WEEE – a copper market conundrum

Rebecca Gordon

Divisional Director, CRU Consulting

June 2019

WEEE recycling challenges faced by all participants

2

● Global WEEE volumes increasing:

o collection legislation,

o electronics market penetration,

o product innovation, and

o reduced product lifespans

● Appropriate waste management crucial:

o mitigating environmental impacts

o addressing materials criticality

● Viability requires e-waste recycling revenues exceed costs

of collection, transportation and processing:

o Precious metals being thrifted out and reduced by

miniaturisation

o End uses consuming secondary materials limited

o Stricter environmental compliance costs incurred

● Much WEEE lost to landfill, stockpiled or exported

Producers

ConsumersRecycle

Copper: criticality still at 9 so further action needed

3

Secondary supply can be a viable alternative to meet

some of the future demand but what about WEEE?

0

1

2

3

Years ofknown

reserves

Uncertaintyof Supply

Uncertaintyof Demand

GeopoliticalRisk

Sustainability

Vulnerabilityto the

absence ofsubstitution

2018 2019

Uncertainty of supplyCriticality Score

9Cu

Copper

29

Has reduced as shelved mining projects have been fast-tracked to financing.

Ten Tier 1 (>100ktpa) “Firm Projects” in January 2019 vs six in Jan 2018 and

five in Jan 2017

-5 000

0

5 000

10 000

15 000

20 000

0 3 000 6 000 9 000 12 000

2015 2017 2019

Cumulative production ('000 t Cu)

Significantly larger pipeline of projects in the CRU 2019 report

Long run year project cost curves*, real ($2018$) full economic costs, $/t

4

DATA: CRU, Company reports, Industry contacts

0

20

40

60

80

100

120

140

160

Mitsubishi GlencoreRecycling

Boliden Umicore PPC Aurubis DOWA SMM0

200

400

600

800

1 000

1 200

Copper Silver Gold Palladium

E-scrap Average grade ore*

2,000

WEEE-scrap metal content can be higher than ore

Metal content of printed circuit boards (PCBs) (g/t)

Several major players dominate E-scrap processing

Estimated E-scrap capacity in gross weight 2018, '000t

* Palladium = Pt + Pd grade

WEEE scrap is rich source of metals, but high barriers to entry

4

Obsolete scrap consumption increasing too slowly

5

● Europe largest obsolete scrap-consuming region:

o well-established smelters, complex waste

streams focus on WEEE & low-grade Cu scrap

● Chinese obsolete scrap processing capacities

have increased slightly in recent years

o most planned smelters are high end

concentrate-only or mixed-feed smelters

o significant technical barriers for low grade feed

smelters

o scrap collection infrastructure in its infancy

● Japan & South Korea several secondary

smelters

● North America only one secondary smelter and

no operation that can effectively process lower

grades of scrap

● Effective obsolete scrap processing capacity

outside of these regions limited and likely to

remain low

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

China Northeast Asia Europe North America RoW

Obsolete copper scrap consumption in secondary and mixed-feed

smelters (‘000 tonnes)

Market stagnation

Yield can be low starting with 1 tonne of end of life WEEE material

6

0

100

200

300

400

500

600

700

800

900

1 000

(Vo

lum

e in

kg

)

End-of-life

e-waste

Glass and

plastic

SlagResiduesFerrous

Scrap

Aluminum

scrap

Smelter-

grade

scrap

Heavy

metals

(Tin-lead)

Precious

metals

Copper

-87%

-75%

Scrap collection and processing (shredder)

Secondary smelter/refinery

7

And the process is not simple…

Equipment or

processing step

End-use market

Intermediary product

Marketable product

Legend Scrap collectors, dismantlers and shredders

Optical and

density

separation

Sieving

End-of-life

product

disassembly

Eddy current

separationMagnetic

separationShredding

Fines/powder

material

Smelter-ready

scrap

Top submerged

lance furnaceSlag

TBRC (Kaldo

converter)Anode furnace

Electrolytic

refinery

LME grade

cathode,

>99.99%

Anode slimes

Precious

metals

recovery

Black copper

~80%

Copper anode

~99%

Copper and PMs

~95%

Bulky

plastic/glass

components

Tin/lead slag

and zinc dust

Base metal

rotary furnace

Tin-lead ingots

and zinc metal

Other recyclers

or landfillEAF steel millsAluminum die

casters

Secondary copper smelter

Copper refinery

Gold, silver

and PGM

Cement

producers,

highway, etc.

Direct melt scrap

Ferrous scrapAluminum-rich

scrap

Another challenge is the changing regulatory framework

8

0,0

1,0

2,0

3,0

4,0

5,0

2011 2012 2013 2014 2015 2016 2017 2018 2019

Gross weight Mt Copper contained, Mt

Operation Green

Fence enactedEnvironmental

inspections

issued

Further

restrictions

announced

Shipment

inspections

overhauled

New

environmental

plan launched

June 2019

Chinese Cu Scrap imports fall as Chinese legislation is systematically tightened, 2011-2019, Mt

Increasing Cu grade of imports

Regulation and inspection has changed landscape in China

9

24%

2%

7%

7%

11%

45%

4%Taizhou

Shanghai

Ningbo

Zhangzhou

Tianjin

Guangzhou

Other

57%

3%

25%

7%

1%7% 0,5%

Taizhou

Shanghai

Ningbo

Zhangzhou

Tianjin

Guangzhou

Other

Approved Category 7 import quotas by

province - 2017

Approved Category 7 import quotas by

province - 2018

• Tianjin District 7% imports 2017

• Major player: China Metal Recycling (CMR)

• Highly fragmented, labour intensive

• Licenses revoked

• 2018: ~<3% imports

• Ningbo / Taizhou District: 25% imports 2017

• Major player: Chiho Group, Taizhou,

China’s largest scrap processing facility

• Highly mechanized dismantling & sorting,

well managed facilities

• 2018: ~45% imports

• Guangzhou District: 42% imports 2017

• Major port adjacent to Hong Kong

• 75% licenses revoked

• 2018: ~<20% imports

• Hangzhou District: 17% imports 2017

• Major processor: Zili Copper Industry Co

• Mostly processes insulated wire & low grade

residues for blister production

• Most licenses renewed

• 2018: ~23% imports

Map: Bing maps

10DATA: CRU, IHS Markit

0

20

40

60

80

100

120

140

160

180

0

50

100

150

200

250

300

350

2014 2015 2016 2017 2018 2019e

Cu Scrap imp Intermediate refined exp

Malaysia:

● Emerged as a key importer of low-grade scrap in

2018 mostly from USA

● Could grow to >340kt in 2019, on the back of

strong imports in the opening months of the year

● Reports that there are now several facilities of

>100kt/y processing capacity in Malaysia, gross

weight

● Exports to China of what we believe to be

processed scrap (under the HS code for Matte)

exceeded 100kt in 2018; up 500% on 2017 levels

● E-scrap pollution possible from unregulated and

illegal processors

● Government considering a ban on this industry

Malaysian Cu scrap imports could rise dramatically in 2019

Scrap imports (lhs) and matte exports (rhs) in gross weight, '000t

Who will process this

material?

Malaysia is importing Cu scrap previously destined for China

Europe is the best served market for copper scrap recycling

11DATA: CRU, Company reports, Industry sources

Size of bubble denotes volume of secondary raw materials used.

Harjavalta (Boliden)

Rönnskär (Boliden)

Glogow I (KGHM)

Glogow II (KGHM)

Legnica (KGHM)Lunen (Aurubis)

Hamburg (Aurubis)

Pirdop (Aurubis)

Atlantic Copper (Freeport)

Brixlegg

Beerse (Metallo)

Hoboken (Umicore)

Olen (Aurubis)

Elmet (Metallo)

Lunen, Hamburg, Pirdop and Olen operations all utilise Cu

scrap. Smelting capacity of 90kt E-scrap and 550kt total Cu

scrap in EuropeAurubis

Large consumer of refinery grade scrap (>100kt) at Legnica

and Glogow I & II. No low-grade or E-scrap processingKGHM

One of the larger consumers of complex materials (slags,

dusts, slimes) but no E-scrap capacity. Metallo’s Beerse facility

processes up to 350kt/y copper scrap/complex materialsMetallo

Operates the Hoboken works in Belgium, limited copper

production (~35kt) with a multi-metal strategy focusing on

various complex raw materialsUmicore

Secondary smelting/refining operation in Austria, using largely

scrap, complex materials and blister from Krompachy in

SlovakiaBrixlegg

Rönnskär smelter specialist E-scrap processor, >120kt

capacity. Expansion planned for 2020 +30kt? The Harjavalta

smelter also processes a smaller volumeBoliden

Huelva in Spain uses up to 30kt/y Cu scrap including a small

volume of E-scrap

Atlantic

copper

Conclusions

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1. To meet the growing demand for copper from the low-carbon economy we need both primary copper mining

and post-consumer recycling

2. The importance of sustainable recycling grows as we consume more materials and we seek to avoid

unnecessary primary production

3. Much of the material we need for the secondary industry is already in the hands of consumers

4. Each region has its own challenges – with Europe well advanced in recycling capacity but short of post-

consumer waste and developing countries seeking to create economic, safe and environmentally sustainable

recycling industries

5. Consumers, scrap dealers / collector, recyclers and primary producers would benefit from considering the full

life cycle of their products by:

● designing in recyclability

● sharing best practice

● developing cost effective recycling technology and

● regulating to ensure post consumer waste is reprocessed safely

CRU International Limited

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Registered in England No.940750. Registered office: Charles House, 108-110 Finchley Road, London NW3 5JJ

THANK YOU

Rebecca Gordon

Divisional Director, CRU Consulting

rebecca.gordon@crugroup.com

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