Problems to solve

China’s economy is evolving in many different ways that each play a role in the nation showing signs of fading as the world’s powerful magnet for any and all secondary commodities.

Presentations at several different recycling industry conferences in late 2014 helped portray some of the factors that are influencing China’s changing role in the scrap recycling industry.

In some cases, China is generating more internal scrap to feed its own appetite. Also, China’s economic growth is both slowing and shifting away from the mass urbanization and infrastructure building that has characterized it in the past 20 years. And finally, Chinese regulatory agencies, in trying to heed calls for a less polluted country, have sometimes targeted scrap materials, whether justifiably or not.
 

Reaching a peak

China’s government continues to pledge its support for a recycling-friendly “circular economy.” Secondary nonferrous metals producers in that nation may need every ounce of that support to make it past several current challenges.

At the 2014 convention of the China Nonferrous Metals Association Recycling Metal Branch (CMRA) [http://www.cmra.cn/en/], held in early November in Guangzhou, China, Ren Xudong of the China Nonferrous Metals Industry Association (CNIA) referred to “bottlenecks” restricting the growth of secondary metals production in China, including “bottlenecks for resource availability [and] environmental stress.”

Li Shilong, vice president of the Beijing-based CMRA, said many metals production and recycling companies “have met financing difficulties” and that “there is very slack investment in the sector” in 2014.

Shang Fushan, president of the CMRA, characterized nonferrous metals production in China in 2014 as “stable,” noting that while copper production was down by 1.05% in the first nine months of 2014, aluminium production increased by 4.77% in that time.

Nonferrous scrap is continuing to be imported into China at similar levels in 2014 as 2013, however falling prices have had an impact on trade values. Measured in dollars, the value of copper scrap imported into China in the first three quarters of 2014 was down by 11.4% while aluminium scrap values dropped by 6.8%, said Shang.

As the value of copper and aluminium has dropped, production costs in China are rising, he remarked. Shang cited increases in labor, energy, financing and environmental compliance costs as a “daunting challenge” for secondary copper and aluminium producers in China. “In terms of global competition, our cost advantages are being undermined,” stated Shang.

At the same time they are facing operational challenges—including container inspection and customs clearance bottlenecks at Chinese ports—nonferrous scrap recyclers and secondary metals producers are being told by the government their sector is important to the future of China.

“Society has boosted the status of the secondary nonferrous industry,” said Ren vof the CNIA. Ren noted that the secondary sector accounted for 25% of all nonferrous metals production in China in 2011. The central government has set a goal for that percentage to increase to 40% by 2020. “We believe this sector has a very promising future,” stated Ren.

Shang also expressed confidence in the longer term future for nonferrous scrap recyclers and consumers. “Natural resources are declining [and] the world’s population is expanding. Nonferrous recycling is an inevitable trend,” he commented. “Recycled metals have rapidly become one of the important raw materials in China.”
 

Selective hospitality

While Chinese ports remain the destinations for large volumes of the world’s scrap metals, paper and plastic, Chinese regulatory agencies have heightened their interest in exactly what is inside all of the shipping containers.

At the same CMRA event, representative from China’s General Administration of Customs (GAC) acknowledged that scrap traders are running into bottlenecks at Chinese ports and outlined one measure the agency is taking to try to alleviate the situation.

Chen Zejun of the GAC’s Guangzhou Merchandise Valuation and Information Office, said the GAC is “focusing on fast declarations and customs clearance” in Guangdong Province.

A pilot project in that region is known as the “one declaration” system. “In the past it might take two days to two weeks with three different procedures involved,” said Chen. “We are trying to go faster with this model. You only need to declare [your inbound shipment] once and then immediately examination and clearance will start—at the same time, not one-by-one in sequence,” said Chen. “We hope it will be rolled out to other areas,” she added.

Traders gathered at the convention commented that the pilot system has the benefit of eliminating the need to unload and reload a container more than once for different inspections. However, it can still entail a wait time while trying to schedule inspectors from both the GAC and the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) to arrive at the same time.

Scrap exporters from Europe and North America expressed discontent with China’s costly inspection regimes overall, citing redundancy between requirements and inspections of the GAC, AQSIQ, the Ministry of Environmental Protection (MEP) and the CCIC (China Certification and Inspection Group), which inspects shipments bound for China before they leave ports in other parts of the world.

Chen, who has been working on scrap-related issues for the GAC for more than 10 years, outlined a series of rights and obligations for GAC and scrap importers, including the rights of importers to seek quick clearance of their containers and to negotiate the value of their shipments.
 

This year's models

As the stream of end-of-life computers, televisions and cell phones grows exponentially in Asia, governments in that part of the world are starting to set up networks designed to ensure what they consider to be the best recycling outcome for such devices.

An overview of China’s vast new system was given at the Electronics Recycling Asia conference, organized by Switzerland-based ICM Ag and held in Singapore in mid-November, as was the announcement of a standardization system in host nation Singapore.

Ronnie Tay of Singapore’s National Environment Agency (NEA) [http://app2.nea.gov.sg/], said Singapore’s new SS587 standard has been designed to help ensure the nation properly handles the estimated 60,000 tonnes of electronic scrap it generates each year.

Tay said the new system takes into account the value of these items. “There is enormous potential for resources to be recovered [so] well-designed systems have to put in place for collection and processing” of e-scrap, he stated.

The SS587 standard can be adopted by all corporate generators and collectors of electronic scrap. At the forum, two companies who have complete compliance with SS587 through a pilot program—packaging firm GreenPac and Solvay Specialty Chemicals—were honored with plaques received from Tay.

China, with some 1.3 billion people and an economy that has converted from agrarian to industrial and commercial in just three decades, enacted a nationwide obsolete electronics recycling system that started in 2012.

According to Professor Li Jinhui of Tsinghua University, Beijing, the precious metals content in items such as printed circuit boards and cell phones can cause “flows to the informal sector,” but that China’s new system of 106 licensed facilities means that most scrap is now “treated by the formal sector.”

Professor Li said China’s licensed recyclers can benefit from additional technology transfer from Europe and other parts of the world. Although, this process is encouraged within China’s current five-year economic plan, it is being hindered by perceptions of inadequate protections of intellectual property in that nation. China’s formal electronics recyclers also could benefit from offshore training methods, said Li.

Even without full access to global technology, the 106 licensed facilities in China generally have adequate dismantling, shredding and materials separation technology, Li indicated. Recyclers and government officials, however, are still trying to determine the correct subsidy figures to help ensure end-of-life items flow into the formal network rather than informal and possibly unsafe locations.

The author is the editor of Recycling Today Global Edition and can be contacted at btaylor@gie.net.