Key Trends for the European Recycling Industry

By Dr. Lilla Grossmann, Siemens AG – Process Industries and Drives, Germany: *)

Key data indicates that the recycling industry is a significant factor for the European economy, and that it offers business opportunities and potential for exports and growth for innovative European companies. The European Commission and the governments of the member states have a vision of forming a sustainable society which uses fewer raw materials thanks to enhanced recycling technologies and less use of energy, in turn reducing pollution to soil, water and air through measures such as encouraging CO2-free power generation.

The enhancement of resource efficiency is one of the key preconditions for achieving this ambitious objective. With this in mind, it is evident that the recycling industry is facing challenges of growing technological complexity, while at the same time coming under pressure to reduce costs and increase recycling efficiency. The recent commodity super-cycle covered underlying technological and economic changes in the manufacturing industry and it inhibited efforts for the necessary technological development and cost-efficiency enhancement in the recycling industry.

Source: European Topic Centre on Sustainable Consumption and Production

Source: European Topic Centre on Sustainable Consumption and Production

The aim of this study is to determine and analyse these underlying forces and their impact on the supply of secondary raw materials in the long-term. The focus of the research paper will be examining the impact of these driving forces on the recycling of scrap, with some observations and consequences also being valid for the recycling of other secondary raw materials.Analysing the metallic material flows in the economy, three different types of scrap can be defined. The first source of scrap is so-called run-around scrap which is produced during the primary production of metals, mostly in smelters and in steel plants. This type of scrap plays practically no role in recycling. It is fed back into the production after certain process steps, such as the processing of matte or converter slag and so on.

The second group of scrap is so-called new or industrial scrap. This kind of scrap arises in large quantities during the manufacturing process. The recycling of new scrap can be performed at relatively low costs because it is mostly free of impurities, making a complex treatment of this scrap type unnecessary. The collection and treatment of this material flow is an important function of the recycling industry. However, the amount and composition of this scrap is majorly affected by the technological development of manufacturing processes and the evolution of production machinery.

The last type of scrap, which is the most widely-known, is so-called old or post-consumer scrap. This material flow includes all metal-bearing waste, end-of-life products and so on, which are disposed of after use. The recycling of this kind of scrap is complex and can be carried out in several ways:

  • Products and machines can be regenerated (upgraded), which allows the continued use of the product
  • Components can be removed from the obsolete products and reused as replacement parts
  • Treatment of the waste to extract secondary raw materials

The first two methods are applied for product recycling and carried out by producers or specialised service companies. Generally, product recycling is not considered to be part of the recycling industry and is often largely ignored, with the general public unawareness of its importance. The latter method is the main focus of the recycling industry. It is often very costly and energy-intensive despite its increasing significance. The composition of this material flow is mostly affected by product evolution and by public tastes and fashion.

Driving forces behind the supply of scrap

The crucial influencing factor for the supply of scrap is the technical development in the manufacturing industry. Following trends were identified: Downscaling, material innovations and substitution, new manufacturing methods like 3D printing, modular design of products, increasing number of electronic components in products. Often, these innovations and continuous product evolution are not perceived by the public as something special, and are instead regarded as normal, convenient and pleasant for many people. The public is not aware of the consequences of these developments for the environment or the recycling industry. As a result, the author has decided to demonstrate the effect of the aforementioned technical development trends on the evolution of “daily companions” like cars, phones and computers.

Downscaling

Downscaling has been a prolonged trend in product development over the last decades. As part of this, developers attempt to reduce the weight and size of the products while even increasing their technical performance and efficiency. Downscaling can mainly be observed in the evolution of electronics and consumer electronics. Currently, we are witnessing a revolution in information technology. The new generations of smartphones are small computers which have outstanding capabilities compared to the room-sized computers of the post-war period. This product evolution can be attributed to the development of integrated circuits and the improved manufacturing of circuit boards using techniques such as robotics and automation.

Material innovations and substitution

Material innovations and substitution has also been a prolonged development process over the last decades. It is characterised by the increasing use of synthetic materials in place of metals in modern times and the development of nano-materials more recently. Nano-materials can be found in many everyday products like sun cream, flat screens and batteries. Their environmental impact has not been fully investigated and understood yet. The disposal and recycling of the aforementioned products is an unsolved problem. One of the latest examples of material substitution is the new BMW i3, which is a light-weight e-car manufactured from carbon fibre supported plastics.

The breakthrough of this manufacturing technology has not yet been realised and will likely be settled in the near future, but the light-weight construction of cars is inevitable in order to reduce carbon emissions and fulfil European emission standards. Therefore, the development of new innovative synthetic materials and alloys is continuing. The principal effect of these developments in product manufacturing is the increasing complexity of products which comprise a broad mix of raw materials.

New manufacturing methods

Innovations in manufacturing methods are continuing to be developed in order to increase productivity. Recently, development in robotics, electronics, IT and automation has enabled the establishment of complex production lines. The implementation of integrated supply chain management has also contributed to improving the operation efficiency of production companies and therefore to economical raw material usage. Digital factory is an innovative approach for planning and controlling production lines and processes including simulation and 3D visualisation, e.g. Intergraph’s “SmartPlant”.

The latest development in manufacturing is 3D printing. Using this technology, parts or whole products can be produced from powders or liquid material through sequential layering and subsequent hardening or fusing. It is mostly used for rapid prototyping, but also increasingly for small serial production. In 3D printing, material losses can be almost completely avoided. The impact of this technological development cannot be estimated at the moment, but some believe that it can trigger the next industrial revolution.

Source: European Topic Centre on Sustainable Consumption and Production

Source: European Topic Centre on Sustainable Consumption and Production

Modular design of products

The modular design principle is used in product development and manufacturing to satisfy special customer requirements in a cost-efficient and flexible way. Individual products can be manufactured based on standardised parts. The principle is widely used in car manufacturing. Suppliers shoulder an increasing responsibility for the development and manufacturing of parts, such as car body panels including electronics. On the one hand, the modular design of products facilitates repairing or upgrading machines or cars, but on the other hand, modular components are becoming more complex, expensive and comprising an increasing number of materials. Moreover, broader product variability makes it difficult for recyclers to develop standard recycling routes and processes. Therefore, the dismantling and recycling of these components is becoming increasingly complicated and expensive.

Increasing number of e-components

In recent times, the increasing integration of electronics and software into products can be observed. This development is most strongly visible in cars and white goods. Most consumers are confronted by abbreviations like ABS (Antilock Brake System), ParkPilot (parking assistance system of German car manufacturer Volkswagen), etc. when purchasing a new car, for instance. Touch screens and car computers are becoming standard features in most vehicles. These system components make products more convenient and interactive for the customer, but also more expensive and complex. Moreover, the products become obsolete at a faster rate due to hampering software support.

Source: Eurofer

Source: Eurofer

Consequences for the recycling industry

The main consequence of these technical developments for the recycling industry is the progressive decrease in the amount of new or industrial scrap. New and improved manufacturing technologies allow reduced material losses during production, which is the main source of new or industrial scrap. Therefore, the treatment of old post-consumer scrap should be brought increasingly into focus in the next decades. The figure (left) illustrate the challenges in recycling obsolete products containing metal: the material composition of an iPad.

The iPad provides a good example because it consists of a broad mix of materials, including micro-electronics (circuit boards), batteries with critical minerals and nano-particles in displays, etc. The treatment of such complex products and the recovery of metals (including critical metals, which can be found in very small amounts in the product) are the major challenges facing the recycling industry in future. The development of such products has been made possible through the aforementioned technical progress in electronics, manufacturing and material sciences. In this respect, the recyclability of the products was almost completely overlooked in the design and engineering of the product by the producer. Shortened product lifecycles further exacerbate this already serious problem.

The fastest-growing waste stream

Waste electrical and electronic equipment comprising of discarded refrigerators, IT equipment, transformers, etc. is the fastest-growing waste stream. The annual growth rate of WEEE is between three and five per cent. Therefore, this development requires increased attention in legislation and by industry.

The figure above shows the average material composition. The enormous range of models and equipment types, the inclusion of harmful substances, nano-materials, precious and rare metals transform the treatment of this waste stream into a real challenge for the recycling industry. Nevertheless, this waste stream contains a high amount of common as well as rare and precious metals, which make WEEE an increasingly attractive source of scrap.

Source: Philippe Chalmin: World market for Recovered and Recycled Commodities – The End of the “Waste Era”, Bureau of International Recycling 2011

Source: Philippe Chalmin: World market for Recovered and Recycled Commodities – The End of the “Waste Era”, Bureau of International Recycling 2011

Economic factors and globalisation

In the last decade, very rapid economical development was witnessed in BRIC countries (Brazil, Russia, India, China)especially in China, which was characterised by the enormous demand for raw materials in these countries. The figure below shows the track of the scrap price index (2001 = 100) of Eurofer. A significant increase in the scrap price can be observed until Europe entered into the so-called North Atlantic Recession. This was followed by a primary commodities rally driven by investment in physical assets. Nevertheless, the commodity super cycle seems to have finished and the author anticipates a progressive decrease in scrap prices due to excess capacity in the European steel industry and a projected deceleration in the Chinese economic growth rate in the near future.

The figure on the following page illustrates the scrap trade volume of the European countries over the latest decade. An export-driven increase in the scrap trade volume can be noted in Europe, which opens up new growth opportunities for the recycling industry in developing countries.
New regulations can be expected

It is a well-known fact that the collection-efficiency of old scrap, especially WEEE, is still weak. Almost half of the old electrical and electronic equipment are disposed of via unclear waste management routes. Additionally, nowadays the majority of post-consumer waste and scrap is being landfilled. Therefore, new regulations and directives can be expected regarding the collection and treatment of old scrap streams.

Due to the anticipated fall in the amount of new or industrial scrap, this step is inevitable to keep and increase the re-use and recycling level of scrap. Additionally, an increase in the recycling of rare and precious metals contained within waste will likely be forced by the legislator, as these metals are considered essential to European economic growth. Legal regulations for monitoring waste streams are subject to continuous change and more stringent standards and monitoring systems can be expected for the near future. All these legislative changes will lead to higher treatment costs and administrative hurdles for the recycling industry.

Photo: Apple

Photo: Apple

Outlook for the European metal recycler

Over the last few years, there was a bull market for the metal recycler caused by the limited delivery capacities, among other factors. This comfortable price development for the industry mitigated and partly covered the impact of the aforementioned techno-economic trends. Due to the recent and expected price cuts caused by the over-capacity crisis in the European metal industry, the consequences hit the industry more powerfully. Because of declining clean and cheap industrial scrap sources, a shift of focus to other scrap sources is necessary.

However, the development costs for these new sources are high due to the recent innovation backlog. Following the development of new scrap management routes, treatment methods are inevitable for the industry to ensure at least the current supply level. Now, the industry is burdened by cost pressures for efficient production and development costs for the increasing treatment of scrap from “low-grade” sources like post-consumer scrap. In addition, due to the increasing global trade of scrap, European recyclers are subject to growing competitive pressure from the Asian recycling industry.

The European metal recycling industry is dominated by SMEs which can barely shoulder this dual burden. The development and implementation of new complex treatment processes is extraordinary expensive. Therefore, an increasing concentration and merger of companies is expected, allowing them to benefit from economies of scale. In conclusion, it seems clear that the structure and focus of the recycling industry in recent times must change to meet these challenges and fulfil its function within the economy.

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*) Abridged version: For reasons of space, the editors reserve the right to shorten research papers. For the content, the author is responsible.

Photo: Marc Weigert

(EURNP0515S1)