rethink sustainability
Urban Mining: A literal gold mine
Lombard Odier Investment Managers
In our current economy, we extract some 97 gigatonnes of material every year – an amount equivalent to roughly half the weight of Mount Everest1. Most of the material we extract is wasted, ending in emissions through combustion of fossil fuels, or is lost to landfills and untraceable waste. Less than 9% of the materials we use in our economy are recycled – and most of that is accounted for by water treatment and organic waste for land applications. Our economy is thus enormously wasteful, and unsustainably so. We can and must do better, and doing so represents a financial opportunity to be embraced, rather than a burden to be shouldered.
Electronic waste represents a case in point. Every year, the world discards around 50 million tonnes of electrical and electronic devices, equivalent to the weight of 19 Eiffel Towers every day. As opposed to the iron used to build the Eiffel Tower, however, the contents of electronic waste are as varied as they are valuable, containing up to 60 unique elements. These range from base metals like copper and tin, to precious metals such as gold, silver and palladium, and technology metals such as cobalt and indium.
E-waste consequently represents a resource that is vastly richer than any naturally-occurring deposit. One tonne of e-waste on average contains 17 times more gold than a typical tonne of mined, gold ore, with the total value of all materials in such waste flows estimated at $63 billion per year. Furthermore, in the EU, the stock of electrical and electronic products in households, businesses and public spaces amounts to as much as 250kg per person, in addition to 17kg in batteries. E-waste, hence, is set to grow.
The social and environmental case for such “urban mining” is equally noteworthy. On average, recycling may be two to ten times as energy efficient as the smelting of extracted raw materials – recycled gold produces 80% lower carbon dioxide emissions than the mining of new ores. Moreover, recycling avoids the accumulation of hazardous wastes in landfills, 70% of which is accounted for by e-waste, despite accounting for only 2% of overall solid waste.
Finally, demand for recycled metals is on the rise. The use of recycled raw materials lowers the environmental footprint of a product, which takes into account the environmental credentials of a manufacturer’s suppliers. Equally as important, recycled materials are free of sourcing concerns such as those that afflict conflict minerals such as tin, tantalum, tungsten and gold – with cobalt (a key material for electric vehicle batteries) are not far behind. And, with prices of raw materials volatile, and erasing price falls in the last century, recycling offers a source of stable, captive supply.
Supply concerns have already led the EU to identify 27 critical raw materials (including cobalt) that are of major economic significance yet face concerning risks to the stability of their supply. Recycling offers an obvious solution, providing a source of raw materials free of social and environmental concerns. Some industries are already taking bold steps. The electric vehicle industry, keenly aware of the need to recycle their valuable batteries, is investing in large-scale recycling operations. With this industry providing a boost to investment in the industry, others will follow.
For now, collection, disassembly and recovery of raw materials still pose a cost burden to recyclers. Not all that glitters is gold and not all materials contained in e-waste may be economically extracted. But, with an increasing carbon price, growing economies of scale and improved technologies, the scales will progressively tilt in favour of the recycling industry.
1Estimate of 97 gigatonnes is a 2019 estimate by LOIM, projected from data up until 2017 from Global Resources Outlook 2019 and MaterialFlows.net
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