One man's trash is another's treasure

The global trade in junk calls up ugly images of starving children picking through mountains of trash in Mumbai or Manila. One imagines SUV-driving, Toys"R"Us-patronizing, McMansion-building fat cats paying a third-world underclass to clean up their messes without a second thought to the consequences of their choices. Less sensational is the crucial role that junk plays in the economies of developing countries. Seen from another angle, the worldwide scrap trade is one of globalisation's great green success stories. This is the real story, according to Adam Minter, a Malaysia-based chronicler of the scrap trade and the author of Junkyard Planet. Mr. Minter "comes from old junk" (in his own words), grew up in a junkyard and has been writing about junk for over fifteen years, giving him a unique insider's perspective on the billion-dollar trash trade. This is Part I of a two-part interview.

In your book, you describe how the plastics, paper, aluminium cans and electronic goods that we throw away are typically shipped to markets where there are highly sophisticated industries devoted to recycling and reusing them. I always say, don’t think of the scrap industry as a recycling industry; think of it as a raw materials industry. Think of copper mines, iron ore mines, oil wells and forests that are being logged. Your aluminium can competes with bauxite dug out of a mine in Tibet. Take the case of China, for example, where demand for raw materials sky-rocketed during the massive economic expansion of the past few decades. China could have got those raw materials from Indonesian copper mines and Australian bauxite mines; it could have drilled more oil wells in the South China Sea and caused more geopolitical conflict. It did do some of those things, but in addition, it took waste from the EU, US, Canada, and Japan — waste that didn't have anywhere else to go because there was no market in these slow-growth economies and would have ended up in a landfill otherwise— and used it as raw materials for its growth. In the giant Chinese housing boom, wiring inside houses and window frames came from recycled materials. The made-in-China products that consumers buy all over the world are manufactured from recyclable materials imported into China. The reason that the scrap industry has grown to the size it is today is because of the Chinese demand for raw materials. The practice of importing scrap not only freed up landfills and kept stuff out of incinerators but also took some of the pressure off Chinese resource extraction efforts throughout the world. Recycling made the impact of China’s development much less than it would have been otherwise. Right now, thirty to forty percent of China’s copper demand is met by recyclable copper. The numbers for aluminium are more or less the same. And it’s not just China, but also India and Thailand and Indonesia etc. But isn't it at least partly a case of the rich dumping their messes on the poor? About two-thirds of the scrap generated in the US stays within the US. It’s the stuff that’s really hard to recycle that goes to China. And here’s the other myth—that scrap goes to India and China because labour is cheap and there’s no regulation. But if that were the case, all the scrap would flow to Madagascar. It doesn't, although labour is really cheap there, and that's because there's no manufacturing on Madagascar. Scrap flows to where the economic production is—it flows to manufacturing. You make it sound very nice, but we've all seen the photos of ragpickers operating in appalling conditions. There's nothing feel-good about that. Yes, of course this aspect of the trade exists. But although it’s very photogenic and makes for good news, I can tell you this is a really minuscule aspect of the global recycling trade. It’s simply not very efficient recycling — there’s far more efficient recycling going on in these countries behind walls, where journalists aren’t going to be invited. It’s not to say these other facilities are nice—they’re not—but then the reality of recycling isn’t nice. At any rate, there’s no economic argument for putting in a highly mechanized recycling system — like they would have in the EU — when you’ve got very low cost labour. It has to function as a business. And human beings are often more adept at recycling than machines. They’re compensated for that ability quite well. In China, for example, the best metal sorters get paid upwards of seven to eight hundred dollars* a month these days. In 2002, they were paid between seventy-five to a hundred dollars. Earlier you said that scrap flows to manufacturing. Can you elaborate on that? I was at a conference in Dubai last month where there was a lot of talk about an Indian renaissance. But for India's scrap industry to boom, they are going to have to get their manufacturing going. It’s still a relatively small-scale manufacturing economy. Once that happens, it will become a major importer of scrap. Manufacturing and recycling go together. Does that have something to do with shipping costs? You’ve written that in the early days of the China-US trade, containers that were full of Chinese-manufactured goods on their way to the US markets were largely empty going back, there being little demand for American goods in China. That changed when someone thought to fill the containers on the return trip with scrap from the US. This really helped lower the cost of shipping scrap to China. Currently, you can ship scrap from Dubai to Nhava Sheva port in Mumbai for less than two hundred dollars. Why is it so cheap? It’s because Nhava Sheva sends so many agricultural goods to the Middle East and Dubai is a major port. Indian agricultural exporters want nothing more than to get those boats and containers back to India, so they’re willing to discount them heavily. As a result, you already have a lot of scrap going from Dubai to India. If India becomes a manufacturing powerhouse—and that’s an open question—they will export to the US and to the EU. As more and more containers go to the EU and the US, there will be more and more empty containers, but the US doesn’t have anything to send back to India—we learned this over thirty years with China. I mean, the US, EU, Australia and to a lesser extent Japan, don’t make anything in huge volumes that developing countries really want to buy. A lot of it has to do with the fact that developing countries make everything cheaper. So you're going to end up with all these empty containers, and if India starts manufacturing and exporting to the US, those containers will become cheaper and start shipping scrap back to India. No question. It’s an endless feedback loop. What intrigues me is the fact that we're seeing history repeat itself. In fact, you write that what China did with scrap is nothing new. Absolutely. What China did was on an unprecedented scale, but it’s not new. Recycling wasn’t invented by hippies in the seventies. From the 1850s to the 1870s, the US was industrializing and didn’t have enough raw materials to start building its railroads, print newspapers, etc. It would import rags and steel from the UK. That started shifting as the US economy got bigger and it started exporting scrap, in particular to Asia and Europe. In fact, when Japan and Germany were rising industrial powers in the 1920s and 1930s, the US scrap industry was shipping millions of tons of scrap to those industries, much of which went into their military industrial complex. So you know, the globalization of the trade is nothing new-- it’s arguably a hundred and seventy years old. The big question going forward now is what happens as China, India and other developing nations generate their own waste? China is now the world’s largest consumer of mobile phones. Where are those things going once they become junk? A lot of the white good are shipped out—when I was in Africa a couple of months ago I saw a whole lot of Chinese white goods coming in. In Delhi, you go to the big electronics market, it’s Chinese televisions. It's not American stuff anymore. China does have a giant e-waste recycling program. It took years to do it. It’s not functioning properly yet, but they are subsidizing the recycling of appliances while they get this thing going. Another problem is that China—although it looks really big on the map—doesn’t actually have that much land available for landfills. So, China is going to have to build incinerators — high-end Japanese- and EU-style incinerators. The labour costs are also going up and the recycling rates are starting to slip. You used to have recycling stations all over the city, right next to big apartment buildings, but real-estate costs are getting higher and higher, so these stations are being pushed outside the city. It’s becoming less profitable to recycle, so they will have to incinerate. What happens when India starts to generate waste? Well, it might be a big problem because they don't have adequate infrastructure yet. There are people who are making huge investments in e-waste recycling, and if the Indian government can actually enforce the regulations on the books things could work out, but it is still in many ways cheaper to handle stuff in ways that are not safe. India has some pilot programs that are really good, but they are still only pilot programs. I was in Karnataka a couple of years ago, which is ahead of a lot of India because there's so much manufacturing there. Intel and Dell have their manufacturing facilities in Karnataka, and they have their own global code of conduct. These companies are going to try to meet a certain standard regardless of the government regulations. It may cost them a lot of money, but they will try to create local solutions to the recycling problem. Then there are also local companies like Attero that are doing a lot of work in the area of e-waste recycling. India has another incentive to get it right, and that’s to get at the gold that’s in the electronics. India is the largest or second largest gold market in the world. They hate the idea that they are exporting circuit boards containing gold to Belgium or Japan when that gold should be staying in India. It drives them crazy. If there’s one thing that’s clear from your book, it is that the market often offers the most efficient solution to waste disposal. Where are the areas that government regulation can add value? I’d say governments can play an important role in two areas. The first is in the area of health and safety regulations for the workers in these facilities. I grew up in a junkyard, and one thing I came to realize over the years is that a safe operation tends to be a more efficient operation. The second area where the government could be effective is in tax policy. Currently, China actually has a tax disincentive to use certain kinds of recyclable materials in favor of virgin materials, which doesn’t make any sense. India has the same situation — taxing imports of recyclable materials. Why would they have such a policy? In China, for one, the attitude is we're going to import it anyway so let's tax it and make money off it. Two, oftentimes customs officials don't understand what's being imported — they open a container and see a case full of Christmas tree lights, but they don't understand what that's for. (There are established trade groups in the US/ EU that are working to educate governments on these businesses and getting them to lower barriers.)

In the Indian case, India has very strict regulations on waste trade. Now, Indian companies import brass scrap from the Middle East, but a lot of brass scrap is conflict scrap — bullet casings from war zones. It's very good quality. People collect that stuff from war zones and ship it to India in particular, where it’s melted down and recast as religious icons. But shell casings have residual gunpowder, and there have been explosions in recycling plants that resulted in fatalities.

So the Indian government is rightfully wary, but regulation is a blunt instrument. Care needs to be taken in defining something as hazardous. There's a lot of grey area. Some would say mobile phones are hazardous waste, but if you can fix them up and reuse them, how are they hazardous? Five years ago, Christmas tree lights were highly hazardous to recycle, but now they’ve figured out how to do it so that they’re not. Governments need to be flexible.  

*All dollar amounts refer to US dollars.