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Metal recycling in China: practices, policies and challenges

时间:2015-02-27 17:13来源:本网站
Fu Jia
University of Exeter Business School, UK
Hui Sun
University of Exeter Business School, UK
Lihong Zhang
Liverpool Business School, LJMU, UK (l.zhang@ljmu.ac.uk)
Zhaohui Wu
Oregon State University, USA
Hervé Legenvre

European Institute of Purchasing Management, France


Abstract 

Satisfying current demand without depleting resources for future needs would necessitate a full recovery of urban wastes. Metals are at the core of green economy, which are extensively used in modern life and can be infinitely renewed and recycled. Based on the literature review and archival research we report metal recycling in China the second largest economy and the most populated country. Current situation and urgent issues are presented and discussed in comparison to advanced economy. Metal recycling in China is apparently in its infant stage in terms of legislation and coordination.


Keywords: Metal recycling, urban wastes, China


Introduction 

Satisfying an increasing demand for products without depleting natural resources (for future needs) and environment necessitates a recovery and reuse of various ‘wastes’. Metal is at the core of this green circular economy with its extensive use in daily life and it applausive nature of renewable and recyclable. China a second largest economy represents a big portion of metal consumption. Yet relatively less metal scraps are collected and reused, for example, in the Chinese iron and steel industry. This paper is to investigate the current state of metal recycling in China, the practices, policies and the challenges it faces. Thus the research questions are identified as follows: How does the government of China manage the metal recycling currently in terms of policies and regulations; What is the current practice in recycling metals of end-of-life products from the local society; What may be considered as the essential problems of the scrap metal recycling in China? 

    The paper firstly reviews the existing literature on the issues of general practices, ELV and e-waste management. This helps to set the framework used to unearth the variety of situations of metal recycling in modern China. Issues have been reveals and discussed in particular regard to the areas of metal recycling practice, governmental policies and regulations, and challenges in coping with unavoidable changes. Besides and in the context of a reverse supply chain, one of the most essential questions is who should mainly perform the recycling process (Pagell, Wu, & Murthy, 2007). We used archival research for data collection and analyses.


Literature review

End-of-life vehicle recycling 

Nowadays extended producer responsibility (EPR) requires vehicle manufacturers to decrease the total environmental impact of a product by considering recycling during the entire life cycle (Lindqvist, 2000). The material requirments in car manufacturing industry regarding the strength and impurity tolerance impede the shaping of closed-loop in ELVs recycling (Pauliuk et al., 2012). The major difference between a close-loop and an openloop system is whether the producers use the recovered materials themselves or not. Under current technical conditions, scrap metals cannot be completely recovered which means if the contaminants in secondary materials exceed the maximum allowance for the target product, additional high purity materials must be added to dilute the contaminant to an acceptable level (Nakamura et al., 2012). Considering the quality and dilution losses, the recycling of steels in automotive industry is less likely to take place in a closed loop. Instead, a partial open-loop is built since some low grade steels that recovered from ELVs may pass into other fields and be applied in products with relatively lower requirements (Hatayama et al., 2014). Generally only around 10% of ferrous materials can find its way back into a new car (Nakamura et al, 2012). Additionally, using all secondary steel to replace primary steel is hard to achieve as the supply of scrap steel is far from demand. 

    To optimize the ELVs recycling system, vehicle producers must play the leading role in improving the utilization rate of secondary steel by collaborating closely with steelmakers and integrating the reverse chain. For example, the German end-of-life automobiles takeback system is often described as a successful example in recycling, one of its main features is the involvement of car companies who are not only required to provide dismantling information but also accept disassembled parts and materials (Nakajima & Vanderburg, 2005).

Collection of E-waste

Electrical and electronic equipment (EEE) represents a range of products (The European Parliament and of the Council, 2012), the production of EEE is one of the fastest growing domains of manufacturing in the world. With broad consumer purchasing of products in this area, there is a mounting issue of waste. E-waste with toxic and hazardous substance requests for special and sound treatment. The fierce competition among different brands exacerbated the problem by continuingly introducing the upgrading version to the market that shortens the lifespan of each EEE, like the service life of mobile phones in China is less than three years (Yin, Gao, & Xu, 2014). Management of e-waste has thus attracted the attention of stakeholders regarding environmental protection and resources recycling. An end-of-life EEE always contain many different types of materials integrated together, ferrous metals accounts for the majority, for example, in the content of a mobile phone iron alloy represented 27% of its total weight (Tanskanen, 2013). 

    Using less material to achieve better performance is the chief principle from designing in desks to operating at plants (Carter & Ellrain, 1998). For end-of-life products, the reuse is the first opt if it can be returned to the market after repair. Separated components may have value in use as replacement to other items. Recycling ranks slightly lower than reuse which need the process of remelting and remanufacturing, then served as raw materials. Some materials which are valueless and require for high cost to recover should be disposed either through incineration whereby energy utilized may be possible or discard into landfilling.

Method 

The methodological approach in this paper is archival research. In despite of the fact that in-depth interviews are used traditionally as the main source of data in a case study, the use of multiple sources of evidence is also recommended (Yin R. K., 1994). Archival records are defined as “documents made or received and accumulated by a person or organization in the course of the conduct of affairs and preserved because of their continuing value” by Ellis (1993, p. 2), which are historical content and useful in explaining process of change and evolution (Welch, 2000). 

    To emerge and analyse the challenges facing in Chinese metal recycling, previous papers from database like EBSCO have been analyzed and classified. Other industrial reports and comments from newspaper are also helpful in identifying current problems, which paves the way for resolutions. Reflected to legislations, the practices in recycling end-of-life vehicles and collecting e-waste are illustrated in turn, although there are a vast number of other sources of scrap steels. Construction industry, for example, yields the steel consumption, but the information about recycling steels from demolition site is not available. The lifetime of construction and frustration are quite long with nearly 30 years takeback times (Pauliuk, Wang, & Muller, 2012). Moreover, the government manages the recycling of railroad tracks, old trains and ships strictly. They ‘simplify’ the process of mass metal recycling so that it is illegal for multiples to own the metallic items. In other words, metal recycling from public transportation is unlikely affected by individual behaviors in modern China. Hence, ELVs and e-waste from households, which gradually arouse the attention of scholars and policy makers, became the subject of our research. 

    Policies and regulations are continuously developed and evolved as new problems emerged over time. Coherence in making policy is a key objective in China’s legal systems. Facing an increasingly pressure on sustainable development the government of China accelerates the legislation that are related to circular and low-carbon economy. The study of policies thus calls for a more longitudinal approach and archival records are happened to be useful in tracking the dynamic. We follow a five-stage archaeological process in using archival data, namely discovery, access, assessment, sifting and crosschecking (Welch, 2000). First step is exploring existing polies by searching the key words like “steel recycling”, “secondary steel production” and “bulk solid waste”. The website of industry association and online law forum turned to be helpful.

     Next step is to make main content of each regulation available. In China, all policies and regulations are numbered after issued year by related departments that makes it easier to get access to specific clauses. Assessments can be omitted here as the objectivity of national policies can ensure that the records yield a trustworthy answer. And in order to gain more convincing data, most of the regulations are sourced from official website of government while the rest are found from previous journals. After reading, some regulations found to be expired or meaningless for the research questions were deleted from the lists. The final step is to verify the data, the technique applied here is gathering archives from more than one source. Thus previous papers from other scholars are used as supplements and evidence.

Metal recycling practice

End-of-life vehicles recycling 

Compared to developed countries where automotive producers are at the heart of recycling and remanufacturing of ELVs, in China scrap metals mainly attracts the attention of large steelmaking enterprises, for example, Baoshan Iron & Steel Ltd (also known as Baosteel) has established a subsidiary called Baosteel Resources which leveraged their expertise in remelting scrap steels and has been certificated in vehicles dismantling (Baosteel, 2012). More importantly, the automobile remanufacturing is regulated very strictly and still in the pilot phase. Only a few enterprises are permitted to remanufacture the components from scrap vehicles. Since 2008, the number of authorized enterprise to formally start the trial operation of remanufacturing automobile parts increased from 14 to 42. And only in this way some components like engines and transmissions can be remanufactured by licensed enterprises within a certain scope. However, the most valuable part of a car, known as Five Assemblies, must be scraped and remelt even can be reused (Wang & Chen, 2013). Old scraps from obsolete vehicles (e.g. car wheels, classis) can be used as raw materials for new steels after shredding, refining and melting. Other substances such as air bag, barriers which are useless but harmful to the environment will be disposed separately. 

    In China, vehicle owners have the responsibility to have their cars examined annually, similar to the MOT in the UK. When a vehicle is at the end of its useful life, it has to be deregistered at the Department of Motor Vehicle and submitted to be approved dismantling companies voluntarily. Due to the complexity of scrapping a vehicle legally, the transactions in black market seem to be more appealing in China. Without paying the 17% sales tax, the prices in illegal market dare higher than subsidies offered by the government (Wang & Chen, 2013). As a consequence, many ELV owners are more willing to sell their used cars to illegal operators to maximize monetary interest which in turn damaging the ELVs recycling rate and increasing the environmental contamination. All these show that China have a long way to go in building a completely closed circle in ELVs recycling system.

Collection of E-waste 

The recycling network in China emerged in a way that individual collectors and small salvaging stations play a major role in collecting obsolete scraps from communities and consumers (Deng, 2013). After gathering, a labor-based sorting is conducted by larger dealers before the scrap steels delivering to large scraps process plants. Most of steel recycling enterprises are located along the coastal provinces where is close to steel consumption center and get easier access to imported scraps (Wübbeke & Heroth, 2014). Collaborations are commonly found in e-waste collection. For example, mobile telecom carriers (China Mobile) and some large manufacturers (Motorola, Nokia, etc.) initiated the “Green Box Environmental Program” to recycle waste mobile phones. However, the absence of financial compensation result in low recycling rate (Yin et al., 2014). Dell paid 25 RMB compensation for per computer and is said not even enough for consumers to make up transportation cost, hence the result of the campaign is counterproductive. 

     Two key characterizes has been identified in previous works. The first key feature is that informal sector constitutes the main part in e-waste recycling system (Yu et al., 2010; Chi et al., 2014). The mixed of formal and informal sectors in e-waste channel is formed for a long time with the informal players mainly dealing with collection and reuse. Nearly 60% of e-waste in China was collected by private peddlers and passed into informal recycling process (Zeng et al., 2013). Many family-based workshops with primitive facilitates consist of the informal recycling system in China. These small workshops benefit from selling auto parts without paying taxes and they have no burden of equipment investment. Even wores, in order to minimize the cost, the workshops often dismantle e-waste in a fast but harmful way, such as using acid bath and open incinerations in a small yard (Leung et al., 2006). These activities release horrible pollutants to the soil and underground water. Meanwhile the informal workshops commonly found in village with clear specialized division such as Jiangxia village in Zhejiang province mainly carry out metal recovery (Chi et al., 2014). 

    The second attribute is the high rate of imported e-waste. China was ranked as the second highest amount of Waste EEE (WEEE) generating with about 7.253 million tons (StEP, 2013). China is like an electronic wastebasket of world, about 70% of electronic waste that is generated all over the world ended up in China (Watson, 2013). In fact the Chinese government has banned the import of e-waste since 2000, however a large volume of e-waste have been constantly shipped into China from the US, Europe, Japan and Korea (Wang et al., 2013). The total volume of imported e-waste is hard to estimate due to the lack of official accounting and numerous illegal importation channels of smuggling and transiting through Hong Kong, Vietnam and other bordering regions. 

    In addition to legislation, Chinese government also put efforts to find out a suitable collection channel. “Home appliance Old-for-New Rebate Program” seems very efficient in collecting domestically generated e-waste. Household appliances, as an essential constitution of electronic and electrical equipment, are made of steels and other base metals. National pilot projects in selected regions such as Beijing, Tianjin, Qingdao and Hangzhou, had been implemented from 2003 to 2006. With the support of central government, the trial cities have established the disassembly line and the network to collect e-waste from available channels (Wang et al., 2014).

     E-wastes in China are treated as tradable and valuable commodity after simple repair and replacement. The imbalance in development of economy exits between different provinces in China. As a consequence, some abandoned appliances are sold to less developed regions (Chi, Wang, & Reuter, 2014). Unlike the illegal operation in car reassembly that poses a threat to others’ lives, e-waste reuse seems to be a more sustainable way than crude dismantling and recovery materials. Extending the lifetime of the old equipment contributes to the efficient use of resources and avoids additional waste as long as the regulatory and supervisory framework is established well. Besides, if dismantled properly, some components being in good condition can be sold in the second-hand market or reused as replacements in post-sale center. This prolongs lifespan of parts and maximizes value in use. Yet the sound recycling system of e-waste is to be established.

Policies and Regulation

Recognizing the scarcity of natural resources and the potential impact of scrap treatment on environment, China has the ambition to establish a circular economy which emphases the importance of using resources in a more sustainable way. Scrap steel, as the most important secondary resource, unsurprisingly has been a focus of policy makers. In order to optimize  the utilization and recycling of steels, Chinese government issued relevant policies and regulations to promote and standardize steel recycling. This section includes two parts: first general policies of scrap steel recycling is presented; second policies related to two main sources of scrap steel, namely end-of-life vehicles and e-waste are presented.

Establishing a recycling system 

The Ministry of Commerce (2007) published “Administrative Measure for the Recovery of Renewable Resources”. Renewable resources refer to “all kind of wastes that are generated from social production and consumption, and loss all or partial values but can be regained through recovery and processing.” Scrap steel recycling is promoted as well. According to this measure, urban and rural residences are encouraged to accumulate and sell renewable resources. Enterprises engaged in resources recovery business must be licensed and the recovery should be carried out by all available means, such as door-to-door and itinerant, in order to provide a convenient and quick recovery.

     In line with the “Twelfth Five-Year Plan”, China Association of Metal Scrap Utilization introduced the detailed plan on scrap steel recycling industry in 2010, named “Suggestions on the development of Iron and Steel Scrap Industry in Twelfth Five-Year Period”. This plan outlined the goals and prospects in near future (2011 -2015), including accelerate the construction of a sound scrap processing and distribution system which consists of 100 companies and the total annual capacities should reach no less than 100,000 tons that gradually replace manual disassembly (Deng, 2013). 

    At the same year, the Construction of “Urban Mining” Model Bases issued jointly by Ministry of Finance and National Development and Reform Commission (NDRC) to ease the bottleneck of metal resources constraints and accelerate the construction of metal recycling system. The primary target of “Urban Mining” is to develop about 30 demonstrated bases that are one step ahead in applying cutting-edge technology, maximizing capacity and protecting environment in five years. Furthermore, it aims to promote the recycling of home appliances, wire and cable, automotive, machineries and other key metal resources. Specific requirements and guidance in this announcement are also extended (NDRC, 2010).

Standardizing and upgrading scrap steel recycling business 

The improper operation in scrap steel recycling is prevalent and becomes a hurdle toward higher utilization rate. Hence, “Scrap Steel Processing Industry Access Conditions” is enacted by Ministry of Industry and Information Technology (MIIT) to restrict the entrance of scrap steel recycling business in 2012. The requirements for new entrants and exiting recyclers have been clarified. New ferrous scrap recycling companies must have the processing capacity of no less than 150,000 tons per year with a minimum 30,000 square meters plant, while existing recyclers should have processing capacities of no less than 100,000 tons per year by the end of 2014. And the consumptions of fresh water and electricity in processing one ton of scrap are restricted to no more than 0.2 tons and 30 kWh respectively (MIIT , 2012).

     MIIT initially approved 44 companies who meet the industry guidelines, in terms of production capacity, environmental protection, energy consumption, technology and equipment (American Metal Market , 2012). With the updating of the list, 130 enterprises have passed the appraisal and evaluation by 17th June 2014. And the designed companies will be audited annually from time to time. The whole scrap processing industry is optimized through the elimination of backward production capacity. To ensure imported scrap metals flow into formal channels, only five types of firms are allowed to import, includes steel producers, imported scrap steel processing and distribution centers, designated scrap metal and electronic waste processing enterprises, foreign equipment and machinery repair companies, and special steel casting export recyclers (MEP, 2009).

Preventing from pollution

Pollution is mainly controlled in the steelmaking phase, which is related to prompt scraps recycling. Steelmaking and its re-melting activities are inevitably accompanied by wastewater, gas, new scrap and other solid emissions. Thus preventing and avoiding the secondary pollution is to promote the utilization of prompt scrap steel while reduce the release of industrial waste. In fact, on-site recycling of new scrap is not only a means of comprehensive utilization but also an effort made in reducing solid pollutant. In 2012, “Guidelines on Comprehensive Utilization of Resource and Bulk Solid Waste in Twelfth Five-Year Plan” is enacted by MIIT. This plan outlines a roadmap for green industry and circular economy, also encourages the comprehensive utilization of metal resources and reduction of hazardous emissions. Specifically in order to accomplish the goal of “zero emission” of steel slag, 12 billion RMB are planned to invest in construction of exemplar and demonstration projects, pretreatment technology and related equipment. About 54,750,000 tons of steel slag is expected to process per year (MIIT, 2012). 

    An “Iron and Steel Industry Clean Production Index System” was released by Ministry of Industry and Information Technology, National Development and Reform Commission and Ministry of Environmental Protection recently, and the basic indicators are divided into six categories, namely the production technology and equipment, energy saving, resources and energy utilization rate, products features, pollutant emission and clean production management (NDRC; MIIT; MEP, 2014). Officially assessed and calculated, a steelmaker gets a score that falls in one of three levels (i.e. International Advanced Level, Domestic Advance Level, and Domestic Average Level) in clean production. The index system helps companies to identify their current level and is used as benchmark to improve in the future. As for the regulations that focus on steel recycling industry, the issuing of “Industry Access Conditions” to some extent restrains the contamination because designed companies must meet the clean production standards. However, more legislation is yet to be enacted.

Challenges

Low collection and utilization rate

Nowadays the capacity of processing and recycling industry does not catch up with the rapid growth of old scrap in China. Two main constraints lead to the low utilization rate of scrap metals, the technical obstacles and the fact of huge number of small dealers estimated 150,000 most of them lack of the knowlegde on scientific recycling approach (Deng, 2013). One possible resolution is to integrate multiple channels (Yu, Williams, Ju, & Shao, 2010). Training the individual peddlers and integrating the small players contribute to standardize recycling process. Strategies could be adopted include a community-based collection system for residential recyclables (Wang, Han, & Li, 2008); an SME alliance for firms with small or medium scrap volume; a vertical integration for large scrap users to enhance cost advantages and sourcing diversity (Deng, 2013). The integrated network not only ease the pollution caused by illegal workshop and improper operation, but also improve the quality of recycled scrap if a standard has been set among the members of the recycling chain and on-site inspections conducted by appropriate governmental agency or large scale scrap steel enterprises regularly. Attitudes towards these individual peddlers shift from brutal banning to proactive supplier development and training, should contribute to the collection rate (Chi, 2012) and, more importantly, help this group of people are mostly in a weaker position with opportunities to employment.

Absence of incentive mechanism 

The burden of taxation hurts the profitability of large recycling companies. China stopped the tax rebate policy and all steel scrap recycling companies had to pay 17% VAT since 2011 (Steel Union News, 2013). Steel recycling requires high investment in equipment and plants with low return rate and long payback period, hence the financial support from government is very important to recycling companies. Moreover, many regulations remain as a guidance without actionable and practical plan, such as the Twelfth Five-Year Plan for iron and steel does not specify a certain goal regarding the volumn or scrap-to-casting production ratio (Wübbeke & Heroth, 2014). Obviously, the shortcoming in stimulation of current policy-system results in the lack of motivation among steel recycling companies.

     Chines government should encourage formal recycling by decreasing taxes, rewarding innovation or funding advanced equipment. A reverse logistics network is beneficial for the environment and society and should be promoted by policy-makers (Giannetti, Bonilla, & Almeida, 2013). Tax incentive policy should be continued as the steel recycling industry is still underdeveloped and more preferential policies are expected. A new tax rebate policy is under discussion and the government should accelerate the pace of issuing the rebate as soon as possible (Wübbeke & Heroth, 2014). 

    From the aspect of scrap supply, the implementation of “old-for-new” subsidy turned out to be effective in significantly arousing enthusiasm among consumers, which ensures more end-of-life steel products recycled in a formal way. Besides, at current stage people put their own financial interest as a priority in China thus the subsidy should be in line with the actual value of those scraps and become more appealing than the price offered by illegal collectors. In this way, the taken-back rate can be increased.

Regional disparity 

China is economically diversified with some regions are prosperous with higher standard of life whilst most remote areas are still poor and underdeveloped. The consumption of metals varies and this is exacerbated by the fact that a majority of large metal groups are located in the North or alongside Yangtze River far from the most developed regions in southern coast (Wang et al, 2014). The gap in economic development resulted in hardship implementing unified policies. Regional disparity also perceives a major reason in boosting black market. That is, ELVs purchased by illegal dealers found their market in remote and suburban countryside.

     To deal with the regional disparity, structural adjustment and industrial transformation are urgently needed (Wang et al., 2014). To some extent, “urban mining bases” can help to mitigate the problem in the uneven distribution because candidates must be able to gather renewable resources no less than 300,000 tons. That means scrap metals in coastal regions can be processed efficiently with more and more urban mining bases being admitted. It also generates the cluster effect in technological innovation and served for surrounding cities. What’s more, the local government should adjust policies issued by central government in accordance with local conditions. And tracing the flow of scraps in black market and enhancing the management in less developed areas helps to curb the spread of illegally reassemble goods, which in turn reducing the number of informal traders.

Conclusion

Recycling metals relies on a sustainable management of reverse logistics and supply chain. This paper reviewed two types of metal recycling strategies (i.e. ELVs and WEEE) that are affected by, and affect, our urban daily life. It then examined the recycling practice in the modern China, policies and challenges it faces. The preliminary results suggest that China has established a metal recycling system with informal processors imbedded in the formal sectors. Municipal governments tend to favour e-waste approach while industrial associates and OEMs emphasise ELV model. This leaves suburban areas as the most polluted place. Metal recycling is regarded as the major means for changing from developing economy to transferring economy, and securing national natural resources, thus attracts attention for research and development. Chinese government strike to keep policy development dynamic and consistent. Foreseeable challenges include the huge gap between waste produced and generated, the absence and abuse of incentive mechanisms, and regional disparity.


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