘the fix’ or ‘fixing’. This is taken as the main reference price for the global market. The settlement at the fixing acts as an international benchmark price for gold, although the bulk of transactions take place through continuous dealing each day in London, Zurich, New York, Singapore, Hong Kong and in many other locallyoriented trading centres around the world. The standard product traded in the London market and priced at the daily fixings is the good delivery bar. The main specifications include a weight of 350–450oz, a fineness of not less than 995 parts per thousand, good appearance and the stamp of a registered refiner or assayer. The other main form of bar in common use is the kilo-bar, which is typically of 9999 fineness and trades at a small premium to good delivery. Other refined products sell at appropriate premiums to good delivery, as do many semi-manufactured and finished products. Scrap and other unprocessed material sells at discounts which reflect the cost of upgrading to refined metal.

1.4 The structure of the scrap recovery/recycling sector 1.4.1 The relative importance of secondary production Recycling has long played an important role in gold supply. Figures published by Gold Fields Mineral Services and its predecessor Consolidated Gold Fields indicate that old scrap accounted for nearly a fifth of total gold supply in the Western World between 1980, the

© Woodhead Publishing Ltd

Chapter 1 / page 5

Part 2: Precious metals

first year for which statistics are available, and the late-1990s. This average concealed a wide variation from one year to another, ranging from a high of over 37% in 1980 to a low of under 13% in 1989. If the former Eastern Bloc is included the role of scrap is reduced, but it remains appreciable. Dispersive applications account for a relatively small proportion of gold end-uses, so the potential for permanent loss of gold in discarded goods is relatively small. Moreover, the exceptional value of gold encourages a high level of effort in its recovery. Table 1.2 shows gold supply from scrap. As in other metals, scrap arisings of gold fluctuate markedly, reacting to a variety of market influences. Between 1980 and 1981, for example, the amount of gold recovered from scrap in the Western World fell by half. It then gradually revived in the wake of rising consumption, and reached a new peak when volatile conditions returned to the gold market in 1986. In 1993–97 scrap volumes ran at relatively high levels by historical standards, although as a proportion of total gold supply old scrap remained unremarkable. In 1998, however, dishoarding in Asia precipitated a flood of old scrap on to the market and recycling again rose to very high levels. In less exceptional economic conditions the most important single influence on scrap supply is the level of the bullion price. High prices encourage owners of carat jewellery and other articles to trade them in

Table 1.2 Gold supply from scrap, 1988–98 Scrap

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Mine

Other

Total

tonnes

%

tonnes

%

tonnes

%

tonnes

394 393 530 480 487 574 615 623 640 611 1094

14.3 12.7 17.1 15.2 13.5 16.2 18.3 17.2 18.2 14.5 26.3

1908 2063 2133 2159 2234 2287 2278 2273 2357 2472 2529

69.5 66.9 68.9 68.2 62.0 64.6 67.8 62.7 67.2 58.5 60.8

444 629 432 527 881 680 469 731 513 1143 536

16.2 20.4 14.0 16.6 24.5 19.2 14.0 20.2 14.6 27.0 12.9

2746 3085 3095 3166 3602 3541 3362 3627 3510 4226 4159

Source: CGF, GFMS.

Chapter 1 / page 6

© Woodhead Publishing Ltd

Gold

for their gold content. The price sensitivity of supply from such sources varies considerably between different countries. In many developing countries a relatively limited price rally will induce holders of jewellery to cash in their assets, which have a well-established role as an investment and store of wealth. Even in more sophisticated societies scrap will appear in response to more significant price increases. This was very apparent in the 1979–80 price boom, when dealers in Europe and the USA were besieged by owners of jewellery, ornaments and coin trying to cash in on the windfall value of their possessions. The rate at which the gold price rises can also have an influence on levels of scrap arisings. On one or two occasions during the mid–late 1980s a swift upturn in the gold price was sufficient to trigger a surge in scrap arisings in two major gold-consuming regions, the Indian subcontinent and the Middle East, despite the fact that the level eventually reached by the gold price was not particularly impressive by the standards of earlier years. More important, at times, can be sales of gold-bearing articles at points of economic distress. Such episodes have followed crop failures in the Indian sub-continent, sharp falls in oil revenues in the Middle East and debt crises in Turkey and Latin America. Most dramatic of all was the experience in South East and East Asia during the economic crisis of 1997–98, when hundreds of tonnes of gold holdings were liquidated from Korea, Thailand, Indonesia and elsewhere. The availability of gold scrap can be influenced by a more muted effect of the kind seen in base metals and other commodities. Higher prices make it worthwhile for dealers and refiners to accelerate the reclamation of the metal content of old scrap items, and to process lower grade materials than would normally be economic. To the extent that better prices for gold coincide with higher prices for base metals such as copper, the amount of gold being reclaimed from obsolete industrial equipment which combines the two will be correspondingly greater.

1.4.2 Forms and availability of scrap Scrap comes on to the market in many different grades and forms. Indeed one international refiner has a list of around 40 distinct classes of gold refining materials. The number of significant sources of scrap is,

© Woodhead Publishing Ltd

Chapter 1 / page 7

Part 2: Precious metals

however, much more limited. Classification of gold refining materials is shown in Table 1.3. Among high-grade materials jewellery is by far the most important. Jewellery includes a considerable variety of forms and grades, depending on the sources from which it arises. The Asian markets are given over to high carat jewellery, which ranges from 22 carat to 24, and consequently generates scrap containing between 90% and 100% gold. Mediterranean Europe, Japan and Latin America, dominated by 18 carat jewellery, are sources of 75% gold scrap, while the USA, the UK and Germany are markets for significantly lower carat products and hence yield lower-grade jewellery scrap. The jewellery sector gives rise not only to old scrap in the forms just outlined, but also to appreciable amounts of new scrap generated by goldsmiths and jewellery makers in the course of manufacturing finished articles. This material includes semi-manufactures, such as tube, rod and sheet, and also castings, sweeps, swarfs, drillings, turnings, dusts, residues, filings and other valuable gold-bearing material. Other high-grade scrap includes coins, medals, medallions and bars of all sizes. Older coins, such as British sovereigns and Krugerrands, are generally 22 carat purity, and when scrapped they will constitute material grading 91–92% gold, the balance being copper. This is also true of the US Eagle, the only remaining bullion coin which is not a 24 carat product. Most new coins, particularly bullion coins, are 24 carat specification and will grade 100% gold. New scrap will include material generated in the rolling and stamping of blanks for coins and other stamped items. A significant source of old scrap of relatively high grade is dental material, though grades can vary quite widely here, with the gold content often being alloyed with base metal or other precious metals. The most important of the lower-grade materials is electronic equipment and components, including printed circuit boards, switches, relays, assemblies, components, solutions, sludges, plated parts, inlays and alloys. The gold content of these articles will vary widely, reflecting their design and the extent to which their host material has been sorted, separated and upgraded. Depending on the nature of the item and the way it has been retrieved for recycling, electronics scrap may contain recoverable quantities of copper, silver, palladium and other platinum group metals.

Chapter 1 / page 8

© Woodhead Publishing Ltd

Gold

Table 1.3 Classification of gold refining materials Refining material

Sources

Possible other precious metals present

Brazing alloys Buffing sands Bullion Carat gold scrap Casting scrap Coinage scrap Coins – demonetised Crucibles – PGM

Aero, electronic & auto industries Silversmiths Primary & secondary producers Manufacturing jewellers Manufacturing jewellers & silversmiths Manufacturing of coin blanks, Mints Mints, Government national banks Laboratories, electronic & glass industries Manufacturing jewellers, precious metals melters Manufacturers, dental surgeons & laboratories Primary & secondary producers Manufacturing jewellers & silversmiths Industrial users of precious metals. Precious metal melters Manufacturers and users of electrical contracts Electronic industry Electroplaters, manufacturing jewellers Electroplaters, manufacturing jewellers & silversmiths Manufacturing jewellers & silversmiths, precious metal melters Precious metal melters Manufacturing jewellers Laboratories, electronics industry Manufacturing jewellers Mints, manufacturers of blanks Industrial users of precious metals, manufacturing jewellers & silversmiths Industrial users, manufacturing jewellers Manufacturing jewellers & silversmiths Pottery industry Manufacturing jewellers Industrial users, scrap collectors Precious metal melters, manufacturing jewellers & silversmiths

Ag, Pd Ag Ag Ag, Pt, Pd Ag Ag Ag Ag, Pt, Rh, Ir

Crucibles – refractory Dental gold alloys Doré metal Drillings Drosses Electronic contract scrap Electronic scrap Electroplating scrap Electroplating solutions Fluxes

Furnace bricks Gauzes Laboratory ware – PGM Lemel bars Medallion scrap Millings

PGM metallic scrap Polishing mops Pottery industry wastes Residues Residues – PGM – HG Skimmings

© Woodhead Publishing Ltd

Ag, Pt, Pd, Rh

Ag, Pt, Pd, Rh Ag, Pt, Pd, Rh, Ir

Ag Ag, Pt, Pd Ag, Pt, Pd, Rh, Ir Ag

Ag, Pt, Pd, Rh

Ag, Pt, Pd, Rh Ag, Pt, Pd Ag, Pt, Rh, Ir Ag, Pt, Pd Ag Ag, Pt, Pd, Rh Ag, Pt, Pd, Rh, Ir, Ru Ag Ag, Pt, Pd Ag Ag, Pt, Pd, Rh, Ir, Ru Ag

Chapter 1 / page 9

Part 2: Precious metals

Table 1.3 Continued Refining material

Sources

Possible other precious metals present

Slags

Precious metal melters, manufacturing jewellers & silversmiths Photographic industry, electroplaters, intermediate collectors & refiners Electroplaters Industrial users, manufacturing jewellers Industrial users, manufacturing jewellers Manufacturing jewellers & silversmiths Industrial users, manufacturing jewellers & silversmiths, intermediate processors & refiners Manufacturing jewellers Manufacturing jewellers

Ag

Sludges Solutions Swarf Swarf – metallic – PGM Sweeps – jewellers Sweeps – prepared

Turnings White gold scrap

Ag Ag, Pt, Pd, Rh, Ru Ag, Pt, Pd Ag, Pt, Pd Ag, Pt, Pd, Rh Ag, Pt, Pd, Rh, Ir, Ru

Ag, Pt, Pd Ag, Pt, Pd

Source: Engelhard.

Other lower-grade forms of scrap include rolled and plated decorative items, though again the grade of the material will depend on the condition of the article and the extent to which the gold has been separated from its substrate.

1.4.3 Scrap recycling arrangements There are no specific incentives for the recycling of gold-bearing scrap, since the intrinsic value of the precious metals present makes recovery attractive enough already. Other than the environmental and health concerns which apply to all metallurgical processes in the industrialised countries, there are no specific restraints applying particularly to gold recycling. With the amounts of gold reclaimed from scrap each year typically measured in hundreds of tonnes rather than thousands, the infrastructure and institutions involved in recycling are limited in scale compared with those for base metals and other bulkier commodities. Much of the jewellery scrap recycled is handled by jewellery makers themselves, receiving jewellery in appropriate grades and simply remelting and

Chapter 1 / page 10

© Woodhead Publishing Ltd

Gold

blending with the raw material they use to make new jewellery. This accounts for the very high figures for recycling in such regions as the Indian sub-continent and the Middle East. Appreciable volumes of jewellery also go to refiners, however, and it is processed there along with the assortment of other materials from primary and secondary sources. In the case of non-jewellery products there is much less recycling by direct use, and the great bulk of scrap reclaimed from end-products is recovered by refiners. In contrast to the base metals, the recycling chain in gold is short, with no more than one or two staging posts between the point where scrap material arises and the point where it is recycled to marketable product. Typically, jewellery retailers or goldsmiths act as collecting points for scrap materials sold by private individuals or by jewellery makers, though the latter often bypass the wholesaler and deal direct with a refinery or its agent. Banks and dealers may act as wholesalers, concentrating the scrap received from a particular country or region and sending it direct to a refinery for recycling. The refining industry itself is quite highly concentrated, with the main centres in Europe and North America. Japan and Latin America also have some refining capacity. In Europe such companies as Johnson Matthey, Degussa, Heraeus, Comptoir Lyon Allemand and the Swiss banks (SBC/UBS and Crédit Suisse) are prominent, as is the Pamp operation established in Switzerland in the 1980s. Some of these companies are also active in North America and elsewhere. The big refineries originally established to handle the newly-mined output of South Africa, Australia and Canada – Rand Refinery, Australian Gold Refiners and the Royal Canadian Mint – also handle scrap. Finally, an important role in recycling electronic and other gold-bearing scrap is played by copper refiners, some of whom have their own dedicated precious metals refining units. These include such companies as Asarco and Noranda in North America, Norddeutsche Affinerie and Union Minière in Europe and Mitsubishi Materials in Japan.

1.4.4 Trade in scrap Published figures showing the supply of gold from old scrap by region greatly understate the scale of recycling in certain countries, notably in Europe. But they also highlight the importance of recycling in such countries as India, Saudi Arabia, Turkey and Egypt. In all these

© Woodhead Publishing Ltd

Chapter 1 / page 11

Part 2: Precious metals

Table 1.4 Supply of gold from old scrap, 1980–99 (tonnes) 1980

1985

1990

1995

1999

Europe Italy Germany UK Other

41.3 18 3.5 3 16.8

39.9 15 4 3 17.9

36.2 14 3.5 4 14.7

61.7 27 4.3 3.8 26.6

53.8 20 4.3 3.3 26.2

N America USA Canada

75.8 70.9 4.9

41.8 37.7 4.1

46.2 41.3 4.9

59.7 54.9 4.8

55.4 51.0 4.4

Latin America Mexico Brazil Argentina Other

17.7 0 5.5 5 7.2

28.6 5.1 10 6 7.5

25.2 7.5 6 3.8 7.9

30.3 16 4.8 2.5 7

21.4 4.0 5.6 2.0 9.8

Middle East Saudi Arabia Turkey Egypt Kuwait Iraq Iran Other

169.6 6 28 22 7 11 85 10.6

136 19.4 40 48 3 15 0 10.6

198.4 57 31 72.9 6 19 5 7.5

235.7 97 47 40 17.8 15.2 10 8.7

197.3 67 56 32 14 1.4 11 15.9

63 59 4

55 50 5

70 60 10

108 97 11

102.2 82.0 20.2

Indian sub-continent India Other East Asia Japan Indonesia S Korea Thailand Hong Kong Taiwan Other Africa

110.4 16.4 70 0 1 7 1 15

118 69.6 15 8.9 8 5 5 6.5

76.4 15.9 12.5 11 9 8 7 13

125 15.5 38 13 15 12.7 10.6 20.2

7.2

8.2

15.1

8.9

Australia

0

0

0.5

2.7

2.1

USSR/CIS China

na na

na na

23 3.8

18.5 15

17.5 29

491.6

333.7

529.5

623.1

612.6

Total

13.8

25.2 9.4 5 0 1.5 0 3 6.3

Source: CGF, GFMS.

Chapter 1 / page 12

© Woodhead Publishing Ltd

Gold

cases recycling of jewellery through direct use has traditionally been an important feature of the local gold market, although in Saudi Arabia, Turkey and India there are now also modern gold refining operations able to handle a range of raw materials. The supply of gold from old scrap is shown in Table 1.4. International trade in gold scrap is difficult to track. Much of it is unrecorded and even where it is documented reported figures may understate the true scale of activity. Countries which disclose a substantial import trade in secondary materials include Switzerland, the UK, France, Germany and Canada, and large exporters include the USA and most of the bigger jewellery consumers of the Middle East.

1.4.5 Scrap pricing arrangements Terms for recycling gold scrap depend very much on the route chosen. For old jewellery taken to a goldsmith for turning into new articles – a very common recycling pattern in such countries as India, Indonesia and parts of the Middle East – the charge would be simply the working cost for fabrication. Typically this might be no more than 5–10% of the value of the raw material, the arrangement being analogous to that of a toll-processing agreement. Refiners may treat material on the basis of either a toll fee or an outright purchase. Contracts for purchase of scrap vary somewhat according to the type of material involved. Arrangements for high-grade material tend to be pretty standard, particularly in North America. But the lower the grade and the more complex the material the less standardised the arrangements become. For high-grade material refiners typically pay for at least 99.5% of the gold content, with a slightly lower credit for low-grade material. Treatment charges and refining charges at the rate of up to $1.00/oz are normally levied, and there will be a charge for refining any payable silver present. Settlement periods of up to three weeks have been traditional, though shorter periods are now frequently offered in what is an extremely competitive business.

© Woodhead Publishing Ltd

Chapter 1 / page 13

2 Silver Tony Warwick-Ching

2.1

Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties 2.1.2 Products and end-uses

2.2

Production processes and technologies

2.3

The silver market

2.4

The structure of the scrap recovery/recycling sector 2.4.1 The relative importance of secondary production 2.4.2 Forms and availability of scrap 2.4.3 Scrap recycling arrangements 2.4.4 Trade in scrap 2.4.5 Scrap pricing arrangements

© Woodhead Publishing Ltd

2.1 Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties Silver shares a number of distinctive properties with gold. It is flexible and ductile, an excellent conductor of electrical current and heat, and has a very high degree of reflectance. Though less durable than gold it is resistant to corrosion, and can endure extreme temperature ranges without deforming. Its colour and lustre make it prized for its beauty, and since it is not particularly abundant in nature it has a high intrinsic value compared with base metals. For this reason, as with gold, its recycling is accorded a high priority by industrial and other users.

2.1.2 Products and end-uses The single most important application for silver is in photographic products, including colour and monochrome film and paper for use in medical, industrial, art and personal photography. Silver demand suffered badly during the 1980s as a result of the price boom set in train by the Hunt brothers in 1979. High prices triggered a wave of thrifting and substitution through alternative technologies. But in the 1990s offtake was on a gently rising trend and after reaching a new all-time high in 1995 it has continued to edge higher. The surprisingly rapid growth of offtake for other uses, however, has pushed the share of photography down in recent years. Silver consumption by end-use is shown in Table 2.1. Industrial and decorative uses include a wide range of applications for silver, both traditional and modern, and offtake grew strongly during the 1990s. Demand rose from around 280 million ounces in 1990 to 335 million ounces in 1998. Silver is highly effective as an electrical conductor, and is used for contacts, switches, conductors and fuses, and in a number of applications for the electronics sector. Electroplating solutions, batteries, brazing and soldering alloys, industrial catalysts, mirrors and coatings, water purification systems and bearings are the other main applications for silver in what is a very diverse group of end-uses. After a period in the 1980s when silver was somewhat neglected, not least for price considerations, its time-honoured popularity in

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Chapter 2 / page 1

Chapter 2 / page 2

184.2 25.7%

Jewellery & silverware

716.7

Source: Silver Institute, Virtual Metals.

Total

32.1 4.5%

221.1 30.8%

Photographic

Coins & medals

279.3 39.0%

Industrial & decorative

1990

707

29.2 4.1%

189.5 26.8%

216.2 30.6%

272.2 38.5%

1991

714.6

33.4 4.7%

209.9 29.4%

210.3 29.4%

261 36.5%

1992

Table 2.1 Silver consumption by end-use, 1990–98 (000 oz)

780.9

40.6 5.2%

257.1 32.9%

210 26.9%

273.2 35.0%

1993

764.1

43 5.6%

223 29.2%

213.1 27.9%

285 37.3%

1994

774.2

23.8 3.1%

230.2 29.7%

220.4 28.5%

299.8 38.7%

1995

814

22.3 2.7%

266.1 32.7%

224.5 27.6%

301.1 37.0%

1996

863.4

27.4 3.2%

280.2 32.5%

232.3 26.9%

323.5 37.5%

1997

890.0

25.0 2.8%

280.0 31.5%

250.0 28.1%

335.0 37.6%

1998

Part 2: Precious metals

© Woodhead Publishing Ltd

Silver

jewellery and silverware has re-emerged. In recent years offtake has averaged over 250 million ounces a year, giving this area of end-use around 30% of silver offtake. The one area of end-use which looks to be in long-term decline is coinage, which has dropped below 3% of total fabrication offtake. Historically, being more plentiful and cheaper, silver was more widely used for monetary purposes than gold. Although there are still minor instances of its use in circulating coin, however, silver has, like gold, been phased out of significant monetary use everywhere, and its main application in this area is in commemorative and investment coin and medals.

2.2 Production processes and technologies In contrast to gold, the recycling of silver involves relatively little recovery by direct use of scrap in the manufacture of finished articles. The sort of applications which generate scrap suitable for direct use – jewellery, silverware and coin – are very much less important for silver than they are for gold. The bulk of silver is nowadays used in industrial processes for the production of photographic and other manufactured articles. This yields both new and old scrap, which can only be effectively recycled by operations capable of handling more complex materials. Such operations are performed by precious metals refiners. In a few instances these are specific silver refiners, who will receive material whose main economic value is silver, with other precious metals and base metals such as copper taken out at the segregation and preparation stages. Or more commonly they are refineries capable of recovering both gold and silver in refined form, with silver reclaimed as an integral stage in the gold refining chain. The initial phase in silver refining requires the recovery of any gold that is present, through either pyrometallurgical or hydrometallurgical techniques. The silver is separated out and recovered in moderately pure form. For most modern end-uses for silver further refining is required, and the metal is upgraded by electrolysis to a much higher degree of purity. There are two main processes for the electrolytic refining of silver. One is the Moebius process, using cells in which alternating

© Woodhead Publishing Ltd

Chapter 2 / page 3

Part 2: Precious metals

electrolytes of stainless steel and silver are suspended vertically in an appropriate electrolyte. The other is the Thum–Balbach process, where the cathodes are arranged horizontally. Both yield crystals of 99.9% silver which are then melted, granulated and cast into bars meeting the quality and appearance criteria of the international bullion market. In the case of some complex materials, such as silver-bearing electronics and electrical scrap with significant copper content, the initial recycling processes will be undertaken by a copper smelter/refiner, with silver recovered as a by-product of the copper treatment circuit. Along with other precious metals, the silver will be obtained in the form of residues from the electrolytic tankhouse of the copper refinery. These then follow the stages outlined above in order to recover the silver in the form of high-purity marketable bars.

2.3 The silver market As with gold, silver is traded in many centres around the world. However, only London, New York and Zurich have a real global influence in setting the prices prevailing in the international market. The price fixed each day in the London Bullion Market is the most widely quoted reference for the valuation of silver bought and sold around the world. Silver-dealing members of the LBMA agree to make a market in silver, to hold stocks of metal of good delivery standard and to abide by the good trading practices of the LBMA. Although it is less formal and ritualised than is the case for gold, there is a London fixing for silver each day and the price agreed at these sessions constitutes the officially reported quotation for that day. Silver is, nevertheless, traded on a continuous basis by telephone throughout the day, and is also traded on futures exchanges in New York, Tokyo and Chicago. While the major bullion markets provide a pricing mechanism and reference for silver for sale on both spot and forward bases, the bulk of the refined metal sold each year passes direct from producer to consumer. Major producers in North America, Latin America and Europe ship large tonnages of bullion direct from their refineries to industrial consumers, such as photo film manufacturers and electrical compo-

Chapter 2 / page 4

© Woodhead Publishing Ltd

Silver

nent makers. The merchant market is a relatively small source of metal for end-use consumption.

2.4 The structure of the scrap recovery/recycling sector 2.4.1 The relative importance of secondary production Silver has been mined, refined and used for thousands of years. The total amount that now exists above ground in the form of refined bullion and products still in use, and as discarded articles no longer in use, is almost impossible to estimate. Since the amount of silver that has been consumed over the course of the centuries is not known, the extent to which it has been reclaimed from obsolete goods in the past is equally difficult to estimate. Sources of silver supply are shown in Table 2.2. What is known is that a relatively high proportion of today’s silver demand is met from recycled scrap, with around 160 million ounces of silver reclaimed from scrap in 1998. The share of scrap in the overall supply of silver varies appreciably between one year and another, but it appears to have been on a rising trend. While scrap provided just 15% of supply at the beginning of the 1960s, in 1970 it accounted for 20% and ran at around a third in the late 1970s. In 1980 it hit an all-time peak at nearly half of total supply. More recently the importance of scrap has dropped back somewhat, but even so it has typically amounted to over a quarter of supply in the 1990s. There are a number of reasons for the fluctuations in the volume of silver recycled in different years. Price plays an important role in prompting short-term variations, with price evoking a strong shortterm response from high-grade old scrap, such as silverware and jewellery. The torrent of scrap that flowed on to the market in the 1979–80 price boom is an extreme example of such a response. Low prices help to explain the dip in recycling in 1990–91. Silver scrap recovery and bullion prices are shown in Table 2.3. Cyclical changes in the economy and in manufacturing activity also contribute to fluctuations in the generation of industrial scrap, such as electronics components and commercial photographic materials. Thus recession in the early 1990s may help to explain the low level of recycling at the time. Government policies on coin remelt have also

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Chapter 2 / page 5

Chapter 2 / page 6

40.0 57.0 55.0 90.0 164.0 101.5 112.0 104.0 115.0 121.0 120.9 134.5 140.8 148.0 160.0

10.0 30.0 25.0 20.0 94.0 18.4 6.0 4.0 3.0 2.0 1.3 1.5 1.7 1.7 2.5

Old coin

* Mainly sales from government stocks. Source: CPM Group Silver Survey.

1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998

Old scrap

Scrap

2.0 16.0 16.0 13.0 23.0 21.0 0.0 10.0 7.2 3.8 6.5 9.6 6.4 10.0 13.5

Indian scrap

Table 2.2 Sources of silver supply, 1960–98 (000 oz)

52.0 103.0 96.0 123.0 281.0 140.9 118.0 118.0 125.2 126.8 128.7 145.6 148.9 159.7 176.0

Total 90.0 426.0 122.0 72.0 5.0 13.0 11.0 11.5 8.1 11.2 15.8 19.0 8.1 5.3 6.0

Other supply* 142.0 529.0 218.0 195.0 286.0 153.9 129.0 129.5 133.3 138.0 144.5 164.6 157.0 165.0 182.0

Total secondary 201.8 218.4 260.6 249.9 293.9 359.3 401.1 392.5 397.2 372.3 365.2 385.5 395.8 419.9 448.0

Mine output

343.8 747.4 478.6 444.9 579.9 513.2 530.1 522.0 530.5 510.3 509.7 550.1 552.8 584.9 630.0

Total supply

15.1% 13.8% 20.1% 27.6% 48.5% 27.5% 22.3% 22.6% 23.6% 24.8% 25.3% 26.5% 26.9% 27.3% 27.9%

Scrap share

Part 2: Precious metals

© Woodhead Publishing Ltd

Silver

Table 2.3 Silver scrap recovery and bullion prices, 1960–98

1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998

Old scrap moz

Old coin moz

Indian scrap moz

Total moz

Price $/oz

40.0 57.0 55.0 90.0 164.0 101.5 112.0 104.0 115.0 121.0 120.9 134.5 140.8 148 160

10.0 30.0 25.0 20.0 94.0 18.4 6.0 4.0 3.0 2.0 1.3 1.5 1.7 1.7 2.5

2.0 16.0 16.0 13.0 23.0 21.0 0.0 9.6 7.2 3.8 6.5 9.6 6.4 10 13.5

52.0 103.0 96.0 123.0 281.0 140.9 118.0 117.6 125.2 126.8 128.7 145.6 148.9 159.7 176.0

0.91 1.29 1.76 4.54 20.65 6.15 4.82 4.03 3.93 4.30 5.28 5.20 5.21 4.91 5.53

Source: CPM Group Silver Survey.

contributed to sharp variations in the volume of recycling, notably during the 1960s and 1970s.

2.4.2 Forms and availability of scrap What form does silver scrap or silver-bearing scrap take? Much the most important today is photographic materials – film, paper and manufacturing and processing solutions. The photographic sector is the largest single end-use application for silver, and it is a rich source of both new and old silver-bearing scrap. Typically in North America, Japan and Europe, photographic materials account for between two-thirds and three-quarters of all recycled silver. The share accounted for by photography reaches a particularly high level in the USA and a slightly lower level in parts of Europe. Silverware and jewellery account for about 10–15% of recycled silver in most industrialised countries, with the bulk of such material deriving from old scrap of varying origins. The amounts of silver recycled from this source vary considerably from one country to another depending on the scale of manufacture and end-consumption in the country concerned.

© Woodhead Publishing Ltd

Chapter 2 / page 7

Part 2: Precious metals

Comparable in significance is electronics scrap, derived from such items as circuit boards, contacts, connectors, solders and adhesives. The rapid growth of consumer and commercial electronics has ensured that silver offtake (and hence recycling) in this area has remained surprisingly resilient in the face of sustained efforts at thrifting and substitution. Other sources of silver scrap include plated and miscellaneous articles, industrial catalysts, alloys and other materials. A category which was formerly a very important source of recycled silver is demonetised coin. The quantity of silver reclaimed from coin averaged 25–30 million ounces a year in the 1960s and 1970s, and peaked at a remarkable 94 million ounces in 1980. Subsequently the volume of old coin melt has fallen away dramatically. By the late 1980s it had dropped to less than 10 million ounces a year, and by the mid-1990s it was averaging just 1–2 million ounces a year.

2.4.3 Scrap recycling arrangements There are no specific incentives for the recycling of silver-bearing scrap, since the intrinsic value of the precious metals present makes their recovery attractive enough already. There are, however, growing restraints on the disposal of certain forms of low-grade industrial waste containing silver suspensions or solutions which are regarded as environmentally deleterious. Moreover, the processing of certain types of other silver-containing material, such as old film and plasticbased electronic equipment, is tightly controlled in the industrialised countries. The main stages in the recovery chain for secondary silver – collection, segregation, preparation, shipment and refining – are analogous to those for gold, and indeed for most ferrous and non-ferrous metals. There are, however, natural differences reflecting both end-use patterns and the processing characteristics of silver. In the case of high-grade new scrap and certain types of old scrap, such as photographic and plating solutions, collection generally occurs at the point of generation. In other cases, particularly where silver is reclaimed from products discarded or dishoarded by end-use customers, such as silverware and coin, merchants will be involved in collecting and concentrating the material involved.

Chapter 2 / page 8

© Woodhead Publishing Ltd

Silver

Segregation is either by merchants, particularly in the case of old scrap, or by industrial users in the case of some forms of new scrap. The same agent may also undertake the preparation of the material for final processing. Preparation may involve incineration, chopping, crushing, grinding and furnacing for purification and homogenisation. The material will then be ready for sampling, assaying and refining by the processes referred to earlier.

2.4.4 Trade in scrap The geography of silver recycling corresponds closely to its pattern of end-use and the location of recycling facilities. Thus the USA reclaims the largest amount of silver, reflecting its status as the largest consumer and its possession of a major refining industry. Total offtake in the USA was around 170 million ounces in 1998 and scrap reclamation was around 45 million ounces, with photographic materials accounting for three-quarters of the total. The supply of silver from fabricated old silver scrap is shown in Table 2.4 and US trade in silver scrap in Table 2.5. Japan is the second largest consumer of silver for manufacturing purposes, and possesses a significant recycling industry. Japanese silver offtake was about 130 million ounces in 1998 and reclamation was about 28 million ounces. Europe had a consumption of about 210 million ounces in the same year, and recycled 45 million ounces. The bulk of it was processed in Germany, the UK and France, all of which have significant refining capacity.

2.4.5 Scrap pricing arrangements Outside the USA and Canada all silver-bearing materials, whether primary or secondary, are valued on the basis of the London official price. Within North America the price quoted by Handy & Harman, a leading US refiner, has traditionally been used. Recoverable metal content is estimated on the basis of assay, and charges deducted for processing and refining the material. The actual level of charges varies considerably, and may include other fees where appropriate. Since the material from which silver is to be reclaimed may contain other valuable metals, such as copper and gold, the valuation of a parcel of silver-

© Woodhead Publishing Ltd

Chapter 2 / page 9

Part 2: Precious metals

Table 2.4 Supply of silver from fabricated old silver scrap, 1990–97, moz 1990

1991

1992

1993

1994

1995

1996

1997

Europe Germany UK France Italy Other

37.9 16.1 7.2 3.1 2.7 8.8

38.8 16.1 7.2 3.8 2.7 9

40.5 16.1 7.2 5.3 2.7 9.2

40.2 15.8 7.3 4 2.7 10.4

39.8 15.4 7.9 4.2 2.8 9.5

40.5 14.8 7.4 4.7 3.2 10.4

41.8 15.4 7.6 4.5 3.5 10.8

43.2 16.1 8.4 4.3 3.4 11

N America USA Mexico Canada

42.7 39.1 2.3 1.3

40.5 36.9 2.3 1.3

40.1 36.5 2.3 1.3

41 37.4 2.3 1.3

43.2 39.6 2.3 1.3

44.8 40.5 2.6 1.7

47.3 43.1 2.4 1.8

47.5 43.6 2.3 1.6

C & S America

3.9

3.9

3.9

3.8

3.8

3.8

3.8

3.4

Middle East

3.1

3.1

3.3

4.2

5.3

6.5

6.9

6.4

India

4

9.7

7.2

4.5

3.9

4.5

4.7

4.9

19.4 15.7 3.7

22.6 18.9 3.7

27.9 24.2 3.7

30 26.2 3.8

31 26.9 4.1

31.9 27.3 4.6

32.1 27.1 5

32.8 27.8 5

Africa

1

1

1.1

1.1

1

1.2

1.1

1.1

Australia

2.3

2.3

2.3

2.4

2.5

2.5

2.3

2.3

Other

13.3

11.9

13.6

13.4

13.1

12

11.9

11.7

Total

127.6

133.8

139.9

140.6

143.6

147.7

151.9

153.3

E Asia Japan Other

Source: Silver Institute.

Table 2.5 US trade in silver scrap, tonnes

1996 1997 1998 1999

Imports

Exports

1810 1530 1800 1640

1280 1020 1060 1310

Source: USGS.

bearing scrap is seen as a package in which the value of all the metals, and the charges for their recovery, must be assessed. The economics of recycling are not easy to cite. High-grade scrap, such as silverware and coin, can be recycled at very low cost, perhaps no more than 25 cents/ounce, and the efficiency with which the silver is recovered from such sources is very high. Even low-purity scrap is eco-

Chapter 2 / page 10

© Woodhead Publishing Ltd

Silver

nomic to process at low silver prices, however, with refiners claiming that it would be possible to recycle many low-grade materials at silver prices as low as $1/ounce. This ensures that the bulk of photographic waste and scrap is indeed economic to recycle, making it easier for industrial users of such material to comply with environmental regulations by reprocessing it.

© Woodhead Publishing Ltd

Chapter 2 / page 11

3 Platinum group metals Tony Warwick-Ching

3.1

Physical characteristics, properties, products and end-uses 3.1.1 Characteristics and properties 3.1.2 Products and end-uses

3.2

Production processes and technologies

3.3

The platinum group metals market

3.4

The structure of the scrap recovery/recycling sector 3.4.1 Relative importance of secondary production 3.4.2 Forms and availability of scrap 3.4.3 Scrap recycling arrangements 3.4.4 Trade in scrap 3.4.5 Scrap pricing arrangements

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3.1 Physical characteristics, properties, products and end-uses With prices in the hundreds or even thousands of dollars per ounce in recent years, the platinum group metals (platinum, palladium, rhodium, osmium, iridium and ruthenium) are very high-value elements, and are naturally the focus of keen interest from the point of view of recycling. However, in volume terms only three of the group – platinum itself, palladium and rhodium – are of significance, and this section will concentrate on these metals.

3.1.1 Characteristics and properties The platinum group metals (pgm) share a number of characteristics both with each other and with the other precious metals – gold and silver. Good conductors of electricity, chemically inert and with exceptional catalytic properties they are sometimes designated the ‘noble’ metals. Thus they find end-uses in electrical and electronic applications where resistance to oxidation and durability are at a premium, and in industrial and other processes where strong catalytic activity is required.

3.1.2 Products and end-uses A lustrous silvery appearance, coupled with outstanding tarnish resistance, has given platinum an important place in the jewellery industry. Platinum jewellery had a brief period of popularity in Europe between the wars, and there is now growing interest in China, but by far the most significant market continues to be Japan, which accounts for over three-quarters of the world market. Japanese consumers feel a traditional affinity for the unostentatious but costly appearance of jewellery made from platinum. Palladium is also used in jewellery, although on a much smaller scale than is the case with platinum, and rhodium finds a minor role in this sector. Consumption of platinum by end-use is shown in Table 3.1. Platinum’s end-uses have become heavily concentrated in recent years. Jewellery accounts for around 40% of recorded offtake, autocatalyst has slipped back a little in recent years but is still a third of offtake, and the balance goes to a mix of other applications. Traditional uses

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Part 2: Precious metals

Table 3.1 Consumption of platinum, by end-use, 1975–99 (000 oz) 1975

1980

1985

1990

1995

1996

1997

1998

1999

360 345 225 65 0 1210 175

690 260 210 140 0 560 150

980 225 200 140 260 810 15

1535 215 205 135 100 1365 140

1850 215 240 225 75 1810 120

1880 230 275 255 110 1990 185

1830 235 305 265 180 2160 170

1800 280 300 220 210 2430 125

1610 315 390 200 90 2880 115

Other

205

190

100

120

225

255

295

305

335

Total

2585

2200

2730

3815

4760

5180

5440

5670

5935

Autocatalyst Chemical Electrical Glass, etc Coin, small bars, etc Jewellery Oil refining

Source: Johnson Matthey.

Table 3.2 Consumption of palladium, by end-use, 1980–99 (000 oz) 1980

1985

1990

1995

1996

1997

1998

1999

Autocatalyst Chemical Dentistry Electrical Jewellery

320 250 520 590 180

320 150 870 1100 210

315 215 1020 1675 195

1800 210 1290 2620 200

2360 240 1320 2020 215

3200 240 1350 2550 260

4890 230 1230 2075 235

5880 240 1110 1970 255

Other

190

120

80

110

140

140

115

110

Total

2050

2770

3500

6230

6295

7740

8775

9565

Source: Johnson Matthey.

include catalytic products for the chemical industry (particularly nitric acid manufacture), oil refining, fibre-glass production and electronics. In all of these areas platinum offtake has tended to stagnate or decline over the longer term. Other applications include investor products such as small bars and coins, and fuel cells for specialist or experimental uses. Palladium demand is slightly more diverse, with important applications in electrical, dental and other uses, and an increasingly significant role in autocatalyst. Electrical and electronic applications accounted for 2.36 million ounces in 1998, just over 28% of total offtake, with booming sales of mobile phones and other devices offsetting the impact of high prices for the metal. The consumption of palladium by end-use is shown in Table 3.2. After dropping to less than 10% of consumption in the late 1980s, autocatalyst applications for palladium grew very rapidly during the

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Platinum group metals

Table 3.3 Consumption of rhodium, by end-use, 1985–99 (000 oz) 1985

1990

1995

1996

1997

1998

1999

135 45 17 17

334 26 12 17

464 13 8 17

424 21 9 53

418 36 9 43

483 31 6 34

502 37 6 30

Other

30

15

9

9

10

10

11

Total

244

404

511

516

516

564

586

Autocatalyst Chemical Electrical Glass

Source: Johnson Matthey.

1990s and accounted for half of all offtake in 1998. Dentistry has slipped back in importance as a user of palladium, but still took just over 1.2 million ounces in 1998, nearly 15% of the total. Jewellery and other applications account for around 4–5% of the total. For rhodium the autocatalyst sector has become much the most important area of end-use in recent years. At 450000 ounces, the motor industry accounted for 84% of total consumption in 1998. Catalytic applications in the chemical and fibre-glass industries also require minor amounts of rhodium, and small quantities are used in electronics applications. Table 3.3 shows the consumption of rhodium by end-use. The major role of autocatalyst as an end-use for the platinum group metals owes a huge debt to the environmental imperatives of the past two decades. Prior to the mid-1970s the motor industry did not feature at all as a customer for these metals. Thanks to new exhaust emission control standards, however, the first catalytic converters were installed in US cars in the 1975 model year. Japan soon followed suit and so, more recently, have Western Europe, Australasia, Korea and other markets. The result has been sustained growth in offtake for autocatalyst. Platinum consumption rose from 360000 ounces in 1975 to 1.85 million ounces 20 years later. Palladium consumption has soared from 320000 ounces in 1980 to around 4.2 million ounces in 1998, while rhodium consumption rose from 110000 ounces in 1984 to a peak of 464000 ounces in the mid-1990s. Partly because of market saturation and partly because of substitution by palladium, platinum demand stopped growing in the mid-1990s, but a subsequent boom in palladium prices has prompted efforts to substitute away from that metal again.

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Part 2: Precious metals

3.2 Production processes and technologies The recycling of the platinum group metals is even more specialised than is the case for the other precious metals, and the number of plants which can undertake all the necessary processes is very limited. Both pyrometallurgy and hydrometallurgy play a role, but the latter performs most of the refining function. The processes employed by refiners are complex, and turnaround times, particularly for the minor pgm, are extremely long – a matter of months rather than weeks, during which the metals are locked up in solutions being treated for sequential recovery of various elements. The traditional route to refining platinum group metals from scrap involves delivering the material to be recycled as concentrate or in other forms which can then be leached for recovery of the metals in solution. This is then treated by chemical separation for recovery of the precious metals present. Gold is reclaimed first, followed by silver and then by the noble metals, starting with platinum and working through to the minor members of the pgm group. Recent years have seen the adoption of modern solvent extraction/electrowinning methods to the recovery of pgm from both primary and secondary material. Johnson Matthey pioneered such approaches on a pilot scale at its plant in Royston, UK, then transferred the process to the Matthey Rustenburg operation in South Africa. Metal recoveries from modern solvent extraction/electrowinning methods are reported by Johnson Matthey to run at 90–95% for platinum and palladium, and 80% for rhodium.

3.3 The platinum group metals market The only pgm markets of significance are those for platinum and palladium, the other noble metals being produced and consumed on such a small scale that most dealings are direct between producer and consumer, and merchants play a very minor role. The markets for platinum and palladium have characteristics in common with the other precious metals, but trading is on a much smaller scale and the markets are much narrower. Nevertheless, there are terminal markets for platinum and palladium in New York, where both are traded on the Nymex division of

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Platinum group metals

Comex, and in Tokyo, where there are contracts for both metals on Tocom. London, Zurich, New York and Tokyo are the only locations for significant merchant dealing in platinum and palladium, and an official fixing for both metals is quoted daily in London and Zurich. In all these cases the metal is traded in the form of refined highpurity bars which conform to certain specified characteristics. However, there is also a merchant market for platinum in the form in which it is recovered after refining – as sponge. The main reference prices for most purposes are the quotations settled for platinum and palladium at the London fixing. In the past some of the bigger long-term contracts for the supply of platinum and palladium direct from producer to consumer (for example, the big US car companies) involved ‘producer prices’, which were fixed for a period by the supplier. These are believed to have been largely replaced by contracts priced on the basis of the spot quotation. A producer price is also set for rhodium, though certain market makers in bullion are normally ready to quote a merchant price for rhodium. The other pgm are typically sold on the basis of producer prices set by the leading suppliers such as Johnson Matthey.

3.4 The structure of the scrap recovery/recycling sector 3.4.1 Relative importance of secondary production In contrast to the position with the other precious metals, overall levels of recycling of the platinum group metals appear to be low. They range from 8.6% for rhodium in 1998 to 7.5% for platinum and just 2.2% for palladium. In part the low levels of recycling are a reflection of the way the statistics published by Johnson Matthey, the only routine source of comprehensive data on supply and demand for the pgm, are presented. Table 3.4 shows the platinum group metals supply from recycled scrap. Except for autocatalyst, all the Johnson Matthey figures record consumption net of recycling – in other words they show net offtake of pgm. The data in the accompanying table are derived from Johnson Matthey figures and show the reclamation of metal from just one source, autocatalyst. Recycling from other end-uses is ignored. Other traditional applications, particularly industrial catalysts used in the oil, chemical and glass industries, are recycled on a toll basis,

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Part 2: Precious metals

Table 3.4 Platinum group metals supply from recycled scrap, 1980–99 Platinum

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Palladium

Rhodium

Total 000 oz

Share of supply %

Total 000 oz

Share of supply %

Total 000 oz

Share of supply %

0 0 10 30 45 70 90 115 160 175 210 205 230 255 290 320 350 370 405 425

0.0 0.0 0.4 1.2 1.6 2.5 3.1 3.6 4.7 4.9 5.3 4.7 5.7 5.5 6.0 6.0 6.6 6.9 7.0 7.3

20 20 20 20 20 30 40 50 65 70 85 85 95 100 105 110 145 145 175 195

0.8 0.8 0.8 0.8 0.7 1.1 1.4 1.6 1.9 2.1 2.3 2.1 2.4 2.3 1.9 1.7 1.8 2.0 2.0 2.4

0 0 0 0 0 0 0 3 7 7 13 16 22 25 34 37 45 48 57 66

0 0 0 0 0 0 0 0.9 2.2 2.1 3.4 4.4 5.5 6.2 7.4 7.8 8.6 7.1 9.7 11.6

Source: Johnson Matthey.

collection and processing are efficient, and the reclamation rate is very high. The catalytic units from such industrial operations are processed by specialist refiners for recovery of the pgm present and the end-user pays for top-up replacement metal supplied by the refiner. Low levels of recycling do, however, partly reflect a reality of the pgm market, particularly that for platinum. This is the strong growth in dispersive uses of pgm, notably autocatalyst, since the 1970s. Predictions made in the early 1980s pointed to huge volumes of pgm coming back from the car industry as spent catalyst by the early 1990s. In the event, in comparison with the amount of metal that has gone into this end-use the volume of recycling is still relatively modest. The figures for recycling indicate just how far there is now to go. Out of a total autocatalyst offtake of over 28 million ounces of platinum, little over 3.3 million ounces (less than 12%) had been recovered by 1998. For palladium the figures are 17.36 million ounces for consumption and less than 1.4 million ounces for recycling, though the slow

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Platinum group metals

growth of palladium in this application until the 1990s implies a lower turnround of metal from products that have reached the end of their useful life. Rhodium had a recovery of just 303000 ounces out of a total autocatalyst use of nearly 4.6 million ounces between 1984 and 1998. Autocatalyst recycling rates for platinum group metals are shown in Table 3.5. The future of recycling in the pgm field now depends very largely on what happens in the autocatalyst sector, since other areas of end-use have long-established and effective recycling routes. While the major refiners maintain research and development programmes aimed at facilitating the direct processing of converters, the cost of final refining seems unlikely to be cut dramatically, and better recycling rates may have to depend on improvements in collection and preliminary processing. Clearly the volume of pgm recovered each year should rise as the amount in end-use grows with the car population, but whether the proportion reclaimed will increase from the low levels seen so far remains to be seen. Partly because of concern over the prospects for supply from Russia, the world’s largest producer, palladium prices have been at much higher levels than in the past, and this should stimulate higher recycling rates for both palladium and other pgm with which it is used in autocatalyst and other applications.

3.4.2 Forms and availability of scrap Pgm scrap can take a number of forms, including investment bars, coins, catalytic converters, electronic components, reaction vessels, industrial catalyst and old jewellery. Much the most interest attaches to autocatalyst, since this is both the fastest area of growth and the one with the most potential. Pgm autocatalyst is used in formulations which may include platinum alone, or combinations of all three main pgm. The chosen metals are deposited on a ceramic substrate, the unit being enclosed within a steel casing and attached to the vehicle as the catalytic converter. Depending on the extent to which reclamation has been carried out, the autocalyst may reach a refiner as a whole converter, or as stripped substrate or as crushed substrate ready for pyrometallurgical and hydrometallurgical processing.

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Chapter 3 / page 8

3540 4180 4835 5480 6320 7300 8440 9695 11010 12465 14000 15565 17115 18800 20670 22520 24400 26270 28070

0 0 10 40 85 155 245 360 520 695 905 1110 1340 1595 1885 2205 2555 2925 3335

Source: Johnson Matthey, Virtual Metals.

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

0 0 0.2 0.7 1.3 2.1 2.9 3.7 4.7 5.6 6.5 7.1 7.8 8.5 9.1 9.8 10.5 11.1 11.9

320 610 920 1240 1580 1900 2165 2435 2695 2960 3275 3630 4120 4825 5800 7600 9960 13160 17360

Autocatalyst in use 000 oz

Recycle ratio %

Autocatalyst in use 000 oz

Autocatalyst recycled 000 oz

Palladium

Platinum

20 40 60 80 100 130 170 220 285 355 440 525 620 720 825 935 1080 1225 1385

Autocatalyst recycled 000 oz

Table 3.5 Autocatalyst recycling rates for platinum group metals, 1980–98

6.3 6.6 6.5 6.5 6.3 6.8 7.9 9.0 10.6 12.0 13.4 14.5 15.0 14.9 14.2 12.3 10.8 9.3 8.0

Recycle ratio % 0 0 0 0 110 245 433 659 891 1155 1489 1790 2095 2451 2830 3294 3718 4135 4585

Autocatalyst in use 000 oz

Rhodium

0 0 0 0 0 0 0 3 10 17 30 46 68 93 127 164 209 257 303

Autocatalyst recycled 000 oz

0 0 0 0 0 0 0 0.5 1.1 1.5 2.0 2.6 3.2 3.8 4.5 5.0 5.6 6.2 6.6

Recycle ratio %

Part 2: Precious metals

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Platinum group metals

3.4.3 Scrap recycling arrangements Apart from environmental regulations which apply to all metallurgical processing activity, there is little specific incentive for or restraint on the recycling of the pgm. Different grades and types of material containing scrap pgm follow different roads on the recycling route, stopping at various different agencies before reaching the final destination. High-grade materials, such as investment bars, jewellery and chemical reaction vessels often report to the final refinery where they will be converted back into high-purity products suitable for sale directly into the metal markets. Recoveries are typically very high indeed for such materials, and process losses will be minimal. Industrial catalysts also follow a short and well-defined route, usually being returned direct from petroleum refineries, chemical plants and fibre-glass makers and other industrial units on a toll basis, with the refiner simply taking a fee for return of the metal reclaimed and returned to the user. Recovery rates are pretty high here, ranging from 85% for chemical and pharmaceutical plants to upwards of 95% for oil refineries. Pgm used in electronic applications tend to follow a similar route to that taken by gold and silver, reporting along with other precious metals to copper smelters. There they pass right through the smelting and refining processes and are recovered in the form of tank-house residues such as anode slimes and sludges. These are collected from time to time and sold to specialist final refiners of precious metals. Autocatalyst is a very different matter. Here the problem is essentially one of dispersion and the costs incurred in collecting and concentrating what is, in its unprocessed form, a material with a relatively low value-to-weight ratio. In many countries – notably the USA – the used end-product, the catalytic converter, is scattered almost as widely as the vehicle repair shops which replace worn-out units and the scrap yards where discarded vehicles end their days. Between these and the end of the recycling chain are a number of points and processes. The recovery of platinum from autocatalyst by region is shown in Table 3.6 and the recovery of palladium is shown in Table 3.7. First comes the dismantling of the vehicle at the scrap yard or the storing of the converter at the repair shop. The converters are then gathered up by collectors, who cover a particular geographical area and deliver the units to specialist processors. The specialist processor removes the converter from its housing – ‘decanning’ the ceramic sub-

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Part 2: Precious metals

Table 3.6 Recovery of platinum from autocatalyst, by region (000 oz)

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Europe

Japan

N America

Other

Total

0 0 0 0 0 5 5 5 10 15 20 25 30 30

5 15 25 25 35 35 45 50 45 40 50 50 55 60

85 100 135 150 175 165 180 200 230 260 275 290 310 320

0 0 0 0 0 0 0 0 5 5 5 5 10 15

90 115 160 175 210 205 230 255 290 320 350 370 405 425

Source: Johnson Matthey.

Table 3.7 Recovery of palladium from autocatalyst, by region (000 oz)

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Europe

Japan

N America

Total

0 0 0 0 0 0 0 0 0 0 5 5 5 15

10 10 15 15 25 30 35 30 30 25 30 45 50 55

30 40 50 55 60 55 60 70 75 85 110 105 115 125

40 50 65 70 85 85 95 100 105 110 145 155 175 195

Source: Johnson Matthey.

strate carrying the pgm – and then ships the compacted material to specialist processors or direct to a final refiner. Specialist processors are very few in number, the whole of the USA having just a couple of plants, of which the pioneering venture established by Texasgulf at Anniston, Alabama, is perhaps the best known. Such operations typically subject the pgm-bearing material to some type of furnace operation from which a high-pgm residue is obtained.

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Platinum group metals

Table 3.8 US trade in PGM scrap, kg

1994 1995 1996 1997 1998 1999*

Imports

Exports

3220 6350 5060 5310 5390 19700

42100 8150 8640 12900 19700 7660

Source: USGS. * Platinum.

This is then sold on to final refiners such as Johnson Matthey, Degussa, Engelhard and Inco.

3.4.4 Trade in scrap North America is much the most important centre for the recycling of pgm, accounting for three-quarters of the recovery of both platinum and palladium and the great bulk of rhodium reclaimed each year (see Table 3.8). Relatively modest amounts of pgm are recovered from old scrap in Japan and in Europe. International trade in pgm scrap reflects both the limited availability of recycling facilities and the narrow spread of end-markets for pgm. Countries such as the UK, Germany, Belgium and Switzerland tend to be net importers of pgm scrap, while most other industrialised countries are exporters. The USA ships appreciable amounts of pgm scrap to Japan.

3.4.5 Scrap pricing arrangements As with other precious metals, pgm scrap is typically priced on the basis of the assayed metal content, less a refining fee. Sometimes other charges may be incurred, depending on the nature of the material and the form in which it is to be recovered.

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Chapter 3 / page 11

1 Plastics John Murphy

1.1

Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties 1.1.2 Products and end-uses

1.2

Production processes and technologies 1.2.1 Raw materials and forms 1.2.2 Moulding 1.2.3 Extrusion

1.3

Market features, structure and operation 1.3.1 Industry structure 1.3.2 Commodity plastics 1.3.3 A worldwide overview 1.3.4 Engineering plastics 1.3.5 High-performance plastics

1.4

The structure of the scrap recovery/recycling sector 1.4.1 Mechanical recycling 1.4.2 Feedstock recycling 1.4.3 Waste to energy recovery 1.4.4 Relative importance of secondary production 1.4.5 Government intervention 1.4.6 Trade in scrap and scrap pricing arrangements

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1.1 Physical characteristics, properties, products and end-uses 1.1.1 Characteristics and properties The term ‘plastics’ covers a heterogeneous range of mainly organic materials with a wide variety of properties and characteristics. Most are used in solid form, as powders or granules, but a few are produced as liquids. Essentially, plastics fall into two classes: thermoplastics (which soften on every application of heat) and thermosets (which soften once only and then form infusible solids). This dictates the method of processing, and also has a direct influence on the ease with which they can be recycled, using reprocessing methods. The thermoplastics make up more than two-thirds of plastics production and consumption. The main thermoplastics are the polyolefins (such as polyethylene and polypropylene), polystyrene, polyvinyl chloride, acrylics, acrylonitrile butadiene styrene (ABS), polyamides, polyacetals, polycarbonates and polysulphones. Thermoplastic versions of synthetic rubbers are growing in significance. The main thermosetting plastics are phenolic and epoxy resins, urea-formaldehyde resins, silicones, cross-linked polyesters and most polyurethanes. Since thermosets undergo a permanent chemical change under the heat and pressure of moulding, they present a challenge for recycling, but several options have been developed. The choice of the appropriate type of plastic for a specific application depends on the optimal cost/performance. The basic characteristics of plastics are: Generally good Weight:

low specific gravity (usually lower than water);

Generally poor Mechanical: relatively low stiffness, fatigue and cold flow;

Mechanical:

impact and tensile strength, flexibility, shear strength and tear resistance;

Thermal properties:

Electrical:

high resistance to electric current; very wide chemical resistance;

Flammability:

Chemical:

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Weathering:

relatively low softening temperatures (effectively around 60–150 °C), except for thermosetting plastics; most plastics are inherently flammable; most plastics are susceptible to oxidation by ultraviolet (sunlight) and are able to

Chapter 1 / page 1

Part 3: Other materials

Barrier properties: Optical: Surface and appearance:

Mouldability:

generally good resistance to the passage of moisture, gases, oils and greases; high transparency (depending on type); capability of accepting decorating by self-colouring (with pigment or dyestuff ), surface texture, surface printing, painting or electroplating; generally good ‘flow’ properties, giving the possibility of moulding complex parts (depending on process) in very large numbers, to high precision.

retain properties after long exposure to weather.

All of the above ‘generally poor’ properties can be substantially corrected by the use of additives and reinforcements (which can also boost the ‘generally good’ properties). There is considerable development of co- and terpolymers (‘alloying’ or polymerisation of two or three polymers together), to enhance performance. Almost all plastics, therefore, come to the processing stage as compounds, in which the plastic often acts largely as a matrix, allowing the valuable properties of other materials to be harnessed. Additives used in plastics compounds include pigments or other colourants, heatand UV-stabilisers, flame retardants, plasticisers, lubricants and processing aids. Fillers and reinforcements such as glass, carbon and other fibres and minerals, such as calcium carbonate, talc and mica, are also used. Applications of plastics are almost endless, ranging from short-life plastics packaging to long-life building materials, lightweight replacement of metal automobile parts to high-purity medical/surgical products and high-performance structures in engineering, aerospace and defence applications. Such heterogeneity and wide performance parameters highlight a major advantage of plastics – their ability to conform to a wide range of design specifications. However, such variety also poses a challenge for recyclers, as outlined below.

1.1.2 Products and end-uses There are few manufacturing sectors which do not use plastics to some degree. Packaging is the dominant end-use in most industrialised

Chapter 1 / page 2

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Plastics

countries, usually accounting for upwards of 30% of total consumption, and this has been the main focus for most plastics recycling initiatives. Plastics are particularly suitable for packaging applications because they are light in weight, but can provide long-lasting protection to products, especially foodstuffs and beverages. They are hygienic and there are many specific grades universally approved for use in contact with foodstuffs. Compared with traditional packaging materials they are also highly versatile, offering good appearance, gloss, colouring and transparency, in many different forms of package. They are also well suited to high-performance applications such as microwave, frozen and modified atmosphere packaging. Construction is the second biggest outlet for plastics, accounting for about 20% of total consumption. In this industry plastics offer users a wide range of products that reduce on-site costs for finishing, installation and labour as a result of pre-fabrication and a high strength-to-weight ratio. Durability, low maintenance costs through self-colouring and excellent resistance to moisture and corrosion are other advantages. Specific building products include pipes, fittings and conduits; panels and sidings; doors, windows and temporary glazing; flooring and membranes. Reinforced plastics have increasing uses in civil engineering, and in the enhancement of the performance of bitumen in road building. Given the longevity of most construction uses and the fact that plastics have only been used on a large scale in building since about the 1960s, the construction industry is only now beginning to generate significant amounts of plastics material for recycling. Special attention to recycling may be required because the first generation of PVC building products (such as rainwater goods and window frames) used additives and stabilisers, including cadmium and lead, which have since been phased out of use. However the construction industry itself could become a major outlet for recycled plastics. Potential applications include wall- and roof-lining materials; under-floor and ceiling ventilation panels; partitions; foundation packing; posts and stakes; construction and tree supports; soil stoppers; outdoor furniture; fences; sign boards, etc. Transport and electrical/electronic applications vie for third place in the ‘league table’ of plastics end-uses. In the transport sector, the largest use is in automobiles, for interior furnishing and trim and lightweight engineering components, which provide comfort, safety and efficiency, while reducing overall weight. Applications, espe-

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Chapter 1 / page 3

Part 3: Other materials

cially of reinforced structural plastics, are also increasing in railways, aircraft and shipping, and for much the same reasons, of safety and efficiency, at lower weight, so economising on fuel and energy. In the electrical/electronics sector, most of modern technology depends on the use of high-performance plastics, while considerable quantities of medium-performance plastics are moulded into housings for equipment, particularly in the consumer and business sectors. Recycling is being introduced into both the automotive and electrical/electronics sectors, and it can be expected that manufacturers will respond by redesigning products and rationalising materials, to facilitate recycling. Other end-uses for plastics include furniture, agriculture, toys, leisure, housewares, clothing, mechanical engineering and medical equipment. Specific recycling measures are being introduced to deal with agricultural plastics (mainly film, sheet and bags) and medical products that necessarily must be used only once.

1.2 Production processes and technologies 1.2.1 Raw materials and forms Although plastics can be made from a variety of raw materials (including vegetable and other biological products), crude oil and natural gas at present provide the basic raw material from which the chemical industry derives the basic ‘building blocks’ for manufacturing plastics – the olefins (ethylene, propylene, butadiene and the C5 olefins) and the aromatics (benzene, toluene and styrene). These feedstocks are transformed into plastic materials in large petrochemicals complexes, if possible sited close to oil or gas sources. A plastic, or polymer, is a long-chain molecule containing thousands of smaller repeated molecular units, or monomers. Polymerisation is a complex process but broadly speaking follows one of two routes. Addition polymers are formed by linking the monomers together in a long chain, in the presence of a catalyst. Examples of addition polymers are polypropylene and polyethylene. Condensation polymers are formed by the reaction of two different molecules. As the polymer chain grows, a small molecule, usually of water, is formed with

Chapter 1 / page 4

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Plastics

each link. The elimination of these water molecules completes the polymerisation process. Polyethylene terephthalate (PET) and all thermosets are condensation polymers. The choice of technology used for processing (moulding) plastics depends on whether the material is thermoplastic or thermoset, and on the type of end-product required. Plastics processing techniques fall into two broad categories: moulding (for 3-dimensional parts) and extrusion (for 2-dimensional, unlimited length products).

1.2.2 Moulding In moulding, the plastic is formed by heat and pressure into the shape of a mould. Each grade of plastic has its own optimum moulding conditions of temperature and pressure, which are well documented, and are increasingly computerised. For thermosetting plastics, there is essentially only one moulding technique: compression moulding. The plastics moulding compound, which may be pre-heated, is placed in a heated metal mould where, as it heats up, it begins to ‘flow’. The mould is closed, pressing the softened material to the shape of the mould, and the plastic sets or ‘cures’. The moulded part is then removed, hot, from the mould. Variations on this process aim to improve the efficiency with which the charge of material can be introduced into the moulding press, within the limitations imposed by the chemical reaction that occurs with heat. Other, specialised, techniques are used for moulding fibrereinforced liquid thermosetting resins, such as unsaturated polyesters and epoxies. These range from open-mould contact moulding to press moulding between matched metal dies. Reaction moulding (RIM) is used for moulding polyurethanes, which are thermosets but in the form of two liquids that react rapidly when mixed, to form a solid material. The liquid components are combined, and reinforcement and additives introduced in a special mixing head, and the mix is immediately injected into a closed mould. The components react, generating heat and solidify, and the part is demoulded. A similar method is used for moulding 3-dimensional products (such as automobile seating) in flexible polyurethane foam, often employing a number of moulds on a rotating ‘carousel’.

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Part 3: Other materials

For thermoplastics, there is more flexibility in the range of moulding processes available: Injection moulding: the plastics compound is heated (plasticised) in the barrel of the moulding machine, usually with the aid of an Archimedes screw, until it flows. The melt is then injected at high pressure into a closed temperature-controlled mould, where it is cooled. When the moulded part is solid enough to be removed, the mould is opened and the finished article is extracted, often by robot. In terms of numbers of machines, this is by far the most widely-used method for processing plastics. Blow moulding: a tube (parison) of molten plastic is extruded, usually downwards, into an open mould. The mould is closed and compressed air or steam is used to blow the plastic into the form of the mould. This method is used for the production of hollow items such as bottles and containers of many different sizes, and automobile fuel tanks. Rotational moulding (rotomoulding): the polymer, in powder form, is loaded into a simple hollow-heated mould, which is then closed and rotated on more than one axis, spreading the powder evenly over the hot inside wall, where it fuses. Rotation continues until the desired thickness has been built up, when the mould is cooled and the polymer sets, allowing the part to be removed. Large hollow objects, such as footballs, oil containers, playground items and roadside equipment, can be produced using this technique.

1.2.3 Extrusion Extrusion (also for thermoplastics) produces a variety of shapes, such as pipe, tubing, rods, sheet and film and complex profiles. It involves plasticising a polymer compound in a long heated machine barrel with one or two screws, and continuously forcing the melt through a die to produce the desired final shape, and finally cooling under controlled conditions to maintain the desired shape. Depending on the type of product required, extrusion can take many forms, as follows. Sheet extrusion involves passing the product through a sheet die

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and between rollers to control thickness and to apply a desired surface. Wire extrusion passes copper or aluminium wire through the die and sheathes them with plastic insulation. Film extrusion uses either sheet extrusion followed by stretching or tentering, or the blown-film process. In this technique, the film is extruded upwards in a tower as a large-diameter tube, which is then blown, stretching the film to the required thickness and then collapsing the ‘bubble’ at the top of the tower and slitting it into flat film. Co-extrusion combines the output from more than one extruder into a single die to produce films, sheets or profiles made up of layers of two or more polymers. This is used to apply barrier layers to packaging film, or to combine plastics of different characteristics in products such as automobile window seals. Calendering is a process used mainly for processing PVC into sheet or film. The molten compound is loaded into a stack of rollers which progressively reduce the thickness until the required sheet or film is reached. As a final stage, the sheet or film can be passed through polishing or embossing rollers. There are also analogous processes for production of similar shapes in fibre-reinforced thermosetting plastics, such as centrifugal casting, filament winding and continuous sheet lamination processes.

1.3 Market features, structure and operation 1.3.1 Industry structure Historically, the plastics industry has been located in the advanced industrialised countries, which account for over two-thirds of plastics consumption. Production of plastics raw materials is dominated by multinational chemical companies and by major oil and gas companies whose primary business gives them access to secure supplies of feedstock. Moulding and processing of plastics materials, however, is carried out by thousands of companies ranging from very large to very small. Recent years have seen an expansion of plastics production capacity in the Asia/Pacific region, Latin America and the Middle East,

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where there has been strong growth in the domestic economy and in exports. The dominance of the industrialised countries is consequently giving way gradually to a more balanced global pattern, but a significant feature is the emergence of a relatively small number of multinational producers who dominate the world market. Something of the same pattern is emerging at the processing level, where a number of large processors have become global, either in their own right or in partnership with other regional companies. This is happening particularly in the packaging sector, and in automotive components and medical products, as key suppliers of plastics products follow their existing clients as they invest around the world.

1.3.2 Commodity plastics The market for plastics materials is dominated by the so-called ‘commodity’ plastics (the thermoplastics – polyethylene, polypropylene, polystyrene and polyvinyl chloride), which account for well over 70% of all plastics produced. These are predominantly used, as film, sheet, mouldings and pipe and tube, and as extruded profiles, in packaging, building products and agricultural applications. Commodity thermoplastics are low price/high volume products, the prices of which tend to respond quickly to changes in supply and demand conditions, though they are not yet actually traded as other commodities. The large volumes of commodity plastics would appear to be enough to generate sufficient amounts of material to render collection and recycling schemes potentially viable, but the fact that they are used so universally (and are so light in weight compared with their volume) means that there are relatively few locations where there are sufficiently large concentrations of waste to permit collection and transport at an economic price. Moreover, the low market prices of commodity thermoplastics set a very low threshold for recyclers to compete with virgin resins, while their fluctuations in price make it difficult to establish continuity of a recycling operation. As recent experience with world market prices for wood pulp and glass has shown, this is not a phenomenon peculiar to recycling of plastics. Also arguably a commodity plastic is bottle-grade PET, which is a technically advanced material, but produced in increasingly large quantities worldwide, and with prices beginning to act in a similar way to a commodity. PET is used for a wide range of beverage containers,

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and a special recycling system is developing in parallel with market growth.

1.3.3 A worldwide overview Depending on how one defines ‘recycling’, possibly as little as 10% of plastics consumption is at present recycled as a specific process. The vast majority is simply dumped. In the industrialised countries, estimates range from 10% to 30%, and this is due to increase to around 50%, as legislation begins to ‘bite’. World production of plastics is expected to total about 120 million tonnes, and is growing at about 5% per year. Growth is strongest in the developing countries, where it will shift the overall dominance from the West to the East – and will bring in some serious problems on the recycling front. Table 1.1 shows regional production and consumption of thermoplastics.

Table 1.1 Regional production and consumption of thermoplastics – 1996–2000 (% of total) Production 1996 Western Europe Eastern Europe CIS United States Canada Latin America Middle East Africa Japan Eastern Asia(a) Asia/Pacific(b) Total

25.0

Consumption 2000

Aagr %

1996

2000

Aagr %

22.69

2.27

24.70

23.63

3.7

3.05

3.01

4.5

2.46

2.47

4.9

2.42 26.3 3.2 5.44

2.9 24.01 2.7 5.42

9.63 2.44 0.49 4.73

1.97 23.87 2.58 6.01

1.92 23.02 2.53 6.32

4.2 3.9 4.3 6.2

2.91 1.23 9.65 14.53

4.36 1.49 8.53 16.17

16.01 10.12 1.6 7.65

2.08 1.75 9.04 17.22

1.96 1.84 8.33 19.06

3.3 6.3 2.7 7.6

6.27 100.00

8.72 100.00

13.82 4.81

8.32 100.00

8.92 100.00

6.7 4.9

Notes: (a) China, Hong Kong, Korea and Taiwan. (b) Australia, Bangladesh, India, Indonesia, Malaysia and New Zealand. Source: Enichem/Parpinelli.

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Table 1.2 World production and consumption of thermoplastics – by type 1996–2000 (‘000 tonnes) Production 1996 Polyethylene – LD Polyethylene – LLD Polyethylene – HD Polypropylene PVC PS/EPS ABS/SAN Total

Consumption 2000

Aagr %

1996

2000

Aagr %

15015

16305

2.08

14670

16114

2.3

8725

11810

7.86

8287

11299

4.9

17416

21767

5.73

16976

21286

5.8

21075 22426 11384 4147 100188

26697 25275 13864 5167 120885

6.09 3.03 5.05 5.65 4.81

20933 22063 11503 4131 98563

26477 25078 13919 5158 119331

6.0 3.2 8.0 5.7 4.9

The most important plastics in recycling are the polyolefins (polyethylene and polypropylene), PVC and polystyrene. PET is gaining considerable importance because it is used in very large and fast-growing quantities in one easily-definable area: bottles for carbonated beverages. See Table 1.2.

1.3.4 Engineering plastics The so-called ‘engineering’ (or technical) plastics – which include ABS, polyamides (nylon), polyacetals, polycarbonates and others – have experienced rapid growth during the past few years. This group has higher performance specifications than the commodity plastics, is more highly priced (usually by a factor of two to three times) and is produced in smaller quantities. It has been in the interest of producers of commodity plastics to raise the technical value of their materials and compete in the lower end of the engineering plastics market. For example, polypropylene has become a major material for car components, and modified polystyrenes compete with ABS in housings for consumer electronics products. However, although there are smaller quantities of engineering plastics and their applications are mainly in longer-life products, there are the beginnings of a viable recycling segment, linked to the automobile and electronics sectors.

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1.3.5 High-performance plastics Advanced or high-performance plastics are produced in quantities measured in thousands or even hundreds of tonnes, compared with the millions for commodity products. Such plastics include polysulphones, liquid crystal polymers (LCPs), polyketones, and fluoropolymers. They are highly priced and meet the very high performance standards required by specialists in the aerospace, defence and electronics industries, but are now beginning to offer design advantages that render them cost-effective in wider fields such as automobile engineering. There are recycling opportunities for these materials, depending on the basic value and the cost of extracting and reprocessing them in sufficient quantities. High-performance plastics also include the reinforced plastics sector (or ‘structural composites’), where mainly thermosetting resins are used with glass and natural fibres, and increasingly with carbon, boron and other specialised reinforcements. At the lower end of performance, composites are used in the engineering and transport sector, for automobile and commercial vehicle components, where recycling technology has been developed to reduce scrapped parts to a powder which can be re-used as a filler in new mouldings. At the high-performance end, the value of fibres such as carbon makes it interesting to investigate recovery of the fibre from aerospace and military applications and hightech sports equipment.

1.4 The structure of the scrap recovery/recycling sector Material for recycling of plastics comes from two sources: process scrap and post-consumer waste. Recycling of process scrap (i.e. waste material left over from plastics processing) is well established and often involves granulating and feeding back off-cut and rejects in-plant into the original application. This is a particularly important aspect of production of blow-moulded bottles, and products thermoformed from sheet, and it is now standard practice to incorporate, where possible, an extra layer into a product, to accommodate in-plant reground material. This, it must be said, falls more into the category of ‘good housekeeping’ than actual recycling.

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Post-consumer recycling of plastics, however, poses completely different and much bigger challenges. There are two main sources: waste retail packaging and scrapped consumer products. Whereas process scrap is clean, concentrated in one place, composed of one or more known materials and involves very small additional collection costs, post-consumer waste is often dirty and diffuse, thereby involving high and often uneconomical collection costs. Moreover, it can be made up of many materials which need identification and separation. This creates a high level of costs, which may often make the recycled material significantly more expensive than the same material in virgin state. If there is to be an effective recycling system, therefore, some ‘non-market’ intervention, by tax, levy or direct subsidy, may well be necessary. Both legislators and the industry strongly urge that, before considering how to deal with waste, the essential preliminary step is to minimise the amount of material being used in the first place. Plastics have a particularly good record in this respect, and it has been estimated by Elf Aquitaine (now named AtoFina) based on their research that, in packaging particularly, the improvement of materials and processing technology has reduced the volume of material by amounts ranging from 10% to 25.6%, with an average reduction of more than 11%. For recycling of plastics there are several levels. The most direct form is ‘closed loop’ recycling, in which plastics waste is reprocessed into a product similar or identical to the original. As well as handling inplant scrap, this is used widely for production of film for agriculture and garbage bags.

1.4.1 Mechanical recycling ‘Mechanical’ recycling is the process commonly accepted as recycling. It involves size-reduction and granulation of plastics waste and melt-processing into new products. Since this relies on melt processing, by extrusion compounding and moulding, it is only useful as a method for recycling thermoplastics. The waste material tends to deteriorate during reprocessing (to about 70–80% of original values) but it is also possible to boost properties by means of suitable additives. Generally speaking, however, one is looking for less demanding applications for this material – and it is most unlikely that it would meet legislative standards for use in contact with foodstuffs.

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In order for mechanical recycling to be successful, the following conditions need to be met: • There must be a reliable and large supply of post-consumer plastic waste. This calls for the establishment of widespread and efficient collection infrastructures. Such schemes for plastics are under development in most countries, but are less well advanced than schemes for paper and glass. • Maximum homogeneity and purity of the recovered resin. The more this condition is met, the greater the potential for higher value-added applications for recycled products. Impure and contaminated resins affect processing and reduce the performance of the final product. At present manual sorting is mainly used, but automated technologies using fluidised bed floatation, infra-red and other methods are being developed. A crucial barrier to overcome is the ability of such technologies to cope with very large volumes of waste. It is also important to be able to deal with other materials in the plastics, such as additives inside or paint and print outside. • There must be sufficient market demand and uses for the recycled plastics. New markets are emerging, and in some countries Government purchasing contracts demand a proportion of products made from recycled material. For plastics, the majority of applications at present are in low-value products, such as insulating fibre, plastic strapping and wood replacements. • Prices of virgin resin must not fall too low. The collection, sorting, cleaning, processing and marketing of recyclates is a costly business, and it is near-impossible to see it ever being able to compete on a level basis with virgin material. This implies some form of intervention, by means of tax or subsidy, to support the recycling sector. It also suggests that a better prospect for mechanical recycling is to concentrate on the higher-value engineering plastics. The most significant commercial development in this sector to date is the establishment, by the Dutch polymers manufacturer DSM and the recycling specialist Wavin Re-use (also Dutch), of a 100000 tonnes/year capacity joint venture.

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1.4.2 Feedstock recycling Feedstock recycling (also known as ‘chemical recycling’, depolymerisation and ‘polymer cracking’) has been the subject of much research and development activity by oil and chemical companies since the 1980s, and offers an exciting prospect for future treatment of plastic waste. It effectively reverses the polymerisation process, returning plastics to their constituent monomers or even to their basic hydrocarbon feedstocks. The resulting raw materials can then be repolymerised as plastics materials or used as an input in petrochemicals plants. This method of recycling has a number of significant advantages. The quality of the recycled product is equivalent to that of virgin resins (PET produced from feedstock recycled PET waste has gained FDA approval for use again in contact with foodstuffs). The process will also, to a certain extent, tolerate mixed and contaminated plastics waste. To be economic, however, it requires an input measured in tens of thousands of tonnes. Against it, the process is not necessarily going to produce monomers that are any cheaper than those available on the free market – and similar technologies which can reduce plastics to oil may be technically exciting but they are up against an even lower cost threshold. The technology has been brought to a commercial scale, notably in the USA (for reformulating PET from drinks bottles, and nylon from waste carpets) and in Germany (for producing petrochemicals from mixed plastics packaging waste). Also in Europe, a consortium led by BP is developing a process, known as the BP Feedstock Recycling Process; however, BASF, which had also developed technology, withdrew from a German venture because it was uneconomic.

1.4.3 Waste to energy recovery ‘Waste to energy’ (WTE) recycling is the recovery of the energy content of plastics materials via efficient incineration. Plastics (which are made largely from oil) have a higher energy content than other components of the waste stream and are particularly suitable for energy recovery by incineration. Extensive studies – and some commercial experience – have shown that this method could be employed to fuel electricity generating stations, feed district heating schemes and fuel high-energy-consuming industrial processes such as cement manufacture and blast furnaces. It has also been shown that the pres-

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ence of a plastics content in the general waste stream entering an incinerator provides some of the fuel necessary and reduces the requirement for oil. However, incineration has a poor image with the public because of fears of potentially toxic emissions, and construction of a ‘clean’ incinerator calls for high capital investment which, in the present climate, is not forthcoming from the public sector. Incineration is therefore not always regarded by legislators as a legitimate part of the recycling chain. WTE is used in Japan but efforts to develop it in the USA have run into environmental objections. Experience in European countries varies, ranging from the UK’s incineration of only 10% of municipal solid waste to Switzerland, which incinerates about 80%. A number of facilities in Sweden produce and use Refuse-Derived Fuel (RDF), which can beneficially contain a significant fraction of plastics, and studies by APME in Würzburg, Germany, and by the British Plastics Federation in the UK have shown that plastics can be safely incinerated in modern wellmanaged incineration plants. There are signs that official reservations about energy recovery by incineration are moving towards acceptance, and it is certain that some such process must form part of a comprehensive recycling programme for the future (see Part Four, Chapter 1).

1.4.4 Relative importance of secondary production Despite the growth of legislation for plastics recycling in recent years, the levels of plastics recycling achieved are still below those of competing materials. In Europe it is estimated that some 7–8% of plastics waste is recycled, equivalent to about 4% of consumption (the difference between the two figures is accounted for by the differing life spans of plastics products). Most plastics packaging (with notable exceptions such as crates and returnable transit packaging such as is used in supermarkets) enters the waste stream almost as soon as it is consumed, whereas plastics used in domestic appliances, cars and in construction applications do not enter the waste stream until several years or even decades after purchase. The amount of plastics waste that is recycled amounts to 20–30% of total consumption: the USA is at the higher end, Europe is nearer 20% and Asia/Pacific is probably below this level. In Europe, recycling rates for plastics differ greatly from country to country: from 22% in Austria, to just 1.6% in the lowest rated country, Ireland. Packaging is still by far the

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largest potential application in Europe and worldwide for the recycling of virgin plastics, at 41% in Europe (12.59 million tonnes), followed by construction at 19% (5.7 million tonnes), domestic applications at 18%, automotive at 7% (2.35 million tonnes) and electrical and electronics, at 8% (2.3 million tonnes). According to the Association of Plastics Manufacturers in Europe (APME), between 1997 and 1998 recycling of plastics increased by 16%, amounting to 5.32 million tonnes on an estimated consumption of 30.3 million tonnes. During 1998 some 1.07 million tonnes of the European total was recycled as new granulate (mechanical recycling) and an estimated 3.3 million tonnes – representing 19% of the total – was recycled by incineration, with recovery of the energy (20% higher than in the previous year). Waste plastics recovered by means of feedstock recycling increased by 8% during the period, but Germany is still the only European country to use this option. Packaging, because of its size (and its very public evidence), has been the target of most recycling initiatives. In future a greater variety of plastics will undergo recycling and it will touch upon more sectors. Producers and users of packaging materials are now looking more closely at the implications of new and existing packages (including labels, closures and printing ink) and the automotive industry is beginning to think in terms now of designing new components to be easily dismantled, incorporating a percentage of recycled material in new vehicles and (possibly) of rationalising its purchasing to reduce the number of different materials.

1.4.5 Government intervention Since the late 1980s, and especially as landfill sites have been filled, governments – local, national and supra-national – have increasingly formulated policies and legislation to reduce the problems arising from the growing quantities of waste. Ecological considerations, such as the use of non-renewable resources, have also coloured opinion. Much of the general legislation affects plastics in the same way as it affects other materials, but some is aimed directly at plastics or specific additives used in plastics. Most of the legislation, to date, has related to recycling of packaging waste (including transit packaging) but, in the European Union, draft directives for automobiles (End-of-Life Vehicles) and electrical/electronics products (WEEE) have also been produced.

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The European Union’s Directive on Packaging and Packaging Waste was finally adopted in December 1994. Covering all types of packaging and packaging waste, this set recovery and recycling targets for all materials used in packaging throughout the Union. Within five years of the implementation of the directive, between 50% and 65% of packaging waste was to be recovered and 25–45% of it was to be recycled, with at least 15% of each material to be recycled by 2001. This implied that greatly improved recycling rates for plastics packaging would have to be achieved. Within ten years of implementation, the targets were to be reviewed with a view to substantially increasing them. Member states were also permitted to set targets above those contained in the directive provided that these did not lead to disruption of schemes of other member states or amount to non-tariff barriers to trade. Such countries also had to establish that they had the facilities to process all their waste. The EU directive followed years of lobbying by some member states, certain of which (notably Germany) went ahead with their own legislation. The German Packaging Ordinance of 1991 set high targets for recovery/recycling of packaging waste, with a timetable, and made producers and retailers responsible for the disposal of used packaging. Recycling rates for household plastic packaging of 29% were achieved in 1993 and over 50% in 1994. In early 1995, the ordinance was under review, with some scaling back of recycling targets. To organise the collection and sorting of consumer waste required by the ordinance, the Duales System Deutschland (DSD) was established. Under this, members paid a fee to DSD and were permitted to mark their packaging products with a green spot symbol, signifying that the product was part of the DSD scheme and was backed by an approved recycling scheme. Originally, incineration was not allowed as a recycling option. The scheme ran into trouble because it was too successful. There was insufficient German recycling capacity for the unexpectedly large quantities of waste packaging material which were collected. DSD responded by exporting collected waste to other EU states and to developing countries. This created serious ‘ripples’ in the world waste materials trade – not the least of which included the depressing of market prices in the West and the destroying of traditional ‘wastepicking’ jobs in the East. After the initial surge, provisions for recycling plastics waste in Germany have been modified, notably to admit chemical recycling as a

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legitimate method of attaining the target percentages. It is thought that, in a few years, this method of recycling could account for some 70–80% of collected plastic waste. The 1991 ordinance has also had the effect of significantly increasing the use of plastics for returnable bottles, rather than one-trip disposables. This has had a marked impact on the volume of plastics requiring collection – but there is much argument about the comparative energy balance between many cycles of collection and washing and a one-trip bottle. Other European states have adopted different approaches to the plastics waste disposal problem. France has a system of ‘Valorisation’ which requires, essentially, that some value must be extracted from waste materials, including plastics. Belgium introduced an ‘eco-tax’ on products regarded as hostile to the environment (aimed particularly at PVC). Italy and Finland have also used taxation. Scandinavian countries have concentrated on deposit schemes and reusable bottles but, at the end of 1993, Sweden introduced tough new laws which closely followed those of Germany. Elsewhere in Europe, the Spanish, Dutch and UK governments have adopted a voluntary approach to the plastics waste management problem. Bans and limitations on certain plastics materials have also been used (but there are questions as to who was to benefit, the public or the producer of a competitive material). For example, polystyrene attracted the greatest antagonism in the United States, while PVC, though not actually banned as a material anywhere in the world, has experienced problems in some European countries. Most of the recycling legislation sets targets and deadlines, while implicit in the voluntary schemes is the understanding that, if the domestic industries fail to achieve sufficiently high recycling levels, statutory measures would be introduced. In North America, serious attempts to introduce recycling laws and legislation related to other waste management issues have been in place longer than in Europe. In the USA, the key legislative level is the state, leading to a myriad of different regulations and recycling requirements throughout the country. Mandatory recycling targets are the favoured sort of programme. However, whereas disposal of plastic waste material in European countries such as Germany, France and Denmark is the responsibility of the manufacturer and distributors, the costs in the USA have fallen primarily on the taxpayer and have placed a heavy cost on state budgets. These costs have been impossible to recoup because the cost of collection and disposal of waste is often several times the market

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value of recovered material. In Canada, a National Packaging Protocol was introduced in 1990 as a voluntary agreement between the government and key sectors. This aimed to reduce packaging waste to 50% of 1988 levels by 2000 using source reduction and recycling. For efficient disposal of plastics waste, it appears that a sensible policy would involve all of the different methods, mechanical, chemical and energy-recovery, according to the type of material and factors such as availability, collection, sorting and cleaning. Many experts advocate a ‘cascade’ approach, in which a plastics material is first used for its highest properties (say in food packaging) and then is reused for possibly one other application (such as furniture or agriculture) before final disposal by an energy-recovery method.

1.4.6 Trade in scrap and scrap pricing arrangements Plastics scrap and waste material from manufacturing sources has been traded for many years, and waste from nylon fibre manufacturing, reprocessed as a moulding compound, has also been available on the market for some time. This is because the waste materials were clean and identifiable, and could be offered at a price below that of virgin material, but still yielding a profit to the trader. The development of a market in post-consumer plastics waste is taking much longer because of problems of sourcing, cleanliness and separation, all of which have raised costs to a level above that of virgin material. The distortion in world markets produced by efforts to clear the volume of waste arising initially from the German Packaging Ordinance is also taken as a sharp lesson. There has been an attempt to establish a market on the Internet, but it is too early to judge the results. With the arrival of higher-grade engineering plastics waste from the dismantling of automobiles and consumer and business electrical and electronics products, there is a much stronger possibility that a trade will build up. Especially in Germany, but also in France, there has been considerable work done on identification of those components that are large and easy to separate, such as polypropylene bumpers and battery cases – but an important factor is that (apart from organised trials) the cars coming into scrapyards are those built 10–12 years ago, before considerations of recycling arose or were implemented. The components designed today with recycling in mind will not be scrapped for another 10–12 years. However, an industry-based recycling system is

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being constructed for computers and business equipment, which have a shorter lifespan. While this is essentially designed to recover valuable components and metals, plastics recovery may be able to be established on the back of this infrastructure. Most manufacturers of engineering plastics now offer recyclatebased grades (mainly of nylon) on their lists. The development of specific recycling systems for PET bottles and nylon carpeting also points to establishment of potential markets for reprocessed plastics waste. It should be noted that both systems use chemical recycling processes and can be supplied with large quantities of post-consumer waste. Repolymerised PET has a number of established applications, including insulating fibres, tapes and strapping, and applications as moulding materials are being developed. Reprocessing of carpet waste is to produce the source feedstock, caprolactam, some of which is repolymerised as moulding materials. These materials may be traded on an open market, but at present they are handled in closed loops between manufacturers. Apart from such closed-loop systems related to specific materials, it seems unlikely that a general market for plastics waste will emerge, on sheer grounds of cost.

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2 Rubber M E Cain, Dr P Jumpasut and P J Watson

2.1

Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties 2.1.2 Products and end-uses

2.2

Production processes and technologies

2.3

Market features, structure and operation 2.3.1 Rubber production and consumption 2.3.2 Market structure and institutions

2.4

The structure of the rubber recovery/recycling sector 2.4.1 The relative importance of secondary production 2.4.2 Forms and availability of rubber wastes 2.4.3 Rubber recycling arrangements Reuse Product life extension Recycling Disposal

2.4.4 Government intervention 2.4.5 Trade in recycled rubber

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2.1 Physical characteristics, properties, products and end-uses 2.1.1 Characteristics and properties Raw rubbers are high molecular-weight polymers with molecular backbones normally composed of carbon and hydrogen, exceptionally of silicon and oxygen or of sulphur. They may also contain nitrogen and halogens, particularly chlorine, bromine and fluorine. Rubbers are available as raw materials either as solids or latices, which are colloidal dispersions of solid rubber particles in an aqueous medium. Two major classifications are recognised: natural rubber, a product of the tropical tree, Hevea brasiliensis, and thus a renewable resource,1,2 and synthetic rubber, a family of materials derived from petrochemical feedstocks. Total world consumption of rubber in 1998 was 16.46 million tonnes, of which 60% was synthetic rubber.3 Table 2.1 shows the world synthetic rubber capacities. Apart from a minor use as crepes for shoe solings and in adhesives, raw rubber is almost never used itself in products. Industrial rubber products are almost exclusively made of vulcanised rubber, i.e. rubber that has been treated with chemicals and heat to provide the necessary strength and resilience. The products are solids of varying degrees of hardness with the characteristic property of elasticity, i.e. the ability to return almost instantaneously to their original shape after deformation from tension, compression or shear; rubbers are virtually incom-

Table 2.1 World synthetic rubber capacities, 1998 Type

’000 tonnes

SBR: solid SBR: latex XSBR BR IR EPM/EPDM IIR NBR CR Total

4803 606 1440 2237 1387 1003 822 633 449 13480

Source: International Institute of Synthetic Rubber Producers.

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pressible. Vulcanised rubbers are generally tough, chemically inert and insoluble, but are swollen by various polar and non-polar solvents depending upon the type of rubber. Their permeability to gases and solvents varies considerably, and particular types are therefore chosen for specific applications, e.g. those involving resistance to oil or air retention. Although popularly regarded as ‘perishable’, rubber articles, particularly those of more than a few millimetres thickness, can be very effectively protected against degradation even in aggressive environments. Thus rubber products such as tyres have an extremely long life; they are virtually indestructible and because of their composite nature are difficult to recycle, and therefore pose a major scrap disposal problem.

2.1.2 Products and end-uses Rubbers are used in a huge variety of household, medical and industrial products. However, some 60% of the world’s rubber consumption goes into tyres, and a total of 70% into the automotive industry. The next largest single sector is latex goods, which range from thin-walled items such as condoms and balloons to foam mattresses. Rubber products are shown in Table 2.2.

Table 2.2 Rubber products Industrial rubber products

Consumer products

Latex products

Pneumatic tyres Solid tyres Mouldings Extrusions Belting: Conveyor Transmission Elevator Hose & tube Reinforced Non-reinforced Diaphragms Hard rubber products Industrial sheeting, linings Cellular products Reinforced fabrics

Footwear Shoes Soling sheet Toys Sports and leisure goods

Dipped products Gloves Condoms Thread Adhesives Moulded foam Carpet underlay Rubberised hair/coir Leatherboard

Source IRSG.

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Rubber

2.2 Production processes and technologies Raw rubbers are generally intractable materials and are processed using energy-intensive operations in large industrial machines. The process first involves supplying energy to break down the rubber molecules (mastication) to give a material that is plastic when hot, incorporating the required ingredients into the hot plastic mass; second, cooling; third, shaping in a mould under pressure; and finally, heating to carry out the vulcanisation reaction in the pressurised mould. The exceptions are latex goods, produced using liquid technologies involving either dipping shaped formers or entrapping air to produce foams; silicone elastomers which are processed as liquids; and polyurethanes which are formed in situ from two liquid chemicals. The majority of rubber products are complex and may incorporate more than one elastomer either as a blend, a separate sub-component or both. The bulk of rubber products, such as tyres, hose, belting, tubing, profiles, footwear, moulded products and others, are prepared from mixtures (compounds) containing vulcanising and preservative chemicals, chemical processing aids (oils) and a range of other materials to enhance the performance, competitiveness, appearance or properties of the final rubber product. Strength and wear resistance are obtained by the incorporation of inert fillers such as carbon black or silica, and many products, particularly tyres, hoses and belting, are reinforced by textiles and/or metals such as steel. Many industrial components are chemically bonded to metal supports or inserts. Thus, even if it were simple to recover rubber from an end-product or to recycle it, the problem that always remains is one of removing the other materials mixed with the elastomers. The complex nature of compounded rubber products can be seen from the composition of typical car and heavy truck tyres (% by weight) shown in Table 2.3. The rubber hydrocarbon in a tyre is a mixture of natural rubber, styrene-butadiene copolymer, polybutadiene and polyisoprene in varying proportions depending on the tyre and its manufacturer. Larger tyres and those used under more arduous conditions normally contain higher proportions of natural rubber. Only a very few products – tyre inner tubes, which are almost always made of butyl rubber, and latex goods, which are almost exclusively natural rubber – provide a source of a single rubber.

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Table 2.3 Tyre composition Component

Rubber hydrocarbon Carbon black Steel Oil, vulcanisers, etc Textile Compounded weight (kg)

Weight % Car tyre

Truck tyre

46–48 25–28 10–12 10–12 3–6

41–45 21–23 22–25 9–11

5–10

50–70

It is a characteristic of vulcanised rubbers (thermosets) that they cannot be re-formed without chemical or mechanical degradation. This is a problem in the disposal of scrap/reject material at the factory as well as presenting problems in recycling of used rubber goods. However, hybrid materials produced by mixing rubbers and plastic materials or by complex polymerisation techniques, known as thermoplastic elastomers, are increasingly being used because they do not require vulcanisation under pressure but can be processed like plastics by shaping while hot and then cooling.

2.3 Market features, structure and operation 2.3.1 Rubber production and consumption Natural rubber is produced in the developing countries of Asia (93%), Africa (5%) and Latin America (2%). The major synthetic rubber producing countries are the USA, Russia, Japan, France and Germany. The major consuming countries are still mainly in North America and western Europe, but the trend over the past decade, even after the ‘currency crisis’ of 1997/8, has been for consumption to shift from the highly industrialised countries to East and South East Asia. The rapid industrialisation and economic success of several Asian countries, including South Korea, China, Taiwan and the ASEAN group, and saturation in consumption in North America and Western Europe, has led the Asian region to become the focal point for growth in elastomer demand.

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2.3.2 Market structure and institutions Natural rubber is produced largely by small farmers in developing countries and exported through a complex trader-based market to the industrial users. The number of traders is very small in relation to sales volume, and the buyers thus exercise considerable control over the price paid at the local level. At the international level, there are four major natural rubber markets, namely Kuala Lumpur, Singapore, London and New York, and other smaller markets in Tokyo, Kobe, Hamburg, Amsterdam, Paris, Jakarta and Hat Yai. Whilst these markets are dispersed geographically, they are closely linked in a global system. Changes in prices in one market can affect prices in the other markets. Some of these international commodity markets, namely those in Japan and Singapore, also provide facilities for both futures and physical trading. The major rubber trade associations publish daily their respective prices of important types and grades of rubber, determined by a committee generally comprising brokers, producers and dealers. Prices quoted in the major markets are often used as a basis for pricing rubber in other parts of the world. Futures prices are competitively determined by demand and supply. There is a relationship between the two prices because futures prices often become the official prices of the market and are widely used in physical trading around the world. Synthetic rubber is produced mainly by large oligopolistic firms to which economies of scale are available. A large element of costs is attributable to research and development, and to marketing. Direct contact is maintained with customers and potential customers, backed by technical service; additionally and increasingly, products modified to customers’ specific requirements are developed so that product differentiation between producers is intensified. Synthetic rubber production is much more widely spread geographically than that of natural rubber, and a very substantial proportion of synthetic rubber produced is used either within the same multinational companies or within the country of origin. Only about 25% of world output of synthetic rubber is marketed internationally, and because of the shorter supply routes it is unnecessary for buyers of synthetic rubber to purchase forward and thus maintain high levels of stocks. Most synthetic rubber is traded directly or countertraded at prices loosely related to individual producers’ list prices, sharply limiting the volume going through the open market. For this reason it is not possible to ascertain actual prices paid with

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any accuracy. Where synthetic rubber manufacturing facilities are owned by major rubber manufacturers, ‘transfer prices’ are established by whatever principles they wish. Rubber products are almost exclusively traded as industrial components, with very few being sold to the general public, so that there are virtually no examples where the ultimate end-user (the ‘consumer’) can influence the composition of the end-product. The major exception is replacement passenger car tyres, but here also the consumer has no influence, even by choosing different brands, on the composition of the product. The design and composition of rubber products is thus set by the manufacturing industry and its immediate customers, largely the automotive industry.

2.4 The structure of the rubber recovery/recycling sector The current annual accumulation of discarded rubber products throughout the world is estimated to be approximately one billion scrap tyres4 and an estimated 3 million tonnes of used compounded rubber products. Unfortunately, tyres and rubber waste have a much greater significance as a disposal problem than as a potential source of material for recycling. Thus the traditional ways of dealing with rubber wastes have been by the establishment of surface dumps for tyres, disposal in landfill, chemical reclamation or product life extension. A general worldwide move towards the recycling of rubber wastes, although desirable on an environmental basis, has proved very difficult. This has been mainly due to the special properties of thermoset rubbers, for which the complex compounding with other materials, chemical crosslinking during vulcanisation and the incorporation into metal/fabric composites in manufacture has made disaggregation extremely problematic. The problems of disposal and recycling are largely those of industrialised countries, since per capita use of rubber and GNP are closely related, and essentially revolve around the disposal of tyres and other industrial products, as these constitute some 90% of rubber usage. Medical goods cannot be recovered because of health and safety problems, and are normally dumped or incinerated, and those rubber products which come into the hands of consumers – household goods, toys,

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etc – are too diverse to form a recognisable waste stream. Subsequent discussion will therefore concentrate almost entirely on the problems and solutions of tyre disposal. The unsightly nature of tyre dumps, often containing hundreds of thousands of tyres, and their potential dangers in polluting the environment through the smoke and chemical run-off associated with fire, and in harbouring mosquitoes,5 has led to increased demands from environmental pressure groups for other disposal methods to be pursued. At the same time, severe restrictions have been placed on the disposal of tyres in landfill sites. These sites will either not accept tyres or will require them to be shredded, a process that considerably increases the disposal costs, or ban tyres in landfill sites (EU directive, 1995) early in the twenty-first century. This has increasingly focused attention on the extension of the life of tyres by retreading and on their ultimate disposal by incineration with energy recovery, or their conversion into usable scrap materials.

2.4.1 The relative importance of secondary production Secondary production of unadulterated thermoset rubbers is not feasible, as they are always, as previously noted, combined with other chemicals or materials during the manufacture of rubber products. The recovery of rubber compounds is also complicated by their frequent contamination with fluids or their partial degradation through the combined effects of oxygen and heat. Thus recovered rubber can only be used either with virgin rubber in amounts small enough not to detract seriously from the properties of the finished article, or as particulate fillers in lower-grade products such as solid tyres or sports surfaces. This reuse only prolongs the life of the rubber, which must ultimately be disposed of by landfill, chemical recovery or incineration with energy recovery.6 Nevertheless, the chemical reclaiming of rubber wastes once constituted a major industry, supplying some 25% of the raw material for the US rubber industry in the 1950s.

2.4.2 Forms and availability of rubber wastes The major source of scrap rubber is tyres, which in the major rubber-consuming countries represent about 2% by weight of the total of industrial, commercial and domestic waste. The approximate current

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SOURCES

CHANNELS

Import used tyres

Production

Export on vehicles

OEM national

Tyres seller

USERS (Waste Producers)

COLLECTORS

Import

Import on vehicles

Export

Users

Retreading

Processing & recycling

RECOVERY

DISPOSAL

Used tyre collection

Wreckers

Export used tyres

Landfill

2.1 The tyre life cycle. Source: BLIC.

annual levels of the arisings of tyres (see Fig. 2.1) excluding industrial, agricultural and motor cycle tyres are detailed in Table 2.4. There are a few other sources of well-defined rubber wastes. These include rubber body seals from cars, tyre inner tubes and reject medical gloves. The majority of rubber components in cars are small, and form about 10% of the non-metallic waste recovered from the shredding of cars. This is currently disposed to landfill, but in future may have to be treated thermally.7 Other products such as textile-reinforced rubber belting and hose can also be reused by shredding or granulation.

2.4.3 Rubber recycling arrangements Efforts to reduce the problem posed by rubber wastes are concentrated in several areas. There are a few cases in which tyres specifically

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Table 2.4 Tyre arisings (millions of tyres) Car tyres: Replaced Retreads replaced On scrapped cars Total Truck tyres: Replaced Retreads replaced On scrapped trucks

500 50 100 650 200 70 30

Total

300

Grand total

950

can be reused without reprocessing. Product life extension is aimed at reducing the accumulation of wastes by prolonging the life of rubber products. Recycling involves the recovery of limited amounts of selectively retrieved material by grinding or shredding, and is usually followed by downcycling, the use of ground or shredded rubber waste as an inert filler in lower-grade products. Reclaim is produced by the chemical and thermal treatment of – usually ground – wastes to give a material that may be added to new rubber compounds as a partial replacement for virgin rubber. However, the volume of rubber processed by any of these routes is small compared with the production and use of virgin rubbers. All of these options merely delay the final disposal of the rubber by dumping or incineration with or without energy recovery. Reuse There are a number of uses for scrap tyres without further processing. They can be used as ballast for plastic covering film in agriculture, as boat fenders and in a variety of civil engineering projects such as artificial fish reefs, coastal defences, river and reservoir bank reinforcement, etc. This is a grey area of recycling rubber wastes as the tyre may not now occur as waste but, in fact, begins a new life as another ‘structural’ object. In some cases this second life for a scrap tyre means that it may never be released for recycling and thus becomes diffused into the environment. Product life extension The strategy of the world’s automotive industry is to eliminate any replacement of components. With the minor exception of wiper blades

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and the major one of tyres, replacement of the original automotive rubber products has almost been eliminated. Damage caused during the life of some rubber products can be repaired – punctures in tyres for example – although this is becoming infrequent due to increasingly stringent legislation in developed countries. The main form of life extension for rubber products is the retreading of tyres. Used tyres are collected and rigorously inspected to ensure that the body of the tyre, the carcass, is suitable for further use. Any remaining tread is removed by buffing, generating a useful by-product in rubber crumb. Retreading may be carried out by the ‘hot’ method, in which unvulcanised rubber compound is applied to the buffed carcass, the composite placed in a metal mould and heated under pressure at temperatures between 150 and 180°C; this process, which is similar to that used in producing new tyres, is used almost exclusively for passenger-car tyre retreading, but increasingly less for truck tyre retreading. Truck tyres are also retreaded by a ‘cold’ or ‘pre-cured’ process, in which a pre-formed, vulcanised tread is fixed to the buffed carcass by means of an intermediate ‘cushion gum’ layer by vulcanisation at temperatures of approximately 100–110°C. The practicality of retreading is that about 80% of the original tyre is preserved and the other 20%, the tyre tread, is renewed. Retreading extends the service life of the tyres and hence reduces total material costs per tyre.

Recycling Granulated rubber: Granular rubber is obtained by the buffing of tyres prior to retreading or from scrap tyres and other rubber wastes by physical size reduction, with or without cryogenic treatment. It is normally produced in a variety of particle sizes from around 2–4mm down to very fine powders, depending on its intended application. It is used as a minor particulate filler in preparing formulations for some products and as a major constituent in others such as carpet underlay and sports surfaces. Cross-ply and textile-braced tyres are easily shredded and ground into granulated rubber. However, the tyre market today is dominated by steel-braced tyres and this increases the energy (and hence cost) for the reduction of tyres into small-particle ground rubber. Consequently there is a tendency to derive rubber granules from only the tread part of the used tyre, leaving the carcass for subsequent disposal.

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Reclaimed rubber: this can be mixed with virgin rubber in relatively small proportions without seriously affecting the properties of the final rubber article and has been available for over a century. In the period 1920–1950, reclaimed rubber was an important raw material, and accounted for as much as 25% of the rubber used in the United States. However, the increased availability of cheap synthetic and natural rubber, together with the increasing costs of the energyintensive and environmentally polluting process used in reclaiming rubber, gradually reduced its consumption to a low level (estimated at <20000 tonnes) in the USA. Although there are now environmentally acceptable processes for the production of reclaim,8 its use is not increasing significantly. Methods of producing reclaim rubber by chemical digestion have been known for more than a hundred years. In the original alkali digester process, the ground rubber (derived from rubber wastes) was cooked in dilute caustic soda solution which removed textile fibres and devulcanised the waste in one step to produce a reusable material. Most processes producing reclaim rubber – open steam, heater or pan process, thermochemical, etc – developed during the past century require the waste rubber products to be broken down into crumbs small enough to permit any embedded metal to be removed by magnets. The increased interest in recycling has led to the investigation of alternatives to the chemical digestion process for reclaim. Ultrasonic disintegration9 has recently been proposed, as has a chemical process for breaking the crosslinks inserted during vulcanisation.10 Both these processes have yet to make a significant impact in the industry. The following are some of the emerging markets for reclaimed or recycled rubber: • • • • • • • • • •

filler material for higher value elastomers playground surfaces running tracks soil additive to reduce compaction plant mulch road-side attenuation products animal bedding bound rubber products (irrigation hoses) traffic bollards sports shoe soles, etc.

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Disposal The main problem associated with recycling waste rubber articles to ‘new’ rubber products through granulated rubber, retreading, reclaim rubber, etc, is that these products themselves (except possibly in the case of rubberised asphalt, where rubber ‘disappears’) in turn become rubber wastes. Consequently, the dilemma of rubber wastes revolves eventually around the problem of disposal. The dumping of tyres in stacks or disposal in landfill is becoming increasingly restricted by legislation in most developed countries. A variety of alternatives are being used or explored with varying levels of government support. Rubberised asphalt. Many countries throughout the world over the past sixty years have experimented with virgin rubber, in the form of rubber crumb or latex, combined with asphalt in road surfaces. Despite the longer life of the resulting roads, the increased cost of the road material has largely prohibited widespread use of rubberised asphalt, which is confined to special applications where wear rates are high or the road is inaccessible. Interest has now turned to the disposal of scrap tyres – as rubber granules – in this way. This process for disposing of scrap tyres was given a boost in the USA in December 1991 when the Intermodal Surface Transportation Efficiency Act (better known as the Highway Bill or ISTEA) was passed. This required states to use progressively higher levels of tyre crumb in asphalt road surfaces. However, its implementation today continues to be delayed, largely thanks to the asphalt lobby group. Thermal decomposition. This type of reclamation has as its objective the decomposition of the rubber product and the reclamation of its constituent parts. The exact nature of the materials recovered depends on the process used and includes gases, fuel oil, carbon black, zinc oxide, steel, sulphur and hydrocarbons. The main methods of thermal reclamation or recycling – pyrolysis, gasification, hydrogenation and catalytic extraction – that have been developed are currently not economically viable on a large scale.10 Nevertheless, from an environmental point of view, material reclamation is very desirable as it reduces demands on the earth’s resources. Thermal disposal. Used tyres and, to some extent, other rubber wastes can be burnt to generate energy, and this is increasingly being considered as a valid solution to the problem of their disposal. Scrap tyres have a potential calorific value (32MJ/kg) which is slightly greater

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than that of coal (29MJ/kg) and contain other materials. Recent trends in landfill and energy costs as well as advances in combustion technology have shown that both small- and large-scale incineration processes are viable, even with the strengthening of emission regulations in many countries of the world. One major use involving incineration is the incorporation of scrap tyres in the feed to cement kilns, where they act as a source of heat and impart improved properties to the cement through the iron content of the steel reinforcement. Energy recovery is also a viable option, and there are several electricity generating stations powered by scrap tyres.11

2.4.4 Government intervention The countries of the European Union (EU) and the USA have as one of their objectives for rubber waste management the reduction of both the stockpiling of tyres and their use in landfill – the former to zero by the year 2000 and the latter by more than 50% during 1995 (compared with 1992). Recent initiatives by the EU and other countries have addressed the problem of scrap tyres and other waste rubber products. For instance, the main ‘recommendations’ from the Used Tyres Project Group of the European Commission are to attain the following objectives by the year 2000 (compared to 1992): • • • •

Reduce the number of scrap tyre ‘arisings’ by 10%. Increase retreading from 23% to 25–30%. Increase recycling from 30% to 60%. Thus, reduce disposal to almost zero.

In a BLIC (Liaison Office of the Rubber Industry of the EU) report for 1998, it was indicated that in the EU a significant increase has been made in the area of energy recovery from scrap tyres, with a corresponding decrease in landfill and dispersion. BLIC foresees, if this trend continues, the termination of the practice of landfill in the next few years in the EU.

2.4.5 Trade in recycled rubber There is little trade, particularly at an international level, in scrap or recycled rubbers. Scrap rubbers are mainly considered as a problem and

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various solutions are dealt with within a country rather than trading the scrap internationally. The scrap rubbers have no ready financial value and their uses depend to a very large extent on government intervention. For example, tyre burning for electricity or heat may be only marginally economic unless some form of government subsidy is available, as scrap rubber cannot compete with bulk fossil fuels. Some withdrawn tyres cross frontiers for further use; in Europe this trade is mostly in heavy goods vehicle carcasses suitable for retreading. In some cases the tyres may be used in their worn condition, or they may be retreaded in the recipient country. There is also a trade in tyres retreaded specifically for export. International trade in scrap tyres mainly involves exports from a richer country to a poorer one, e.g. scrap tyres from USA to Mexico. In Japan more than a quarter of scrap tyres are exported for retreading. The Japanese have legislation which tends to enforce a very short vehicle life and in consequence there is a flourishing export trade in second-hand vehicles, some of which are reconditioned prior to export. Most of these vehicles are currently traded to neighbouring Asian countries, but Japan hopes to establish a major market within the Commonwealth of Independent States. According to the US Scrap Tire Management Council, more than half of all scrap tyres in the US were used as tyre-derived fuel (TDF) in 1996.

REFERENCES

1 Rahaman, Dr W A, ‘Natural rubber as a green commodity – Part I’, Rubber Developments, 1994, Vol. 47, No. 1–2. 2 Jones, K P, ‘Natural rubber as a green commodity – Part II’, Rubber Developments, 1994, Vol. 47, No. 3–4. 3 Rubber Statistical Bulletin, International Rubber Study Group, Wembley, UK. 4 Shulman, V L, ‘Technology Transfer Options in Tyre Recycling ’, European Tyre Recycling Association (1998). 5 Griffiths, J, ‘Giving new life to rubber dumps’, Financial Times, 4 March 1994. 6 Leibbrand, F, ‘Rubber recycling – chances and limits’, Proceedings of the Belgian Plastics and Rubber Institute, April 1994. 7 Fisher, P M, ‘Old tyres are a burning issue’, Material World, June 1994. 8 Payne, E, ‘Reclaim rubber usage and trends’, Rubber World, May 1994. 9 Rubber and Plastics News, 27 February 1995. 10 Plastics and Rubber Weekly, 15 August 1995.

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3 Pulp and paper Tom Bolton (updated and revised by Eric Kilby of the Paper Federation of Great Britain)

3.1

Physical characteristics, properties, products and end-uses 3.1.1 Characteristics of the industry 3.1.2 Products and end-uses 3.1.3 Recycled fibre (RCF) definitions 3.1.4 Waste classification

3.2

Recycling production processes and technologies 3.2.1 Contraries 3.2.2 Deinking

3.3

Market features, structure and operation

3.4

The structure of the waste recovery/recycling sector 3.4.1 Relative importance of RCF production 3.4.2 Environmental and economic impact 3.4.3 Trade in waste paper 3.4.4 Waste paper pricing arrangements

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3.1 Physical characteristics, properties, products and end-uses 3.1.1 Characteristics of the industry World consumption of paper passed 300 million tonnes in 1998, with an average growth rate of 3.1% per annum over the last 20 years. 300 million tonnes of paper will use in its manufacture around 275 million tonnes of cellulose fibre, and around 25 million tonnes of minerals. Without considering the added value of converted and end-use paper, the value of the pulp-paper industry is of the order of $US 300 billion per annum. Added to this is the cost of chemicals – minerals, starch, size, dyestuff, peroxide, caustic soda – and that due to machinery supply, clothing, and effluent treatment. The industry also uses sophisticated controlling and tracking systems, and this information technology cost must also be considered, as must transportation and materials handling. The annual turnover associated with the industry could, therefore, well approach $US 1000 billion. Many mills are integrated pulp and paper producers. The quantities produced by a mill are huge, 500000 tonnes per annum not being unusual. The industry has grown from one which is craft based to one which for the most part is now controlled in a highly sophisticated manner. The industry has long since recognised its reliance on good fibrous raw materials, and has operated a substantial forestry management programme of selective felling and seedling replanting. Trees are felled, barked, chipped and treated either chemically or mechanically to produce wood pulp, which is then mixed with water and pumped to a paper machine. A modern paper machine is huge. Its purpose is to take the fibre and water suspension, spread it out uniformly, and then extract the water from the product in a sequential process of water removal, by gravity, suction, squeezing and, finally, drying stages. A modern state-of-the-art paper machine is in essence a number of sophisticated processes linked together. Erected in a purpose-built building it might cost US$500 million. It could be 20 metres wide, 1000 metres long and would produce at a rate of 1000 metres of paper per minute – in four days the output could stretch a distance equal to the 3500 miles from London to New York!

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Every tonne of paper uses around 300–400 tonnes of water to transport the fibres around the system, to lay the paper down uniformly and to promote strength before the water is eventually removed, when it will be reused, retaining raw materials and heat within the system. A paper machine will be rebuilt and upgraded many times in its lifetime, and it is not unusual to find machines operating today which were originally built in the early 1900s. These machines will have undergone an extensive programme of unit and section replacement and rebuild over their lifetime. Because the industry is so capital-intensive, it operates plant 24 hours of the day, seven days a week and 52 weeks a year. The paper machine will only be stopped when it is necessary, and then it will usually undergo a detailed programme of planned maintenance. The production plant is highly capital-intensive. A paper mill with an output of around 200000 tonnes per annum will operate with around 500 employees.

3.1.2 Products and end-uses Paper is produced in widely differing varieties. Newsprint, boxboards, corrugated boards, printings and writings, tissues and speciality papers, like photographic and cigarette tissue, are just a few examples. Printing papers are often coated to enhance print quality, the paper having a mineral-based surface coating applied at the paper machine, or in a separate process. The variety of fibrous raw material is wide, and may be specific to the grade of paper produced. For example, newsprint and boxboards require a less sophisticated raw material than higher-quality printings and writings. The hardwood or softwood content, the pulp treatment and the bleaching treatment all combine to produce grades with specific properties. There are also very special small-quantity raw materials – for example, rag, hemp and straw – that confer particular properties. Recycling poses a special problem for the papermaker. For several decades some grades have been made from predominantly recycled raw material. Corrugating medium is a good example, and so also is board where the internal plies of the board are from recycled material. However the market has special quality requirements for some grades. For example, photographic paper cannot tolerate blemishes or con-

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taminants in the product, and certain food-wrapping grades have a tight raw-material specification precluding the use of recycled raw material in their manufacture. Nevertheless, the industry has always carried out a recycling programme, besides reusing its own mill waste, and recycling levels are now increasing. Consider recent fibrous raw material figures for the UK. In 1984 43% of all fibre used was imported and 50% was waste paper pulp. In 1999 the imported figure had fallen to 26% whilst the waste paper pulp figure had risen to 65% (source: The Paper Federation of Great Britain). In 1998 the paper industry worldwide used close to 112 million tonnes of recycled fibre (RCF) representing 44% of total usage. This was a great increase over the 1970 consumption, where only 30 million tonnes (or 23%) was used. A combination of social, environmental, technical, economic and legislative factors have been behind the increase in RCF utilisation, and this will continue to be the case. The role of waste paper has gained respectability, moving from a liability as a waste, to a valuable resource, serving as an asset. RCF pulp can now be made to a uniform quality, without contaminants. This has removed many of the obstacles to using the material in such a capitalintensive industry that places big demands on high levels of efficient machinery utilisation during the production process.

3.1.3 Recycled fibre (RCF) definitions There have been many problems in defining the terms used in the waste paper sector, not least being the use of the term ‘recycled’. It is now recognised that it is necessary to state how much of the fibrous content of the product is made from RCF in order to justify the use of the term. Her Majesty’s Stationery Office (HMSO) in the UK has studied this problem in some depth, highlighting the wide range of political, commercial, and other interests involved. In particular: • extreme environmentalists calling for the abolition of virgin fibre from the supply chain; • papermaking opportunists offering ‘recycled’ paper made from predominantly mill waste;

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• virgin fibre manufacturers denigrating the very use of alternative fibre; • recycled paper manufacturers defending market positions by insisting on hurdle rates as high as 75% recycled content to prevent market entry by new players; • government trying to reduce pressure on landfills (some 40% of domestic waste is paper) by convincing the public that recycling is environmentally sound. To clarify the position, HMSO recently offered the following definitions of commonly used terms: • Virgin fibre: fibre derived from wood or sources such as bagasse and straw, which are alternative fibres used to enhance paper properties. Cotton linters and sawmill waste should not be counted as recycled since they too are alternative fibre sources. • Broke: waste paper that occurs during paper manufacture. It has always been reused and this will continue. However, as it has not been used by a consumer, it should not be classified as recycled fibre. • Pre-consumer/industrial waste: any fibre source that may be counted as an industrial by-product. It encompasses such items as printer’s trim, converter waste, reject materials and excess inventories. This fibre source is valuable and easy to collect in bulk. As a matter of good economics it should be directed back into the papermaking cycle. There is no desire to see this source artificially expanded to enable companies to satisfy the demand for recycled paper. With improved business practices under ISO 9000/BS 7750 and with better planning, and economic design, and with shorter press run-up times, there is every possibility of minimising but not eliminating this source of waste fibre. • Post-consumer waste: fibre that has been used for its final and intended purpose. It is the largest source but the most difficult to collect. As virgin fibre prices rise, new techniques for segregating and economic processing of this waste are emerging. Using the guidance provided by these definitions, HMSO recommend that, to qualify as recycled, a paper must contain at least 10% postconsumer waste.

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3.1.4 Waste classification Almost any type of paper and board can be recycled, and comprehensive classification systems have been developed to ensure that maximum commercial value is obtained from recovered fibre. Classification systems are not internationally standardised, which makes data comparison between countries difficult. The grading system produced by the Paper Federation of Great Britain is shown in Table 3.1. Recycled fibre (RCF) differs from virgin fibres in a number of ways: • In most cases waste paper consists of a mixture of different types of pulp fibre and other materials, such as mineral filler. • Waste paper contains fibre that has normally undergone some type of mechanical refining during the primary papermaking process. • RCF has been subjected to drying in the papermaking process, and possibly in conversion – for example, heat-set offset printing. • RCFs can have high contamination, in particular inks and stickies (adhesives, lacquer, etc.) Recycling fibres back into the papermaking process implies reconditioning the material to its original virgin condition as far as the reuse requires. However, some of the changes described are irreversible, particularly those caused by refining and drying. A complete return of the fibre to its original state is not possible. Each time a fibre passes through the manufacturing process it suffers strength and colour reduction, although there is some evidence to say the strength loss is only in the first few passes. Many industry participants believe there will always be the Table 3.1 UK standard groups of waste paper Group

Waste paper type

1 2 3 4 5 6 7 8

Unprinted woodfree Printed woodfree Mechanical Coloured woodfree Newspapers and magazines (ordinary grade deinking) New KLS and unused Krafts Used Kraft and OCC (post-consumer) Mixed and coloured card

Source: Paper Federation of Great Britain.

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Table 3.2 Current use of RCF in the range of paper grades in Europe, 1998 Item

RCF content (%)

Newsprint Printings/Writings Tissue Liner/Fluting Cartonboards Other

58 7 64 90 52 65

Overall average

45

Source: CEPI.

need to add some virgin fibre to make up for the strength losses in the process, and to restore any loss of quality and runnability. In general terms, recovery and reuse of RCF has concentrated on the easiest and most economical waste paper to collect and recycle, and this has been predominantly used in the lower-grade papers such as case packaging and board materials. However, now that there is an increased demand for recycled fibre, there is a tendency to use RCF in higherquality grades. Nevertheless, certain grades of paper and board will still need to be made using a high proportion of new fibres as exemplified by surgical papers, and by grades in contact with certain foodstuffs. The net effect of all these factors in terms of end-use is shown in Table 3.2, which provides a 1998 analysis of RCF utilisation by paper grade for the EU (excluding Nordic countries). Whilst the overall average for RCF content is around 50%, there are wide variations according to grade. Most RCF has been used in the lower paper grades such as packaging and board where visual and printing properties are not so critical. Printings and writings show less than 10% utilisation, and this segment is now receiving considerable attention, so that it is here that much of the predicted growth in RCF utilisation is anticipated.

3.2 Recycling production processes and technologies The overriding objectives of recycling waste are to maximise the recovery of reusable fibre and to minimise the foreign impurities known as contraries.

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Table 3.3 Effect of contraries in waste paper Impurity

Problem caused

Printing ink

Reduction in stock brightness, increase in speckiness, worsening ‘stickies’ problem

Adhesives

Blinding of paper machine clothing, reduction in equipment efficiency resulting in stoppage, reduction in product quality

Fillers

Reduction in quality of tissue products, reduction in yield and strength

Wet strength agents

Prevention of fibre separation at the pulping stage, loss of yield

Dyes

Reduction in stock brightness, problems with colour matching

Staples, paper clips, plastics, etc

Damage to stock preparation equipment causing stoppage and reduction in stock and product quality

3.2.1 Contraries There are three main groups of contraries: 1 Paper mill additives, such as minerals, chemicals and functional aids. 2 Conversion process additives, such as printing inks, plastics, foil, adhesives, and even staples and pins. 3 Miscellaneous waste items, such as food, sand and plastic. Typical problems caused by these contraries are shown in Table 3.3. Thus it can be seen that the elimination of contraries is of vital importance in RCF and that it is a dominant factor. A typical process line contains many of the following stages: • • • • • • • • • •

Paper handling. Waste paper repulping. High-density cleaning. Coarse screening. Ink flotation. Light reject removal. Heavy reject cleaners. Fine screens. Pulp thickening. Pulp pressing.

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• • • • •

Dispersion. Flotation. Pulp thickening. HD pulp storage. Bleaching.

3.2.2 Deinking Emphasis has already been placed on the removal of contraries, but it is also worth highlighting the deinking process, or the removal of ink and similar contaminants. Deinking is a selection of washing and flotation techniques. In flotation, the first stage involves detaching the ink from the paper. The fibre is processed under alkaline conditions to bring about fibre swelling and to enhance ink release through saponification. Depending on fibre characteristics required for the end product, other chemicals such as sodium silicate, bleaching materials and chelating agents are used. The second stage accomplishes the removal of ink from the fibre and takes place in the flotation chamber. Incoming pulp is mixed with air bubbles which bring the ink particles to the surface. The resulting foam which contains the ink is then removed. In designing deinking equipment it is important to take into account the effect of likely changes in ink formulations. Some of these changes, ironically stimulated by environmental pressures, may give rise to problems in deinking. A good example is the move in the printing of newsprint from solvent-based to water-based flexo inks. The problem with the water-based ink is that the resins used in the formulation are alkali-soluble. Thus, on pulping under normal conditions the resins solubilise leaving minute ink particles. These particles are below five microns in size, and as they are hydrophilic, flotation deinking is not effective. Wash deinking, which is designed to remove small particles, also does not work as the water-based ink tends to stain the fibres, and the very small ink particles become entrapped in the fibre structure. Chemicals in office copying, particularly from non-impact printing, make the ink difficult to remove, and are causing the development of new deinking techniques, including the use of enzymes to detach the print. It is possible to increase the quality and therefore the usefulness of certain grades of waste paper by a process known as ‘fractionation’,

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Table 3.4 Growth in world deinked fibre utilisation Year . . .

1990

Grade

Million tonnes

Newsprint Tissue Packaging Printing and writing Market pulp Total

2000 % Total

Million tonnes

% Total

5.5 3.5 2.0 2.0 1.0

40 25 14 14 7

15.0 6.0 2.5 4.5 3.0

48 19 8 15 10

14.0

100

31.0

100

Deinked fibre consumption will more than double in the decade and by the year 2000 it will account for at least 20% of total RCF. A significant proportion of the extra deinked tonnage will be used in newsprint (over 55% of the total). Printings and writings will overtake packaging and become the third largest application for deinked fibre.

causing separation of long fibres from a waste mixture. The residual shorter fibres may be usable in the middle layer of a corrugated case. One of the weakest fibres is found in newsprint, acceptable because a newspaper only has a short lifespan. Thus, recycled newspapers are used together with magazine waste to make more newsprint. By the same token it is not possible to make high-quality writing paper from recycled newsprint (Table 3.4 shows growth in world deinked fibre utilisation). Brightness is one of the most important properties of paper, particularly in the production of high-quality papers. In deinking, therefore, close attention must be paid to bleaching. Brightness will be affected both by the presence of ink, and by impurities such as dyes in coloured paper and by lignin in mechanically produced fibres used in some newsprint manufacture. Bleaching of waste paper is not straightforward. All recycled fibres will have undergone at least one drying process, which can adversely affect their ability to accept additional bleaching. Metal ions may be present and they can cause decomposition of bleaching chemicals. Besides this, the wide mixture of different fibre types with varying histories invariably found in waste paper will each have different bleaching responses. Waste paper processing is expensive. Depending on the final quality required, which may attract additional chemical costs, and including the cost of waste collection and transportation from urban areas to pulp mills, RCF can be at least as expensive as virgin fibre.

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An investment comparison would suggest that a bleached kraft pulp mill would cost US$600 million for 1000 tonnes per day compared to a deinking plant costing US$40 million for a capacity of 500 tonnes per day. It is interesting to note that in the US it is common practice for government to offer significant tax concessions to encourage the building of deinking facilities, and this has led to the appearance of a number of merchant deinked pulp mills.

3.3 Market features, structure and operation There are a number of components in the waste paper/recycling business. They are: • • • • •

collection and recovery; sorting and disposal of discards; transportation; utilisation; residue/sludge disposal.

It is important to note that the term ‘recovered waste paper’ means what it says – waste paper recovered from the total paper consumed. The term ‘utilised waste’ paper means the percentage of waste paper that is actually used in the product. While on a global basis of course the two terms must be the same (assuming no stockpiles), this is not necessarily true for industrialised countries. In Finland for example, 63% of the paper consumed domestically is recovered but, because the home market is so small, this represents just 5% of the paper manufactured. Whilst traditionally there have been a number of waste paper merchants handling some bulk grades – mixed waste and KLS, for example – recovery has traditionally been under the control of the local authorities. Utilisation is in the hands of the paper industry. This is in turn significantly governed by the investment required and by consumer attitudes and demand. The term ‘The Urban Forest’ has been adopted to describe the vast quantities of waste paper that are generated each day in major cities. The analogy is a good one. Most pulp producers go to great lengths to ensure a sustainable supply of cost-effectively produced wood of the

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Table 3.5 US MSW waste generation, 1993 Material

Million tonnes

Paper and paperboard Yard trimmings Plastics Metals Food waste Glass Wood Other Total

% of total

70 30 17 15 12 12 12 17

37.8 16.2 9.2 8.1 6.5 6.5 6.5 9.2

185

100.0

Source: US Environmental Protection Agency.

Table 3.6 US recovery rates for selected components of MSW Material

% of total recovered

Aluminium packaging Steel packaging Paper and paperboard Glass containers Yard trimmings Plastics packaging

53 46 34 25 20 4



Million tonnes recovered 7.5 23 3 6 0.7

Source: US Environmental Protection Agency.

correct quality for use as a raw material. Forest management, with benefits both to the papermaker and to the environment, has become an integral part of the pulp-producing operation. For exactly the same reasons, the ‘urban forest’ will require similar investment and management. Because the life cycle of the urban forest is shorter, it will respond more quickly to management control. The municipal solid waste (MSW) generation statistics in the USA are interesting, and highlight the large amounts of paper and paperboard in MSW. The US MSW waste generation is shown in Table 3.5. The progress in recovering the components of MSW is shown in Table 3.6. The US paper industry is now moving up the waste recovery stakes, achieving 40% in 1995 and aiming at 50% by the year 2000. Once a deinking facility is on line, a plentiful supply of recyclable paper is critical. Mills may therefore try to build up a stock, leading to conditions of temporary shortage.

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The key force for RCF utilisation has been economics. It enables mills and countries without abundant forest resources to compete effectively with integrated producers of virgin fibre-based grades. The impact of RCF on the competitiveness of mills can clearly be seen in the Western European newsprint industry. Here the most cost-competitive production is based on RCF and is located close to both RCF sources and final customers. This has led to industry restructuring and relocation. Similar developments are now taking place in North America. There are other reasons. There is, for example, an urgent need to divert the growing mountains of waste from costly and limited landfill. This is a move further underpinned by legislation and by public concern over the environmental impact of landfill causing contamination of ground water and gas emission.

3.4 The structure of the waste recovery/recycling sector Waste from commercial sources in Europe has traditionally been collected by waste paper merchants, often held captive by big paper companies who have organised their business on waste-based products. It is interesting to see the collection of waste newsprint similarly organised on a local basis by a main producer of recycled newsprint. Strong competition for waste paper supplies and high waste paper prices are forcing mills to re-examine the way in which they buy waste paper, and to arrive at a better understanding of the entire collection system. Nevertheless it is believed by many that the collection of printing and writing paper from offices is underdeveloped in Europe, which lags behind the USA in this respect. The global recovery of waste paper has been steadily increasing from a figure of 49 million tonnes in 1980 to over 110 million tonnes in 1998. The historical trends for recovery from the main regions of the world are shown in Table 3.7. It is interesting to note the improvement in the N American recovery figure since 1980, coming more in line with western Europe by 1993 and exceeding that of Asia from the early 1990s. Table 3.8 shows worldwide RCF utilisation by region.

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Table 3.7 Worldwide waste paper recovery (% of total paper consumed) Year

North America

Western Europe

Asia

World

1980 1985 1990 1993 1998

25.9 26.1 33.3 39.4 44.0

31.7 34.0 37.7 41.9 48.0

34.5 36.5 39.2 37.0 39.0

28.5 30.8 35.5 38.2 48.0

Table 3.8 Worldwide RCF utilisation by region, 1998 Region

Paper production (million tonnes)

RCF utilisation (million tonnes)

%

Asia Latin America W Europe Africa Australasia N America E Europe

86.0 13.7 81.4 3.0 3.5 104.6 8.8

43.2 7.2 36.4 1.0 1.5 38.9 2.6

50 53 45 33 43 37 30

World

301.0

130.0

43

Source: FAO, National Associations.

North America, western Europe and Asia dominate the picture as paper producers, and are clearly major RCF users, but Asia and western Europe produce higher waste utilisation rates largely because they have poor forestry resources, and so are big pulp importers. Differences in RCF utilisation also help to explain the main trade flow of waste paper from North America to Asia (see 3.4.3). On an individual country basis, the leaders in utilisation are: • • • • • • • • • •

Taiwan Mexico Spain Netherlands Korea UK Germany Japan Switzerland Australia

90% 93% 81% 71% 74% 72% 61% 55% 68% 58%

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• Thailand 59% Source: FAO (excludes countries producing less than 500000 tonnes p.a.). There are few other uses for recovered paper. The largest alternative use is in the manufacture of moulded egg boxes and fruit trays. Alternative uses are expected to expand, driven by the desire to divert material from landfill, and could include wastepaper as a fuel.

3.4.1 Relative importance of RCF production Both RCF and virgin fibre consumption will increase steadily over the next five years. There is little doubt that recycling pressures, arising from further legislation and from environmental awareness, will mean that the use of RCF by the paper industry will continue to take an increasing share of total fibre supply. During the next 5 years RCF utilisation is forecast to grow at 6% per annum, three times the rate of virgin fibre. This will result in RCF consumption approaching the same volume as virgin pulp use by the year 2005. Table 3.9 shows worldwide growth of RCF utilisation by the paper industry. A shift of this magnitude will force many changes in the industry, resulting in substantial restructuring. It was estimated by the Finnish engineering and consultancy group Jaakko Poyry in 1992 that the waste paper disposal burden (the difference between paper consumption and waste paper recovery) will grow by about 20%, or 32.9 million tonnes over the period 1990 to 2005. This difference reflects the efforts to increase the recycling of waste paper, against a projection of paper consumption growing by 45% (3% pa) during that time. In North America, the disposal burden will decline slightly, reflecting the dramatic moves Table 3.9 Worldwide growth of RCF utilisation by the paper industry Year

1985 1990 1995 2000 2005

RCF

Virgin pulp

Million tonnes

% of total fibre

Million tonnes

% of total fibre

59 84 114 151 190

30 35 39 45 49

141 157 175 187 197

70 65 61 55 51

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to increase waste paper recovery, whilst in Asia and Latin America the burden will grow significantly. There is little doubt that environmental concerns backed by both legislation and certain national initiatives will continue to exert pressure to further increase RCF utilisation.

3.4.2 Environmental and economic impact A study by the Austrian Institute of Applied Systems Analysis (IIASA) raised serious questions about how far recycling should be taken. Broadly, they found that maximum recycling increases the consumption of fossil fuels, which in turn increases emissions of sulphur dioxide and carbon dioxide. The deinking process also consumes more energy than a self-sufficient modern kraft mill, and transportation of waste paper over increasingly greater distances adds to the energy consumption. IIASA do not imply that recycling is bad for the environment. They suggest there is an optimum level of recycling beyond which the net environmental impact becomes negative. Waste paper is also regarded as a potential fuel. Scandinavian work has shown that biofuel waste paper has a high calorific value and a relatively low environmental impact. The debate of recycling versus energy recovery is not new. Paper deemed unsuitable for recycling has been burned by the forestry industry boilers for some time. It appears to be a good substitute for coal and other fuels, particularly when it has been pelletised. It is anticipated that low-quality and non-recyclable waste paper will become a standard solid fuel for small-scale power production. The heat value is usually above that of bark (20MJ/kg) but below coal (30MJ/kg). There is considerable concern about how progress by RCF could discourage investment in the industry, and could militate against new plantings. It could also reduce the profitability of forestry operations to a point where they can no longer sustain forestry management activities.

3.4.3 Trade in waste paper Global patterns. International trade in waste paper, of which there is a significant amount between North America and the Pacific Rim

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Table 3.10 Worldwide waste paper imports by region, 1998 Region

Waste paper imported Million tonnes

Asia W Europe N America Latin America Other World

% of total

8.8 7.0 2.7 1.8 0.5

42 34 13 9 2

20.8

100

Source: FAO.

Table 3.11 Worldwide waste export by region, 1998 Region

Waste paper exported Million tonnes

N America W Europe Asia Other World

% of total

7.6 8.1 1.6 0.7

42 45 9 4

18.0

100

Source: FAO.

countries, is worth US$ 2 billion p.a. The traded volume is 21 million tonnes p.a., which is about two-thirds the volume of pulp, and a quarter the volume of paper. The amount of waste imported on a regional basis is shown in Table 3.10. Seven countries import in excess of 1 million tonnes p.a. They are shown with their share of the world total. • • • • • • •

Korea Canada Netherlands Mexico France Germany Taiwan

10% 11% 6% 6% 6% 5% 5%

The worldwide waste export is shown in Table 3.11.

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There are relatively few countries with the ability to export significant quantities of waste paper. The lead countries are shown below, with their proportion of the world total. • USA • Germany • Netherlands Source: FAO

39% 16% 7%

The USA and Germany are the two main exporters of waste paper and between them they account for about 55% of the world exported waste paper. As the US consumption reaches 50%, targeted for the year 2000, their ability to export is expected to diminish significantly.

3.4.4 Waste paper pricing arrangements The price of waste paper depends on a number of factors, but as with other commodities, the balance of supply and demand will have the biggest influence. Prices vary widely according to grade, as illustrated by the following prices prevailing in Chicago in the middle of 1995 (Source: Pulp and Paper Week). Table 3.12 clearly shows the range of prices, from US$ 650 (hard white envelope cuttings) to US$ 135 (mixed paper). Prices exhibit

Table 3.12 US waste paper prices – by grade f.o.b. seller’s dock, June 1995 Grade

$/tonne

Hard white envelope cuttings Hard white shavings Computer printout White ledger Sorted coloured ledger Coated book stock New double-lined kraft White blank news Corrugated containers News Mixed paper

650 560 460 430 320 310 260 260 180 170 135

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similar trends to the sharp cyclical pattern of pulp prices, possibly being more volatile. Since 1993, export waste paper prices have risen dramatically and by 1995 were close to US$ 200 per tonne. In addition to the demand arising from the buoyant state of the paper industry, a number of other factors put pressure on prices. In 1994 Germany moved to reduce waste paper collected by 15% in order to stabilise prices and reduce loss-making exports. Other big influences have been the start-up of major newsprint capacity based heavily on waste paper, together with a high demand from the Far East, and a general move to build up stocks following low levels in 1992/93 when supplies were plentiful. The upward pressure on waste paper prices may well remain in the long term. Main exporting countries will continue to need more waste paper domestically in order to meet ambitious utilisation targets. This could lead to shortage for export followed by a price escalation. With timber shortages also predicted because of environmental concerns imposing constraints on logging, virgin pulp prices could also be under pressure.

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4 Glass David Moore

4.1

Physical characteristics, properties, products and end-uses

4.2

Production processes and technologies

4.3

Market features, structure and operation

4.4

The structure of the cullet recycling sector 4.4.1 Relative importance of secondary production 4.4.2 Forms and availability of cullet 4.4.3 Cullet recycling arrangements 4.4.4 International trade in cullet 4.4.5 Cullet pricing arrangements

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Glass has been found to occur naturally as volcanic glass, obsidian and around lightning strikes in the desert. Glassmaking first began some 5000 years ago in the Middle East probably because the main ingredients, silica, in the form of quartz sand, and alkali from wood ash were readily available. The raw materials were melted in a furnace to produce a solid amorphous mass which was then crushed before being shaped around a friable core. Further heating then gave the final artefact. Glasses were used as replacements for semi-precious stones and methods for making a wide range of colours were developed. Because of the high value placed on glass and the energy needed in its production recycling has always been a feature of its use. There have been recent finds from shipwrecks in the eastern Mediterranean Sea dating back to Roman times which feature entire cargoes made up of broken glass, indicating a flourishing trade. Church building in the Middle Ages led to a use of glass in windows and the development of the flat glass industry. Industrialisation led to an expansion of the glass industry around the world and its eventual adoption as a packaging medium. The modern glass industry is dominated by bulk production of soda–lime–silica glass which is used in flat glass, container glass and bulk glassware. Different compositions are used to meet the particular working characteristics the forming process requires and the final properties of the product.

4.1 Physical characteristics, properties, products and end-uses Glass is a very versatile material and its properties can be tailored by adjusting the composition to meet the requirements of the end user. Hot glass can be formed by several different methods and once solidified can be ground, etched and highly polished. As well as the common uses in packaging and as window glass it has found a number of other uses: glass fibre is used as thermal insulation, as a reinforcement in plastics and cements, or in optical communications; glass is used in the production of cathode ray tubes, for slow-release drug delivery and as a substrate for magnetic storage devices; finally, by introducing small crystals into the structure, glass ceramics with controlled thermal expansion and exceptional mechanical properties can be made.

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There are three main types of glass: 1 Soda–lime–silica glass is the commonest and is used in flat glass, packaging and bulk tableware. The composition of this glass varies depending on its final use and how the glass is to be formed. A typical flat glass composition is: 72.6% SiO2, 13.6% Na2O, 8.6% CaO, 4.1% MgO, 0.7% Al2O3, 0.3% K2O, 0.17% SO3. Container glass has a wider-ranging composition: 71–73% SiO2, 12–14% Na2O, 9–12% CaO, 0.2–3.5% MgO, 1–3% Al2O3, 0.3–1.5% K2O, 0.05–0.3% SO3. 2 Borosilicate glass is used in some glass fibres, laboratory equipment and in thermal-resistant tableware, the familiar brand being Pyrex. 3 Lead crystal glass is used in high-value glassware, where the lead content can be as high as 36% PbO. Health concerns associated with lead have meant there have been a number of lead-free compositions developed recently with the same inherent properties. There are also other special glass types such as TV glass, heavy metal fluoride glass used in optical fibres, silica glass used in hightemperature applications and phosphate glasses used in sealants. The colour of glass can be controlled by adjusting the oxidation state of different metal oxide additions and in the choice of raw materials. Sand, the main raw material, has various impurities, the most important being iron. Ferrous iron oxides give various shades of green, while ferric iron commonly gives blue. Amber or brown glass uses carbon additions. A colour change in a container furnace can take several days of lost production to implement. The packaging industry is responding to customer demand for faster response times by introducing the colour at a later stage, just before the containers are formed. Colour changes can then take a few hours.

4.2 Production processes and technologies Glass is made by melting raw materials together in a furnace. Very small volumes up to around 2 tonnes/day are melted in crucibles or pots. The much larger industrial scale involves melting the batch continuously in a tank furnace where individual furnace capacities are 100–350 tonnes/day. Furnaces generally still use fossil fuels as the energy source,

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Glass

but electric melting has been adopted in some situations and oxy-fuel firing is a more recent development. There are constant pressures on glass makers to comply with legislation on pollution abatement and emission of greenhouse gases. Modern furnaces tend to have campaign lives of more than ten years before refractory wear necessitates a rebuild. An alternative to melting is the low-temperature route using the solgel process. This has been used to produce novel glasses for value-added applications such as optoelectronic components, but is also being developed as a coating for glass containers to improve their mechanical properties and reduce the overall weight. In combination with organic resins, nanocomposite ormosils can be made by the sol-gel route. Containers are produced by taking a set weight of glass, a gob, and then following a two-stage process. A parison is formed in one mould and then inflated with compressed air inside a second mould. The bottle or jar is then removed from the mould and conveyed through a lehr where it is annealed. The basics of this forming process have been established for some time now but there have been minor developments recently which have helped reduce the overall weight of a container: a necessity if glass is to compete with plastics and metal in the packaging market. Automatic inspection before and after the lehr detects any faulty containers which are rejected and sent back to the internal cullet handling system. Getting more items packed rather than rejected is seen as being the best method to save energy and cut waste, but this reduces the amount of available internal cullet and increases the proportion of external cullet. The overwhelming majority of flat glass is produced by the float process, initially developed by the UK glass manufacturer Pilkington in the late 1950s. This revolutionised the production of window glass and has been licensed around the world. Glass from the furnace is continually poured onto the surface of a molten bath of tin where it spreads and cools. As it hardens the edges are gripped and pulled from the tin bath with a stable thickness. The glass then travels through a lehr to relax the stresses from the cooled glass, the edges are removed and recycled and it is then cut into sheets for transportation. The speed at which the glass is pulled from the tin bath determines its thickness. The unique atmosphere within the tin bath also allows special coatings to be deposited on the surface. Other forming processes for glass products include: pressing, for TV panels and tableware; extrusion, for fibres and tubes; casting, for

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Part 3: Other materials

Table 4.1 EU glass production by sector (1000 tonnes)

1996 1997 1998

Flat glass

Container

Tableware*

Fibres

Others**

6390 6893 7277

17322 17316 17676

1041 1046 1025

487 475 506

1526 1557 1622

* Excludes Spain. ** Others include pharmaceutical glassware, sealing glass, TV and VDU tubes, optical lenses, optical fibres, lighting glassware (bulbs and tubes), glass bricks, lead crystal and studio glass. Source: CPIV (Comité Permanent des Industries du Verre de l’Union Européenne).

optical lenses and telescope mirrors; and hand blowing, for low production-run items and studio art. Table 4.1 shows the quantity of glass produced by each sector.

4.3 Market features, structure and operation The raw materials for glassmaking are readily available throughout the world, placing few obstacles in the way of anyone wanting to establish production according to local market demands. Capital investment is the main issue for anyone wanting to establish a glass manufacturing operation. The typical capital cost of a new container furnace, excluding the pollution abatement equipment, would be between £3 million and £5 million; substantially more for a float furnace. A typical float or container furnace will run continuously for more than ten years before it is rebuilt. A rebuild takes the furnace out of production for around two months, a time when no glass is being made. A lot of the capital is tied up in the refractories used in the campaign. Pollution abatement measures will add to capital and operating costs. Some manufacturers have converted to all-oxygen firing to comply with abatement laws but also to make savings on expenditure on a regenerator (oxy-fuel firing, which involves the replacement of normal combustion air by oxygen, is a method for reducing nitrous oxide emissions). A cheap source of electricity is required for the production of oxygen to keep operating costs down. Around 70% of total energy consumption of a factory is used to melt the glass. The flat glass market is dominated by four major international manufacturers, all using the float process, who account for 60% of sales.

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Glass

Pilkington has around 15%, Asahi Glass 21%, Guardian Industries 13% and Saint-Gobain 11%. PPG is mainly based in USA and is the next largest with around 9% of sales. There are also a number of smaller companies using sheet glass production techniques. The container industry is also dominated by a small number of global manufacturers, the biggest and only truly global operation being Owens-Illinois. Saint-Gobain are second on a worldwide scale but largest in the European Union. There are some major regional companies and a vast number of smaller companies serving their own domestic markets. In some respects the type of container glass produced is a function of what the filling is, especially drinks. A wine-producing nation will make more green glass and a proportion of this will be exported, while the UK glass industry, for example, creates mainly clear glass, e.g. the milk bottle and the whisky bottle. Without a native wine industry, and with EU regulations demanding bottling at source, there is less demand for green glass in the UK. Fibre is also produced by a limited number of large producers and some small national firms. Saint-Gobain is a major producer as are Corning, PPG Industries and Owens-Corning. Domestic glassware follows the same pattern but with a more limited international spread of companies. Lighting glass producers are either owned by multinational lighting companies or are small independents with supply contracts to the local manufacturer. Most other glass types are domestically produced with varying degrees of export opportunities. Western European glass container production can be seen in Table 4.2.

4.4 The structure of the cullet recycling sector Cullet, the term used for glass for recycling, has been traded for over 2000 years.

4.4.1 Relative importance of secondary production Cullet is continuing to establish itself as the dominant component in glassmaking, and the fuel savings alone are a compelling reason for further inroads to be made. This incentive has been reinforced by the introduction of ‘carbon taxes’ in many countries. The advantages of using cullet in the glass-making batch include a reduction in furnace

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Table 4.2 Western European glass container production (bottles, jars and flacons), tonnes (Switzerland and Turkey in addition to the EU countries) Country

1998

1997

France B + DK + IRL + NL Germany Italy UK Greece Portugal Spain N + S + FIN Austria Switzerland Turkey TOTAL

3785142 1501154 4323180 3046948 1852100 95000 762977 1816151 245993 306081 158041 469200 18361967

3642322 1447710 4293693 2929182 1969600 92500 751221 1684208 268370 307294 166177 449840 18002117

Figures aggregated for confidentiality: B + DK + IRL + NL Belgium, Denmark, Ireland and Netherlands. N + S + FIN Norway, Sweden and Finland. Source: FEVE, European Container Glass Federation.

energy consumption of 2.5–3% for every 10% of cullet used. Cullet preheating with the rest of the glass batch by waste heat before it is delivered to the furnace may allow further fuel savings. In terms of furnace operation, high cullet levels can also give other benefits such as low particulate emissions. Cullet is easier than batch to preheat. The output of the furnace can also be greatly increased, but there are a number of drawbacks to the manufacturer when operating at high cullet levels. • Metallic impurities such as bottle caps or foils from wine bottles can cause serious refractory damage and shorten the furnace life. • Aluminium caps and foils act as strong local reducing agents causing silica of the glass to reduce to silicon metal. The silicon forms into microscopic beads, which significantly reduce the mechanical strength of the glass, due to stresses resulting from the high difference of thermal expansion coefficient between silica and silicon. • Ceramic inclusions, such as earthenware or pottery that are insoluble in the glass melt will appears as ‘stones’ in the final

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Glass

product and lead to rejects. This has been a problem in Germany where ceramic bottles are fairly common. • At high cullet levels the control of composition and therefore the physical characteristics of the glass melt can be reduced, possibly leading to final product quality problems. The variable content of organic matter (food residues, paper labels, plastics) in particular can cause problems of oxidation–reduction state leading to colour and refining difficulties. • The organic content in cullet can become an issue with neighbours to the glass factory. One factory testing a cullet preheating system had to cease using unwashed foreign cullet because of the smell. In addition to the substantial energy savings possible with cullet usage, there are a number of other important associated environmental benefits. Emissions of CO2, SOx, NOx and dust are greatly reduced thanks to lower fuel usage and furnace temperatures. Emissions of other volatile substances may also be lower due to the reduced temperatures. However, impurities in the cullet may lead to higher emissions of HCl, HF and metals. This is particularly relevant in areas with high recycling rates where impurities can build up in the recycled material. Many raw materials in glass making are carbonates and sulphates, which release CO2 and SOx on melting. The increased cullet usage reduces these rawmaterial-derived emissions and reduces the consumption of virgin raw materials. Some proportion of the recovered glass will not be recyclable, and alternative uses have been the focus of government-backed research. Suggested options include simulated marble tiles and aggregate for road-building ‘glasphalt’.

4.4.2 Forms and availability of cullet Nowadays, apart from the in-house sources, the forms of cullet available for glass making are those from the various bottle bank and waste recovery schemes set up by private enterprises, national and local authorities. The use of cullet in a glass batch can significantly reduce energy consumption. Its use is generally applicable to all types of furnace, i.e. fossil-fuel fired, oxy-fuel fired and electrically heated furnaces. Most

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internal cullet is recycled. The main exceptions are continuous filament glass fibre, which is not considered possible to recycle due to quality issues, and stone wool and frit production. The base internal cullet level in the batch will usually be in the range of 10 to 25%. Cullet has a lower melting energy requirement than the constituent raw materials. The use of cullet generally results in significant cost savings as a result of the reduction in both energy and raw material requirements. A distinction should be made between internal cullet (recycled glass from the production line) and external or foreign cullet (recycled glass from consumer or external industrial sources). The composition of foreign cullet is less well defined and this limits its application. High final product quality requirements can restrict the amount of foreign cullet a manufacturer can use. Typically, flat glass for recycling goes to the container sector rather than feeding back into the float furnace. The domestic glassware industry has quality considerations which generally prevent the use of external cullet in the process. Internal cullet usage is limited by the availability of cullet of the correct quality and composition.

4.4.3 Cullet recycling arrangements The container glass industry can use significant quantities of foreign cullet from bottle recycling schemes. Cullet use in container glass production varies from under 20% to over 80% (see Table 4.3), with an EU average in the region of 48% in 1998. Recycling rates vary widely between member states depending on the schemes in place for postconsumer glass collection. High-quality container glass products (e.g. perfume bottles) have lower cullet levels than standard products. For the manufacture of flint (colourless glass) only very low levels of coloured cullet can be tolerated since coloured glass cannot be decolourised. Colourless glass can be used in amber or green glass batches without any adverse effects. Recycling schemes are, however, more effective where colour separation is included. Throughout the European Union there are ample supplies of green and brown cullet; however, flint cullet tends to be less common and because of this situation furnaces melting coloured glass operate at higher cullet levels. The situation varies significantly between member states due to regional differences in glass production and usage. It is a problem in the UK since

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Table 4.3 European glass container recycling, 1996 and 1998 Country

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland Turkey UK TOTAL

1996

1998

Tonnes collected (1)

National recycling rate (%)

Tonnes collected (1)

National recycling rate (%)

206000 224000 122000 (2) 33000 1400000 2839000 39000 43000 894000 380000 40000 120000 456000 120000 259000 44000 420000 7639000

n.a. (3) 66 66 63 50 79 29 46 53 81 75 42 35 72 89 12 22

203000 221000 120000 36000 1650000 2773000 40000 36000 810000 385000 43000 120000 567000 143000 281000 100000 476000 8004000

86 75 (2) 63 69 55 81 27 37 (2) 37 n.a. (3) 81 42 41 84 91 31 24 (2)

(1) From the general public and from bottlers. (2) Provisional figure or estimate. (3) Not yet available. The recycling rate is calculated from a count of the tonnage collected divided by the total tonnage produced. Glass packaging consumption was less in 1998 but the proportions collected had increased. Countries with extensive recycling facilities such as Holland recycle very high percentages; to attain this in the UK it has been said that a bottle bank would be needed on every street corner. Other countries such as Germany have legislation on packaging waste and its collection. Source: FEVE, European Container Glass Federation.

the bulk of production is flint glass, whereas a substantial proportion of cullet is coloured because it is derived from imported wine and beer bottles. Consequently furnace cullet levels in the UK are on average lower. The trend to nonreturnable or one-trip bottles began in the 1970s around the same time as the first bottle bank schemes began in Europe. The amount of glass collected from bottle banks has increased ever since. Bottle bank cullet provides some quality issues with the container glass maker. Variation of colour, especially green, may affect the glass batch composition and the colour balance of the glass being made. Lead

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foil seals on wine bottles have been phased out over the past five years, ending the major source of contamination from bottle bank sources. Lead could accumulate in pools at the bottom of the tank furnace and drill through the refractory floor of the furnace, seriously affecting production. Some lead was also present within the glass and there were concerns about leaching into the food or drink in the container. Glass ceramics can also be a major problem to the container glass manufacturer. Its thermal expansion differs greatly from that of soda–lime–silica glass and leads to rejected ware when it is discovered. The trouble for the cullet collector is that it is very hard to differentiate between the two different materials and the person depositing glass may not be aware of any difference. Consumer education has also been an issue: having succeeded in raising the identity of the bottle bank, the new message that they are not just for bottles but also for jars has had to be made in some countries. The European Union Directive on the Disposal of End of Life Vehicles will place greater pressure on the recycling of automotive components of which glass made up 70000 tonnes per annum. The recycling of television screens and VDU tubes is also being addressed by the EU, and industry committees have been set up to resolve the technical issues. Lead crystal cullet if not used in-house has traditionally been sold to the network of studio glassmakers and craftsmen. This has the beneficial effect of reducing studio worker’s exposure to the lead compounds used in making up the batch. The 1998 figures for the UK can also be broken down into individual colours. On average, clear glass has 12% recycled content; amber (brown) 19%; and green 67%. As the majority of glass containers produced in the UK are made with clear glass there is little spare capacity for the many thousands of tonnes of green glass collected across the country. More than 550000 tonnes of green glass are imported filled into the UK each year, compared to the 250000 tonnes of green glass manufactured. In 1998, 80000 tonnes of green cullet were exported. The glass container manufacturers also recycle a significant amount of flat glass annually (95000 tonnes in 1998) into new glass containers. Table 4.4 shows the UK bottle bank growth, 1990–96. Excess green is not seen as a problem on continental Europe where wine and beer bottle manufacture can absorb available supplies of cullet.

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Number of commercial bottle bank sites

Number of public bottle bank sites

Source: British Glass.

444

20.5

1822524

372451

1990

Number of districts with bottle bank sites

Percentage of glass recycled

National production of glass

Glass recycled (tonnes)

Table 4.4 UK bottle bank growth 1990–96

7155

4020

448

20.9

1845898

385387

1991

8703

3963

456

26.3

1742454

459076

1992

10965

4854

457

29.3

1714264

501598

1993

12858

4793

458

27.5

1784760

491817.5

1994

14257

5379

459

27

1885542

501427

1995

15061

4995

446

26.6

1951192

518538

1996

Glass

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4.4.4 International trade in cullet The cost of transportation and the relatively low value of raw materials have meant that there is only a limited international trade in cullet. As more national and local waste recovery schemes are introduced, the cost of cullet will decrease. In the same way as glass industries use local raw material sources, cullet will tend to be recycled locally. The only possibility of major international trade is where there are imbalances in markets such as the UK. The problem may be to find suitable alternative uses if the glass cannot be reused in containers.

4.4.5 Cullet pricing arrangements Transportation costs, local demand and the recycling rates influence the price of cullet. Prices can vary depending on the local market. For example, in 1996 Coors accepted and paid for crushed brown glass at $40–$50/ton delivered. However, clear (flint) and green cullet were only worth $15.00/ton delivered, because Coors uses primarily brown glass. Americans buy a lot of imported beverages in green bottles but do not then use green bottles for domestic packaging so there is little support for green prices. In 1994, for instance, Owens-Brockway paid $40/ton for clear container glass, $20/ton for brown container glass but only $5/ton for green container glass. UK cullet prices are shown in Table 4.5. The market for cullet may be supported by levies on the sources of packaging waste imposed by national governments or local authorities. In the UK a scheme has been introduced under the Producer Responsibility Obligations (Packaging Waste) Regulations 1997, based on EU regulations on packaging waste, which embodies the ‘polluter pays’ principle. A Packaging Waste Recovery Note (PRN) demonstrates that a specific tonnage of packaging waste has been recovered or recycled by a particular reprocessor. The funds raised by obligated businesses purchasing the PRNs are used to develop further recycling Table 4.5 Representative UK cullet prices (March 2000) Colour

Price/tonne delivered

Green Flint (clear) Amber (brown)

£0–£20.00 £28.50 £25.50

Source: Recycling World.

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infrastructure. Figures released by the glass container industry in early 2000 showed that glass PRN income fell from £4.9 million in 1998 to £2.6 million in 1999, a drop of 47%. The majority of funds raised were spent on the glass collection system, with 64% of 1999 revenue allocated by container manufacturers to supporting the prices paid for cullet and purchasing bottle banks. Other countries in the EU have introduced their own mechanisms to deal with this, either through a green spot on the packaging indicating a fee has been paid for the item to be recycled, or through kerbside collection and sorting of domestic waste.

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1 The European Union Robert Barrass and Shobhana Madhavan

1.1

The recycling industry and environmental regulation

1.2

The economic context

1.3

The definition of waste and raw material

1.4

Environmental regulation

1.5

Waste management strategy: the hierarchies

1.6

Implementation of the waste management strategy

1.7

Waste management regulations

1.8

Impacts of environmental policies on the recycling industry

1.9

The international dimension

1.10 Conclusion References European Legislation

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1.1 The recycling industry and environmental regulation In EU member states, environmental regulation operates within the legislative framework enacted under the Treaty establishing the European Community, and in the context of other policies which affect – and should take account of – the environment (see Barrass and Madhavan, 1996). European environmental legislation specifies (inter alia) environmental performance criteria for environmentally sensitive industrial activities, emission standards for pollutants, and quality standards for the receiving environment. The legislation is normally in the form of directives, which establish objectives and leave to the authorities in member states decisions as how the objectives are to be achieved. Some legislation (for example on shipment of waste) is in the form of regulations, which directly specify the measures to be taken. Environmental regulations affecting the recycling industry include measures designed to avoid hazards to health and to limit damage to the environment, and also the special provisions which are made for management of wastes. The latter can be controversial when applied to recycling operations, because the material being processed ceases to be waste. While policy makers tend to favour recycling over final disposal, their ultimate preference is for the generation of waste to be avoided altogether. The key environmental consideration is the impacts of alternative options, which include indirect effects, such as those of transport, land use and energy and water consumption. The regulatory authorities have also to take account of economic considerations: some material recycling is profitable and purely market driven, while in other instances disposal to landfill may be a lower-cost option. Policy makers thus have to decide the extent to which their intervention is justified, and what form it should take; and industry in turn has to respond, both in accommodating to the regulations and in seeking to influence the regulatory environment. The recycling industry is generally well established in the EU, particularly in the northern member states (see Table 1.1, ‘Structure of the recycling industries in the EU’). However, the recycling of plastics – which usually are more complex than other materials – is not well developed. Recycling activities (with the exception of metal processing) tend to be integrated between the various stages of the operation, from

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High throughout the EU

High throughout the EU

High throughout the EU

Recently established industry in Italy, Germany, France and the UK. Very little development in the rest of the EU.

High throughout the EU, except in Greece and Portugal where currently being developed.

Well-established industry in the EU, especially in Germany, France, the UK, Belgium, Denmark, the Netherlands, Italy.

NON-FERROUS METALS

FERROUS METALS

PAPER

PLASTICS

GLASS

TEXTILES

Very few operators (regional basis with very widespread customers).

Regionally-based operators; close links with glass companies

Very few operators; very close links between sorting and processing/reprocessing.

Few operators. Regional basis: close link with paper manufacture firms.

Numerous local operators (collection and sorting), less numerous regional ones.

Numerous local and regional operators (collection and sorting), SMEs for reprocessing.

Industrial organisation

Private, with some voluntary and public sector intervention in collection.

Generally private; some public involvement with collection.

Public intervention in local collection; processing is private.

Private, with public participation in local collection.

Totally private

Totally private

Role of the private and public sectors

None

Generally high, especially in the north of the EU.

High from processing onwards.

High from processing onwards

Higher on the Continent than in the UK

Low

Degree of vertical integration

Source: European Commission, The Competitiveness of the Recycling Industries, Brussels, European Commission, 1999, p. 21.

Level of development

Materials

Table 1.1 Structure of the recycling industries in the EU

Part 4: The regulatory framework

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collection and sorting to reuse, and with close involvement of the public sector. In contrast, the metal processing industry tends to be fragmented. Collection and sorting are undertaken by numerous local and regional operators, and – particularly for non-ferrous metals – much of the reprocessing is undertaken by small and medium enterprises, with a low degree of vertical integration between stages of the recovery and recycling process. This fragmentation may cause difficulties for environmental regulators, and also for the industry itself in responding to regulation, in areas such as consultation and performance monitoring.

1.2 The economic context An important function of public policy is to ensure that markets function properly, so that suppliers and purchasers are adequately informed and able to respond to economic incentives. Furthermore, with appropriate incentive structures the market mechanism can be a powerful ally of environmental management: this is a prominent feature of the European Union environmental action programme (European Commission, 1992), which includes a chapter entitled ‘Getting the prices right’. There is thus a strong public interest in ensuring that recycling is not inhibited by market distortions. However, the markets for recyclable materials do not always operate smoothly, because: • • • •

prices are often extremely volatile; the recyclable content of waste can vary; collection and sorting can have high costs; firms do not necessarily give high priority to maximisation of revenue from their wastes or by-products.

To address the problem of price volatility, the UK government has undertaken to consider official encouragement for a futures market in recyclables (DETR, 1998). There are several obstacles to the wider use of recycled materials (identified in European Commission, 1999, p. 11). These include: • Product and process standards which – either directly or indirectly – exclude the use of recycled materials.

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• The negative image of waste materials, which can affect the confidence of the public and of insurance and credit institutions. • High administrative costs in the use of recycled materials, including authorisations and shipment documentation. • Regulatory restrictions on the circulation of recyclable waste (for instance Regulation 259/93 on shipments of waste, discussed below), which prevent the recycling industry from achieving economies of scale. • Prices charged for the landfill of waste, which (in some EU Member States) do not reflect the true environmental costs, and thus give an economic disincentive for recycling. Measures that might mitigate these obstacles include the following: • Consistency and simplification of regulation, where necessary distinguishing between wastes and material for recycling. • Agreements between public authorities and enterprises to facilitate recycling. • Procurement specifications which favour (or at least do not discriminate against) the use of recycled materials (a number of EU countries already have these for public sector purchasing). • Increased charges for landfill. With respect to the last of these, Article 10 of Directive 1999/31/EC on the landfill of waste obliges Member States to ensure that the price to be charged for the landfilling of waste takes into consideration the costs of establishment, operation and closure of the landfill site, and its aftercare for a period of at least 30 years. A tax on waste going to landfill was proposed in European Parliament amendments to the draft legislation, although it does not feature in the directive as enacted; however there are such taxes in some member states – for instance France and the UK.

1.3 The definition of waste and raw material Reuse, recovery and recycling involve the transformation into useful products of material that would otherwise go to waste. A distinction can be made between raw materials, which have a positive economic value, and wastes, which typically have a negative value, inasmuch as their disposal incurs a cost. This in turn depends on factors such as the

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costs of alternative materials (including virgin materials), the ratio of value to weight, costs of collection and transport, the quality of the waste material and the costs of reprocessing compared with final disposal. In practice the distinction between waste and raw material is not straightforward, and has caused difficulty for environmental regulators. Whether a material is considered to be waste can depend on who owns it and the location and timing of its production. Some criteria for distinguishing between waste and raw material are set out below. These criteria derive from OECD (1998).

SOME CHARACTERISTICS OF WASTE AND RAW MATERIALS

Waste. Unintentionally produced, not in response to market demand, with a negative overall economic value; recovery and reuse are financially justified only if necessary for regulatory compliance or if supported by subsidies. Raw material. Directly and completely used as an input to a process which is not classified as (or comparable to) a waste management process. Waste becomes a raw material when it requires no significant further processing, and the recovered material can and will be used in the same way as virgin material.

The Basel Convention on the control of transboundary movement of hazardous waste (Article 2(1)) defines ‘wastes’ as ‘substances or objects which are disposed of or are intended to be disposed of or are required to be disposed of by the provisions of national law’. Similarly, the 1975 European Community Directive 75/442/EEC (Article 1) defined ‘waste’ as ‘a substance or object . . . which the holder disposes of or is required to dispose of . . .’ [within certain categories which are specified in Annex I of the Directive]; ‘disposal’ was defined as ‘the collection, sorting, transport and treatment of waste as well as its storage and tipping above or under ground’, and also as ‘the transformation operations necessary for its reuse, recovery or recycling’. A subsequent, 1991, Directive (91/156/EEC) introduced a definition of the ‘holder’ as ‘the producer of the waste or the natural or legal person who is in possession of it’; the holder ‘discards’ rather than ‘disposes of’ waste, and waste can also be a ‘substance or object which the holder . . . intends . . . to discard’ [emphasis added]. Waste ‘management’ is defined as ‘the collection, transport, recovery and disposal of waste,

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including the supervision of such operations and after-care of disposal sites’. The Directive (Annex II, B) also sets out a listing of ‘waste recovery’ operations, which includes ‘recycling/reclamation of metals and metal compounds [and] of other inorganic materials’; it is also specified (in Article 4) that ‘waste must be recovered without endangering human health and without the use of processes or methods likely to harm the environment’. These definitions suggest that the source (as discarded material), rather than the economic value, of materials is the criterion which determines whether they are classified as waste. This was the understanding of the European Court of Justice in the 1997 Tombesi judgement (Case C-304/94), where the Court held that the concept of ‘waste’ does not exclude ‘substances and objects which are capable of economic reutilization, even if the materials in question may be the subject of a transaction or quoted on public or private commercial lists’. Later in 1997 the Court held that ‘the term “discard” covers both disposal and recovery of a substance or object’ and that ‘substances forming part of an industrial process may constitute waste’; this is notwithstanding the ‘distinction which must be drawn . . . between waste recovery . . . and normal industrial treatment of products which are not waste, no matter how difficult that distinction may be’ (Wallonne Case C-129/96). Hence it appears that the legal definition of waste is broader than the everyday sense of the term, and that to avoid categorisation as ‘waste’ a substance must be directly reused, without any recovery operation. There is however a grey area between the removal of impurities in the course of a waste recovery operation and the decontamination of materials prior to their use in the production process. In principle the former is defined as waste treatment and the latter as normal industrial treatment. A recent English High court judgement (Mayer Parry v Environment Agency, 9 November 1998) exempted from the waste category ferrous and non-ferrous scrap metal which could be used in industrial processes without requiring further processing. In the Mayer Parry case, the point was made that manufacturers will sometimes accept material containing foreign matter, which they will then remove: but the mere presence of impurities does not necessarily mean that all the material is waste. The metal processing industry has been critical of the categorisation of scrap metal as waste. The European Coal and Steel Community’s Consultative Committee has declared that ‘unjustified restrictions

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impeding the free movement of scrap or pejorative connotations such as the ‘waste’ label can lead to commercial and/or technical difficulties and jeopardise the competitive position of European user enterprises’ (ECSC, 1997). In the UK, the British Metals Federation has claimed that ‘much of the material entering a metals recycling site, let alone leaving it, is not waste’, and called for less frequent Environment Agency inspections, and lower inspection fees (Recycling World, 4 June 1999).

1.4 Environmental regulation When material recovery, reuse and recycling are profitable, and therefore commercially motivated, the main functions of regulation are to promote the functioning of markets for materials, and to ensure that operators comply with environmental standards. Since recycling activities are often potentially environmentally hazardous, pollution regulations are an important consideration for the industry. Installations using the frequently recycled materials mentioned in Table 1.1 are among those requiring a permit in the EU, under the provisions of Directive 96/61/EC on integrated pollution prevention and control (see below). Article 3 of the Directive requires that installations are operated so that ‘. . . preventive measures are taken against pollution, in particular through application of the best available techniques. Waste production is, as far as possible, to be avoided; and where waste is produced, it should be recovered ‘or, where that is technically and economically impossible, . . . disposed of, while avoiding or reducing any impact on the environment’. Annex 4 specifies criteria for determining ‘best available techniques’: these include the use of low-waste technology and the recovery and recycling of substances generated and used in the processing of waste materials. INSTALLATIONS

WHICH MAY USE RECYCLED MATERIALS COVERED BY THE

EUROPEAN

DIRECTIVE ON INTEGRATED

POLLUTION PREVENTION AND CONTROL

Metal ore (including sulphide ore) roasting or sintering installations. Installations for the production of pig iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2.5 tonnes per hour. Installations for the processing of ferrous metals: (a) hot-rolling mills with a capacity exceeding 20 tonnes of crude steel per hour; continued

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(b) smitheries with hammers the energy of which exceeds 50 kilojoules per hammer, where the calorific power used exceeds 20MW; (c) application of protective fused metal coats with an input exceeding 2 tonnes of crude steel per hour. Ferrous metal foundries with a production capacity exceeding 20 tonnes per day. Installations: (a) for the production of non-ferrous crude metals from ore, concentrates or secondary raw materials by metallurgical, chemical or electrolytic processes; (b) for the smelting, including the alloyage, of non-ferrous metals, including recovered products (refining, foundry casting, etc.) with a melting capacity exceeding 4 tonnes per day for lead and cadmium or 20 tonnes per day for all other metals. Installations for surface treatment of metals and plastic materials using an electrolytic or chemical process where the volume of the treatment vats exceeds 30m3. Installations for the manufacture of glass Chemical installations for the production of basic organic and inorganic chemicals Industrial plants for the production of: (a) pulp from timber or other fibrous materials (b) paper and board with a production capacity exceeding 20 tonnes per day Plants for the pre-treatment (operations such as washing, bleaching, mercerization) or dyeing of fibres or textiles where the treatment capacity exceeds 10 tonnes per day Source: Directive 96/61/EC concerning integrated pollution prevention and control, Official Journal 1996 L257/26, Annex I.

Control of effluent discharges is a longstanding concern of European environmental policy. A 1976 ‘framework’ Directive (76/464) provided for regulation of discharges of dangerous substances, and identified two categories of substances. ‘Black’ list substances are toxic, persistent, and bioaccumulative, and the objective was to eliminate pollution by setting discharge standards having regard to their environmental impact and the best technical means of pollution abatement. For ‘grey’ list substances, which have more localised polluting effects, discharge standards must be set to achieve environmental quality objectives established by EU Member States. As an alternative to regulatory requirements, it is possible that industry will be motivated to take action voluntarily to protect the environment. In some instances this can be profitable – the so-called ‘win win’ situations, where economic and environmental performance is aided by critical appraisal of product and process life cycles, taking account of costs associated with potential environmental liabilities and

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the benefits of improved market opportunities. One example of this phenomenon (cited in DeSimone and Popoff, 1997, p. 68) was a Spanish metal finisher’s investment in recycling of process chemicals and water which had a payback period of only twenty months. Environmental appraisal procedures have been institutionalised in the form of environmental reporting and management certification standards, notably ISO 14001 and the European Union Environmental Management and Audit Scheme (the latter is discussed in Gouldson and Murphy, 1998, Chapter 4). Participation in these schemes is of course voluntary for the organisations concerned, although there may be an incidental benefit in alleviating the burden on regulatory compliance and reducing the amount of new regulation. The need for formal regulation can also be reduced if industry can voluntarily agree to achieve specified standards: in the right circumstances such agreements might achieve environmental objectives more rapidly, while for industry they can have the advantages of flexibility and cost effectiveness. There are several examples of voluntary environmental agreement in EU Member States (see European Commission, 1996, Annex). In the case of the metal processing industry the scope for voluntary action may be limited due to the fragmentation of the industry: small firms are often less able to pursue activist environmental policies, and it is more difficult to secure solidarity within the industry.

1.5 Waste management strategy: the hierarchies In the context of waste management policies recycling can be seen as an ‘intermediate’ option. The first resort is to prevent waste from arising, while disposal is seen as a least preferred option. Thus environmental policy makers, such as the European Commission and the US EPA, have adopted a hierarchical framework, along the following lines: • • • • •

Prevention (or ‘precycling’). Reuse (regeneration, recovery, energy conversion). Recycling. Incineration. Safe disposal to landfill.

The priorities in terms of the waste management regulatory framework are set out in Article 3 of Directive 91/156/EEC (see below).

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THE WASTE HIERARCHY: THE EUROPEAN LEGISLATIVE FRAMEWORK 1. Member States shall take appropriate measures to encourage: (a) firstly, the prevention or reduction of waste production and its harmfulness, in particular by: – the development of clean technologies more sparing in their use of natural resources, – the technical development and marketing of products designed so as to make no contribution or to make the smallest possible contribution, by the nature of their manufacture, use or final disposal, to increasing the amount or harmfulness of waste and pollution hazards, – the development of appropriate techniques for the final disposal of dangerous substances contained in waste destined for recovery; (b) secondly: (i) the recovery of waste by means of recycling, re-use or reclamation or any other process with a view to extracting secondary raw materials, or (ii) the use of waste as a source of energy. Source: Directive 91/156/EEC on waste. Official Journal 1991 L078/32 Article 3.

Implementation of a waste management strategy has to balance the environmental impacts at various stages of the product cycle: for instance, ‘aluminium is expensive and dirty to make, but easy to recycle’ (Financial Times 27 October 1999). Moreover, it is conceivable that incorporating features that facilitate recycling, and increasing the use of recycled materials, might intensify the direct environmental impacts of the production process. To take account of such effects, policy makers have advocated a holistic approach to management of the product life cycle. For example, a 1997 paper by the then European Commission Director-General for the Environment (Enthoven, 1997), stresses the need ‘to produce more from less’, by: • • • • •

reducing material and energy intensity; reducing toxic dispersion; enhancing (material) recyclability; maximising the use of renewable resources; and extending product durability.

This is supported by life cycle analysis of products and processes, to assess the environmental impacts of: • extraction and processing of raw materials; • product manufacture, distribution and maintenance;

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• product use and reuse; • recycling of components and materials; • final disposal. The information generated by this analysis can be used to control environmental impacts through management of risks, processes, products, and wastes. Policy measures can encourage product developers and manufacturers to take account of the effects of product usage and eventual disposal – and thus, for example, to design the product for reuse or recycling. This policy framework is broadly favourable to the recycling industry. Notwithstanding the priority given to waste prevention, the industry stands to benefit from the preference for recycling over disposal, and from the emphasis on integrated management throughout the product life cycle.

1.6 Implementation of the waste management strategy A ‘model’ for waste management legislation is set out in the Basel Convention. This includes a requirement for the regulatory authority to ‘encourage the adoption of new environmentally sound technologies aiming at minimising the generation of . . . wastes [and] to ensure . . . that adequate recovery and disposal facilities are located as close as possible to the sites of generation of . . . wastes, and, if appropriate, that an integrated network of such facilities is established’. Thus regulatory measures are used to deter the generation of waste and to promote recovery of materials – in effect, to encourage movement up the waste hierarchy described above. Possible mechanisms to achieve this include: 1 waste recovery regulations; 2 mandatory reuse/recycling requirements; 3 product specifications to include a minimum recycled content. There are, as yet, no general requirements with respect to the use of recycled materials. The UK government (DETR, 1999, Part 2 paras. 3.21–22) has indicated that, ‘looking to the longer term’, it will consider whether it might be desirable to set mandatory levels of recycled content for specified goods.

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Recycling is often inhibited by the absence of infrastructure to collect recyclable materials; on the other hand, infrastructure will not develop in the absence of a market for materials. Regulations can be used to break this log jam: one – prominent – example is the 1991 German legislation on packaging, which obliges producers and sellers of products to take back packaging materials for recycling (this led to the establishment of the Duales System Deutschland (DSD) which has developed infrastructure – such as collection facilities at supermarkets – to channel waste for recycling). One side effect of the system was to stimulate exports of material for recycling, and to depress the prices of materials such as waste paper; this led to economic disruption in other member states, and pressure for action at European level to prevent disorder in the market. The result was Directive 94/62/EC on packaging and packaging waste, setting a target for 50–65% recovery of packaging waste within five years. Standards and regulations with respect to specific products can be oriented towards environmental requirements. One instance is the European Directive (91/157/EEC) on batteries and accumulators, which sets limits for the mercury content of alkaline manganese batteries (Article 3), and requires that spent batteries and accumulators are collected separately with a view to their recovery or disposal (Article 4). There is provision for marking of products to indicate the need for separate collection and recycling, and the heavy-metal content. EU Member States are also required to develop programmes for: • reduction of the heavy-metal content of batteries and accumulators; • promotion of batteries and accumulators containing smaller quantities of dangerous substances and/or less polluting substances; • reduction of spent batteries and accumulators in household waste; • promotion of research into less polluting substitute substances, and into methods of recycling; • separate disposal of spent batteries and accumulators. Another instance in which regulation is designed to promote recycling is the proposed European Directive on end-of-life vehicles. The explanatory memorandum for this proposal stated that ‘in the past the existence of markets for second-hand components and scrap metal made it profitable to treat end of life vehicles and to achieve high rates of

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recovery of the metal fraction. However, in recent years, the situation has changed, mainly due to the greater use of non-metallic parts in the manufacturing of vehicles, the rise of disposal costs for non recyclable materials (particularly for hazardous wastes) and the dropping of steel prices’ (European Commission, 1997, para. 15). Thus the economic viability of recovery of materials from vehicles is inhibited by costs of recycling plastic components, which could be reduced by development of recycling infrastructure and markets for the use of recycled materials. Targets for recovery of vehicles are common in European countries. Examples of these targets, expressed in terms of the percentage of vehicle weight recovered, include those in Italy (85% by 2002 and 95% by 2010), in France and Spain (90% for new models by 2002) and in the Netherlands (86% by 2000) (European Commission, 1997, para. 33). The European Commission has proposed EU targets of 80% by 2005 rising to 85% by 2015 (European Commission, 1997, Article 7). However, if these targets are to be met, the arrangements for ensuring that vehicles are properly dealt with will require legal force and economic incentives. The European Commission proposal would require that vehicle manufacturers bear the costs of processing vehicles, including reimbursement of any costs to the final owner. Collection systems are to be established, so that all end-of-life vehicles would go to an authorised facility; a certificate of destruction would be a condition for vehicle deregistration. Manufacturers would be encouraged to design vehicles with a view to eventual dismantling, and the reuse, recovery and recycling of vehicles, components and materials. There would also be encouragement for the use of recycled material in vehicles and other products, in order to develop markets for recycled materials. The use of hazardous materials would be discouraged: in particular, vehicles sold after 2002 should not contain lead (except for solder in circuit boards), mercury, cadmium or hexavalent chromium which can be shredded in vehicle shredders or be disposed to landfill or incinerated.

1.7 Waste management regulations Where material is categorised as waste, EU waste management authorisation provisions are applicable to the recovery operations. More detail is given below.

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RECYCLING AND RECOVERY: REQUIREMENTS FOR PERMITS AND ENVIRONMENTAL PROTECTION IN

EUROPEAN

DIRECTIVE 91/156/EEC

Article 4 [European Union] Member States shall take the necessary measures to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods which could harm the environment, and in particular: – without risk to water, air, soil and plants and animals, – without causing a nuisance through noise or odours, – without adversely affecting the countryside or places of special interest. Member States shall also take the necessary measures to prohibit the abandonment, dumping or uncontrolled disposal of waste. Article 10 For the purposes of implementing Article 4, any establishment or undertaking which carries out the operations referred to in Annex II B* must obtain a permit. Article 14 All establishments or undertakings referred to in Articles 9 and 10 shall: – keep a record of the quantity, nature, origin, and, where relevant, the destination, frequency of collection, mode of transport and treatment method in respect of the waste referred to in Annex I and the operations referred to in Annex II A or B, – make this information available, on request, to the competent authorities [referred to in Article 6 of the irective]. * Annex II B refers to ‘recovery operations’ which include ‘recycling/reclamation’. Source: Directive 91/156/EEC on waste, Official Journal 1991 L078/32.

EU Member States license waste recovery operations, acting in the framework of Directive 91/156/EEC. In England and Wales, for example, the Waste Management Licensing Regulations 1994 (pursuant to Part II of the Environmental Protection Act 1990) require that anyone wanting to deposit, recover or dispose of waste must obtain a waste management licence from the Environment Agency. Licences may stipulate – for example – the type of waste that can be accepted, and operation procedures to minimise risks to the environment; this is in addition to any conditions imposed by local authority planning permission. The licensing system also includes requirements to demonstrate financial soundness and technical competence. Shipment of waste between EU Member States, and between the EU and non-EU countries, is subject to control under Regulation 259/93. The Regulation categorises waste in three lists: ‘green’, ‘amber’ and ‘red’ (respectively in Annexes II, III and IV of the Regulation). Most paper, glass, textile and metallic waste is on the green list, although some

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is on the amber list – for example, glass from cathode ray tubes, wastes from iron and steel manufacturing, and ash and residues of zinc, lead, copper, aluminium and vanadium. The red list includes potentially dangerous chemicals – for example, polychlorinated biphenyls (PCBs). When destined for recovery, shipments of green list waste must be accompanied by information on the holder, the consignee, the nature and quantity of the waste and the recovery operation (Regulation 259/93, Article 11). For amber list waste, the requirements (set out in Articles 6–9) are more onerous: details must be given of the source, composition and quantity of the waste, insurance arrangements, safety measures, the method and degree of recovery, disposal of residual waste and the estimated value of the recycled material. Thirty days advance notice must be given, and the authorities may object if they have reason to believe that the regulations will not be respected. At all stages of the shipment, the responsible party is required to sign, and retain copies of, the consignment note. The same rules apply to red list waste, except that the consent of the competent authorities concerned must be provided in writing prior to commencement of shipment (Article 10). There are similar provisions regulating imports of waste for recovery into the EU from countries that are signatories to the relevant international conventions (Articles 21 and 22).

1.8 Impacts of environmental policies on the recycling industry There is a certain ambivalence in the relationship between the recycling industry and environmental policy makers. The latter perceive recycling as beneficial, albeit less so than waste prevention; but on the other hand the industry is engaged in activities which can have extremely negative impacts on the environment. The British Metals Federation (BMF) reflected this tension in its representations to the UK government over the proposed ‘climate change’ levy on industrial energy consumption, the purpose of which is to help the UK meet its targets for greenhouse gas emissions. According to the BMF, the levy would be both ‘unfair and damaging’ to the steel scrap industry, which as a big user of energy would pay substantial amounts in levies; this was because the levy did not take account of the environmental benefits of use of scrap metal (rather than virgin ore), in terms of lower energy usage in

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steelmaking and reductions in environmental impacts such as air and water pollution, water use and waste disposal to landfill (Recycling World, 27 August 1999). Environmental policy measures can also affect the metal processing industry through their influence on the markets for metal products. An example is the switch to unleaded petrol which began in the 1980s. European legislation encouraged the use of unleaded petrol – for instance, the harmonisation of mineral oil excise duty in the European single market set a minimum rate for leaded petrol approximately 17% above the minimum for unleaded petrol (Directive 92/82/EEC, Articles 3–4). Meanwhile, emission standards for new vehicles were raised: for instance the 1989 Directive 89/458/EEC, which more than halved the previous emission limits for exhaust gases. To achieve these standards, it was necessary to use state-of-the-art technology in the form of catalytic converters (using unleaded petrol), in which precious metal components absorb pollutants. Consequently, business opportunities were generated in industry sectors undertaking the manufacture, maintenance and recovery of the converters.

1.9 The international dimension The international movement of hazardous waste is restricted by the 1989 Basel Convention. The Convention is broadly in accordance with the EU waste strategy hierarchy outlined above: Article 4(2) calls for generation and transfrontier movement of wastes to be minimised, while Article 4(8) provides that waste should be managed in an ‘environmentally sound manner’. The Convention includes two key provisions affecting the movement of materials for recycling: • Article 4(1): Parties may prohibit the import of wastes for disposal and are obliged to prohibit (or not permit) the export of wastes without the consent of the importing state. • Article 4(9): Transboundary movement of wastes may be allowed if they are required as a raw material for recycling or recovery industries in the state of import. The substance-related criteria that define ‘waste’ for the purpose of the Convention include several metals (and their compounds),

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potentially toxic chemicals, and waste from surface treatment. These are listed below.

BASEL CONVENTION: CATEGORIES OF WASTES TO BE CONTROLLED (As defined in Annex I of the Convention) Wastes having the following metallic constituents: • Metal carbonyls • Beryllium* • Hexavalent chromium compounds • Copper compounds • Zinc compounds • Arsenic* • Selenium* • Cadmium* • Antimony* • Tellurium* • Mercury* • Thallium* • Lead* *includes compounds Waste substances and articles containing or contaminated with polychlorinated biphenyls (PCBs) and/or polychlorinated terphenyls (PCTs) and/or polybrominated biphenyls (PBBs). Wastes resulting from surface treatment of metals and plastics. Note: this listing is not exhaustive; its purpose is to identify substances most relevant to the recycling industry.

The Convention (Annex IV) includes a listing of ‘disposal operations’, broadly defined to include activities ‘which may lead to resource recovery, recycling, reclamation, direct re-use or alternative uses’. Outside the EU, some countries have sought to make a clearer distinction between waste ‘disposal’ and ‘recovery’, and there are ‘diverging views regarding the status of processes which utilise certain waste materials as feedstocks’ (OECD 1998, p. 7). A further complication is that material which is classified as waste because it does not comply with regulatory standards governing its use may nevertheless comply with the standards in another jurisdiction (one example is the trade in used tyres which, although no longer meeting the legal requirements of the

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exporting country, can be exported to countries where they may still be lawfully used) (OECD 1998, p. 9).

1.10 Conclusion The discussion of the regulatory framework in this chapter has drawn attention to a number of key issues: The ‘prevention, recycling, disposal’ hierarchy makes recycling an intermediate (or second best) option in the scale of environmental preference; this may sometimes be difficult to reconcile with the environmental impacts of recovery and recycling operations, and the measures taken to regulate these impacts. The distinction between waste and raw material: the legal definition of ‘waste’ appears rather broad, and as a result recovery and recycling activities may be subject to the waste management licensing procedures; waste eventually becomes a process input, but the demarcation of the transition point is a ‘grey area’. The policy makers’ preference for recycling over final disposal could, where appropriate, be reflected in the administration of the regulations. Product life cycle management: there is a growing appreciation that environmental management should take account of, and strike a balance between, impacts on the environment at all stages of the life cycle, so that reuse, recycling and disposal are considerations at the design and manufacturing stages. The functioning of markets for recyclable material might be improved by policy measures to improve information on market opportunities, to stabilise price fluctuations, to facilitate the transportation of materials and to encourage the use of recycled material. Industry development varies between sectors and between countries. Much depends on the development of a collection infrastructure, particularly for consumer goods, and in the southern regions of the EU. The recycling of plastics, because of their complexity, poses particular problems for the industry and for regulators alike. Industry fragmentation is a particular concern in the case of metal recycling. This has its positive aspects, because small and medium enterprises often perform well; however, the industry and its regulators

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need to be aware of the difficulties which can arise in ensuring regulatory compliance and in developing environmental management policies at enterprise level.

references Barrass R and Madhavan S, European Economic Integration and Sustainable Development, Basingstoke, McGraw-Hill, 1996. DeSimone L and Popoff F, Eco-Efficiency: the Business Link to Sustainable Development, Cambridge, Mass., MIT Press, 1997. DETR, Less Waste. More Value. Consultation Paper on the Waste Strategy for England and Wales, London, Department of the Environment, Transport and the Regions, 1998. DETR, A way with waste: A draft waste strategy for England and Wales, London, Department of the Environment, Transport and the Regions, 1999. ECSC, Resolution of the ECSC Consultative Committee on the classification of scrap, Official Journal, 10 October 1997 C356/8. Enthoven M, ‘The substance flow approach. Implications for industrial management and Community policy’, IVM Conference on Substantial Sustainability – The Relevance and Feasibility of Managing Substance and Material Flows, Amsterdam, IVM, 1997. European Commission, Towards Sustainability – A European Community Programme of Policy and Action in relation to the Environment and Sustainable Development, Brussels, European Commission, 1992. European Commission, Communication on Environmental Agreements, Brussels, European Commission, 1996. European Commission, Proposal for a Council Directive on end of life vehicles, Brussels, European Commission, 1997. European Commission, The Competitiveness of the Recycling Industries, Brussels, European Commission, 1999. Gouldson A and Murphy J, Regulatory Realities, London, Earthscan, 1998. OECD, Final guidance document for distinguishing waste from non-waste, Paris, OECD, 1998.

european legislation Directive 75/442/EEC on waste, Official Journal, 1975 L194/39. Directive 76/464/EEC on pollution caused by certain dangerous substances discharged into the aquatic environment, Official Journal, 1976 L129/23. Directive 89/458/EEC amending with regard to cars below 1.4 litres Directive 70/220, Official Journal, 1989 L226/1. Directive 91/156/EEC on waste, Official Journal, 1991 L078/32. Directive 91/157/EEC on batteries and accumulators containing certain dangerous substances, Official Journal, 1991 L078/38. Directive 92/77/EEC supplementing the common system of value added tax, Official Journal, 1992 L316/l. Directive 92/82/EEC on the approximation of the rates of excise duties on mineral oils, Official Journal, 1992 L316/19.

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Directive 94/62/EC on packaging and packaging waste, Official Journal, 1994 L365/10. Directive 96/61/EC concerning integrated pollution prevention and control, Official Journal, 1996 L257/26. Directive 1999/31/EC on the landfill of waste, Official Journal, 1999 L182/1. Regulation 259/93 on the supervision and control of shipments of waste, Official Journal, 1993 L30/1.

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