How to write vendor contracts so that they include proper end-of-life management criteria

Good Point Recycling

www.retroworks.com Middlebury, VT

NERC March 2004

How to write vendor contracts so that they include proper end-of-life management criteria

Robin IngenthronGood Point RecyclingMiddlebury, Vermont

www.retroworks.com

Northeast Recycling Council



NERC March 2004

• Making an educated procurement1) Understanding the basics behind world demand for

used electronics and scrap

2) Understanding how supply and demand affect your costs

3) Understanding your own supply, and what could or should happen to it

4) Considerations for evaluating bids (ie demand) from multiple recycling vendors

5) Contracts and Procurement

Session Goals:



NERC March 2004

Meanwhile

• World Demand for Electric and Electronic Devices is Rising

– Disposal and mining• vs

– Reuse and recycling

0

5

1 0

1 5

20

25

1 999 2000 2001 2002 2003

China’s copper demandhas compounded at 20%per year for the past 4 years.



NERC March 2004

Example: the CRT Monitor

• US demand: 50M monitors per year• Chinese demand: 50M monitors per year• India demand: 50M monitors per year• % Made in Asia rising every year

ferrous

copper

lead

silica

plastic

alum

other

USA secondary (used) market for PCs is 1:3. Asia is 3:1.



NERC March 2004

Cost of Consumption

Gorilla and orangutan extinction is driven by electrics metal mining.One Copper mine in Papua New Guinea dumped 80,000 Tons Per Day of Cyanide tailings into the OK Tedi River from 1990-2000 – due to reopen in 2004.

USGS – At 1990 rate of consumption, all known copper reserves will be exhausted this century: Ocean mining for copper to begin in our lifetimes.

USA Model? 95% from federal lands, $5/acre, 14/15 largest Superfund sites, bankrupts Superfund. GMA 1872 - Became World Bank standard in 1980s.

Hard rock mining produces 45% of all toxics produced by all USA industries.

E-Scrap is 300% richer in copper and other metals than mined ore. Recycling produces a fraction of the pollution from mining.

Gold mining releases more mercury than mercury mining and disposal combined!!!



NERC March 2004

Chinese demand in particular drives recycling and mining

1. Electric and electronic appliances “made in China”2. Chinese “New Deal” scale infrastructure development3. Asia #1 in per capita consumption of gold & platinum (the only materials which the West does not consume most of)

Mining nightmares in Borneo, Chile, Congo, Philippines, Turkey, etc.



NERC March 2004

Basic Process: Triage for value1) Can it be reused? 5% material = 50% of income

- e.g. 17” monitor tested working, $30

2) Can it be repaired? 15% material = 30% of income- e.g. white box PCs, repairable monitors, $5 each

3) Can it be recycled? 75% of material = 20% of income- gold, copper, aluminum, steel, plastic, pennies per pound

4) Disposed (incl. contaminants)? 5% material = LOSS- Wood debris, cable casings

• All Income combined = 1/3 of collection and operating cost

$$$?

$?

$ ?

?



NERC March 2004

Service and ResaleWholesale ReUseWholesale Repair/partsScrap (42% lead glass)Residue

Glass Smelters

Plastic Recyclers

Gold, copper, aluminum other metals smelters

Destiny of materials at Good Point Recycling: 2.5M lbs since 2001



NERC March 2004

Digital Scrap• Over 1,000 parts requests per day via internet parts

exchange services (tradeloop.com, pricewatch.com, etc.)• http://www10.tradeloop.com/tlTF2/pgSummary.cfm

• Contact with over 200 international repair shops via exporters.com.sg, alibaba.com, globalrecycle.net, recycle.net, etc. http://www.exporters.com.sg/members/myshowroom/

• Sales of parts and refurbishment on ebay.com• www.ebay.com

• Scrap copper, alum, plastic sold directly to end users• www.globalrecycle.net

The internet has completely changed the secondary parts and scrap market during the past 8 years, lowering the barrier to entry into technical and

export markets.



NERC March 2004

Market Forces ~ Recycling Costs

Next 3 Slides:

-USA costs currently (1000 monitors)-USA costs with 1900 copper prices-USA costs with Chinese labor rates



NERC March 2004

Overall USA Monitor Management$ spent and earned per 1000 monitors

-2000

-1500

-1000

-500

0

500

1000

1500

Copper revenue

Other materialrevenue

25% monitor resale

Demanufacturing

Repair Labor

Scrap handling

Most demand for used is overseas



NERC March 2004

Possible USA Monitor Management$ spent and earned per 1000 monitors

-3000

-2000

-1000

0

1000

2000

3000

4000

Copper revenue


75% monitor resale

Demanufacturing

Repair Labor

Scrap handling

If copper and lead returnedto 1900 prices, and monitors wererepaired at 75% rate

Countries with high reuse and no mining subsidies have the advantage in scrap sales. Countries with high reuse and “free” software have the advantage in reuse.



NERC March 2004

Overseas Monitor Management$ spent and earned per 1000 monitors

-1000

-500

0

500

1000

1500

2000

2500

3000

3500

Copper revenue


75% monitor resale

Demanufacturing

Repair Labor

Scrap handling

No mining subsidies, and 10%technical and handling labor cost

Countries with high reuse, no mining subsidies, and low wages are the winners



NERC March 2004

Scrap Recycling

Toxics Along for the Ride

Repair & Reuse

The good, the bad, and the ugly exports



NERC March 2004

Struggle to keep recycling from embarrassing itself

REALITY: If USA exports everything, we send 1/3 reusables, 1/3 recyclables, and 1/3 Toxics Along for the Ride.

REALITY: if USA exports nothing, we destroy reuseables (and they can’t afford new); they mine to replace the recycled metals, and mining produces even more toxic harm than recycling.

SOLUTION: Setting a Higher Standard. USA processing, limited exports (tested equipment, copper scrap), simple tests (like CRT Glass Test); market development to promote best practices; (funded) state processing contracts with restrictions and incentives; etc.



NERC March 2004

Understanding your own supply

1) Pristine takeouts, off lease equipment- you can deal with anyone directly

2) Picked over Junk, Obsolete and burnt - you should insist on domestic processing

3) “I dunno”…Mix of good, bad and ugly- you should deal with USA company with capacity to separate, process and market, and get documentation



NERC March 2004


1) Pristine takeouts, off-lease equipment (Reuse material)Highly Sorted Working and repairable monitors, P2s+, cords, peripherals, cartridges

positive revenue

dollars per item (not pennies per pound)

high overseas demand, with incentives to hide it from tariff collectors and anti-gray-market enforcers

Working monitors-No screen damage-No VGA-No Apple-Make, Model, COM,-Year, other tech details



NERC March 2004


2) The Dregs: • Cherry-picked material,

TVs, obsolete equipment, residue, shredded or baled material.

• Damaged CRTs• Pennies per pound• Overseas demand based

on copper, gold and aluminum content



NERC March 2004


• “I don’t know”: Then make sure the company you select has capacity to handle either type of E-Scrap.

Working monitors

“Crapple” “We’re switching to flat screens”One fellow insisted his 1990 public schoolStuff “works as good as when it was new”.

Another commercial client insisted that working monitors, replaced by flat screens, must be recycled/destroyed here in the USA.



NERC March 2004

4 Simple Due Diligence Tests

• Glass recycling records

• Gold-bearing scrap records

• Sample manifests (declared reuse items)

• Employees or capital investment per ton



NERC March 2004

1. CRT Glass Test - Legitimate USA recyclers must be able to show where the LEAD (non-repairable glass) goes.

Credit: www.ban.org



NERC March 2004

2. Printed Circuit Board (PCB) Gold Test (DRAFT) Nasty recycling (and nastier mining) practices. We do all Printed Circuit Boards domestically.

Q: Will this lead to more mining?A: Gold mining is maxed out already

Reuters: chinese minerBAN: chinese circuit board / gold recycler

See March, April 2004 National Geographic for environmental impacts of gold in Asia



NERC March 2004

3. Truth in Exporting Test - Legitimate bill of lading shows make/model/voltage/COO/condition.

Curiously: terrific export prices offered by this vendor, but everysample photo sent includes a carton of cigarettes…Hmmm.

Dual books – purchase orders could include high-end equipment(e.g. submarine tracking devices) hidden in the scrap.



NERC March 2004

4. Employment / Capacity Test - How many tons did the company

handle last year?- How many employees per ton?- If fewer employees, how

much automated processing

equipment is in place?

Logistics - Does smaller vendor have records and signed agreement

with larger vendor

?



NERC March 2004

Enforcement – defrauding a state contract is more than a fine

• Violation of Basel puts vendors in fear of … um… the United Nations Police (?)

• Violation of a state/federal contract puts vendors in fear of the Attorney General (so long as the AG can understand your contract)



NERC March 2004Procurement Goals

• Competition: write the RFP so that at least 6 companies can bid on it (3 won’t show up). If there are fewer vendors in your region, you may have to lower your standards.

• Apples to Apples: establish guidelines to compare incoming product and markets. (Commercial P2 hard drives are different from Public School Mac LC2s).

• Perspective: 12 pages is too long for a one-day event.

• Economy of scale: Volume lowers cost, low costs encourage participation. The perfect may be the enemy of the good.

• Bigger Contract, Higher Expectations: Buy off of existing contracts (state, EPA, Dell, etc.) which have successfully imposed high standards and follow-through/evaluation. (“Recycler agrees to use markets identified in state bid XXX unless Host is notified in advance”)



NERC March 2004

• KISS: Don’t make it more difficult than the AG’s office can understand

• For first events or sales, establish ex-post-facto follow-up guidelines. “Recycler agrees to provide copy of bill of lading or shipping manifest for any trailerload or export container with items recovered from Host”. Document follow up visits (or make them yourselves).

• Glass Test Etc. “Recycler will fax a copy of each shipment of processed CRT glass, PCBs, etc.”

• Play multiple vendors off each other might be more credible threat than to reissue RFP (only if logistics allow).

• Tax primary smelting - take back the federal subsidies to mining states at the point of consumption

Shortcuts / ROTs



NERC March 2004

False Comfort

• ISO 14000 lets you do ANYTHING so long as you document and improve. (You may feed the CRT glass to babies so long as you document it and feed it to fewer babies each year).

• California gold rush contract – 68 cents/lb. Nice if you can get it, but would crush voluntary recycling if left unfunded.

• PA County RFP - 28 pages for 1-day event• EPA ID Number provided… Superfund sites have EPA ID

numbers.• Membership in organizations indicates spare cash, not

much else.



NERC March 2004

• earthworks.org

• mpi.org.au

• USGS.gov

• moles.org

• ban.org

• copper.org

• www.antigraymarket.org • www.minebox.com

HOTLINKS AT www.retroworks.com

How to write vendor contracts so that they include proper end-of-life management criteria

Documents

Transcript of How to write vendor contracts so that they include proper end-of-life management criteria