Junkyard Planet: Travels in the Billion-Dollar Trash Trade

by Adam Minter

In 2009 I visited EconEcol, a Japanese scrap recycler with several warehouses at the base of Mount Fuji, one of which is devoted to dismantling old pachinko machines (the Japanese equivalent of a slot machine) purchased from some of Japan’s thousands of gambling houses. As I walked the warehouse with one of the company’s managers, he told me that gaming machines’ diminutive HD touch screens are carefully extracted from the other components, packed, and then shipped to China, where they’re installed in GPS units. Pachinko screens, apparently, are just the right size for fitting onto a dashboard. What’s more sustainable than that?

You can buy one Intel Pentium III chip here; you can buy hundreds in bulk. And those bulk orders of chips don’t come from home PCs “recycled” in the United States. Rather, they come from containers of obsolete computers sent in bulk to Guiyu from businesses in China and all over the world; they come from defective motherboards that a manufacturer sold in the process of cleaning out a warehouse. None of these chips are going to Japan for refining. Rather, they’re all destined for reuse in new products.

For years, activists and the media have portrayed Guiyu as the natural outcome of foreign rapaciousness. To shut down the injustice, they implied, scrap recyclers just had to stop shipping computers to China. In retrospect, it was a simplistic message, even before China became the world’s largest consumer of computers. Today, though, it’s beyond simplistic: it’s willfully ignorant. Guiyu won’t be shut down because it stops receiving computers from abroad. It’ll be shut down if and when China manages to implement an environmentally secure electronics collection and recycling system for all of the electronic scrap being generated within its own borders.

In the midst of this crumbling history is a single-story temple, hung with red lanterns and decorated with faded ceramic gods and birds. Before the Communists came to power and destroyed the institutions of old China, temples like this one were places where wealthy family clans memorialized their histories, projected their wealth, and above all preserved continuity with the past.

I watch gloves skimming over metal, flipping fragments of aluminum into bins. It’s amazing to me that anybody could last more than eight minutes at this kind of work, much less eight hours, and do it for $100 per month, plus room and board. But spread out before me are 150 women who seem to think it is worth it. Nobody’s forced them to come here; they could’ve stayed home, wherever that might be.

the point of this building isn’t to awe, but rather to separate shredded metal from shredded foam, plastic, and other nonmetallic pieces of a pulverized automobile. The physics of how this happens are deceptively simple. Consider for a moment, a common egg. If you place it in a bowl of fresh water, it sinks. But if you add enough salt to that water, the water becomes heavier than the egg, and the egg floats. In the mid-1960s Ron Dalton, an engineer who first went to work for Leonard Fritz in 1957, wondered what you’d need to add to water to make various metals float. The idea, he told me in an interview, came from reading a book that described how floatation was used to separate minerals in the mining industry. There, miners used “heavy media”—the industrial equivalent of table salt—to increase the weight of water, and thus float away crushed rock from crushed minerals. It seemed logical that the concept could be extended to scrap metal.

At the end of those conveyors something curious happens. The metal fragments don’t fall so much as they seem to leap into the air and deposit themselves into chutes and bins they wouldn’t reach if they just relied on the momentum of the conveyors. Meanwhile, the remaining trash—the rubber and the plastic—falls away harmlessly. The device that makes this curious separation possible is called an eddy current. Thomas Edison developed and patented the first one in the 1880s, and it’s most assuredly the case that he didn’t foresee its application to shredded automobiles. Still, he’d immediately recognize what’s going on. The spinning rotor that drives the conveyor is packed with magnets. As the magnets spin, they create a kind of magnetic field around the nonmagnetic metal fragments (such as aluminum and copper, which are not ordinarily magnetic) that approach the rotor. When those fragments reach the rotor, the field repels them just as two magnets repel each other when similar poles are placed end to end. The practical result is this: pieces of metal are ejected from the remaining mix of conveyed trash.

But really, the eddy currents aren’t even close to being the most interesting equipment and process here. David walks me over to a four-foot-tall metal bin positioned just beneath a bathroom-size box he calls the “coin tower.” From the coin tower, high-speed round projectiles are shot into the bin at irregular intervals less than a second apart. I step forward to get a better look, and Jack taps my shoulder and suggests I be careful. “You don’t want to get hit in the eye,” he says. So I lean over carefully, and there, piled a foot high against the sides of the metal bin, are beat-up U.S. quarters, dimes, nickels, and pennies. Next to the filling bin is another bin, a full bin of coins that fell from the pockets of Americans who had more pressing matters than loose change. According to Jack, an average junked U.S. automobile contains $1.65 in loose change when it’s shredded. If that’s right—and from what I see, I believe that it must be—then the 14 million cars scrapped in good years (good for automobile recyclers, at least) in the United States contain within them more than $20 million in cash just waiting to be recovered. Understandably, Huron Valley isn’t interested in revealing just how much money they recover from U.S. automobiles (they have a deal whereby they return the currency to the U.S. Treasury for a percentage of the original value), but David is willing to note that the coin recovery system has “paid for itself.”

In short order, perhaps in less than a week, all of that Twitch—all that scrapped-in-America, recycled-in-America Twitch—will be refashioned into engines, transmissions, wheels, and other essential bits of the mobile American experience.

Today, Huron Valley not only extracts metal from SNF shipped to it from across North America, it’s also occasionally engaged in the business of mining landfills where SNF was dumped before flotation and other separation techniques were developed.

as a raw material, scrap is highly sensitive to perturbations in the global economy. If manufacturers aren’t manufacturing, the scrap dealers are among the first to feel it. Indeed, scrap prices began to slip as much as six months ahead of the Lehman crash. Likewise, if an economy is starting to grow, scrap prices tend to be among the first rising indicators (when Alan Greenspan was the chairman of the Federal Reserve Bank, scrap prices were among his favorite economic indicators). At my family’s scrapyard, we always felt we knew the direction the economic breeze was blowing months ahead of time.

Perhaps, in his stubbornness, he believed that the price would eventually rebound, that all of the recently abandoned construction sites in Beijing—the ones kicking up all of the dust—would resume, need window frames, and drive up the price of cans again. In November 2008, though, it didn’t look like a very good bet. Aluminum cans weren’t the only recyclable items trending into worthlessness on that brisk November day. On a nearby corner, piles of cardboard—once a highly sought commodity among Beijing’s cagey scrap peddlers—sat in the early winter sun, awaiting a taker. But nobody was taking: the economic crisis had sapped the will of Americans to buy anything, and since most anything that Americans purchase is packaged in cardboard, the price of used cardboard, too, had plummeted. By day’s end, the China World’s cardboard, once worth a day’s wage to a scrap peddler, would be on its way to a landfill or an incinerator, and nobody—not a scrap peddler, an environmentalist, or a dock manager hoping for some cash on the side—could do a thing about it.

The differences are profound, but in many ways they come down to one simple factor: the peddlers sell locally, and the titans sell globally. Not that any of the mostly paunchy men in Function Room 12 were thinking in such esoteric terms in November 2008. Rather, most of them were either angry or frightened, having watched as global prices in some scrap metal, paper, and plastic declined by as much as 80 percent in the space of the previous few weeks. The decline devastated Chinese recyclers, in particular, many of whom had had built up large inventories of American and European scrap metal in anticipation of a perpetual, Chinese-driven run-up in the price of raw materials. China’s economic development had been viewed as inevitable, and as more and more of the country took part in that development, the price of metals could only go up. So they bought more and more scrap metal, often on the basis of a 20 percent down payment on 40,000-pound shipping containers that might contain scrap worth $100,000 or more. But when in the fall of 2008 the price of scrap metals went into a free fall, many of these traders made a cold and calculating decision: it’s better to hold losses at 20 percent than to pay for an even bigger loss—perhaps as much as 50 percent. And so, starting in September, hundreds of Chinese scrap buyers refused to pay the outstanding balance for the containers of scrap metal that had already sailed from ports in Europe and the United States. They broke their contrac...

By early December the recyclables that Americans and Europeans had diligently sorted into blue and green bins were now worth no more than the abandoned containers of scrap metal and paper at Chinese ports. Desperate recycling managers in the United States and Europe looked at warehouses overflowing with cardboard, and they did the only thing they could: they sent it to landfills and incinerators.

At past events the lobby, and the lobby bar, were jammed with buyers and sellers trading business cards and prices. Away from the hotel and the conference hall, Chinese scrap traders splurged on outrageously expensive and elaborate meals (I once attended a banquet that featured a large cooked alligator in the middle of the table) and fine-boned prostitutes, all in hope of convincing a handful of foreign scrap suppliers that they—and nobody else—should be the ones to buy their scrap. But the financial crisis put an abrupt end to the fun. In 2008, unlike, say, 2007, there were no Taiwanese scrap brokers in the lobby whispering “Do you want a girl?” to any male with a white face, a delegate badge, and a shipping container of old washing machine motors to sell;

The mood in Function Room 12 was formal and controlled—a rude surprise to the Americans, in particular, many of whom naively (despite their millions of dollars of trade with China) expected a freewheeling, open-ended discussion that led to a resolution (in their favor, of course). But the long table, with Chinese mostly on one side and foreign exporters mostly on the other, was devised in part to create an illusion that comity had been restored. In other words, it attempted to suggest that—despite breaking thousands of contracts with their American suppliers—the Chinese importers could still sit down, chat, and even trade with their cheated suppliers. And you know what? Two years later, the volume of scrap being exported to China from the United States and European Union was almost back to the levels of 2008.

“There’s no manufacturing in America now,” scoffed James Li, my longtime friend, the man who introduced me to Sigma, and a businessman who now owned yards in China and the United States. “So Americans will have to sell their scrap to somebody. And China will be the biggest one for buying again when the economic crisis ends.”

Spend even a few days on the road with a Chinese scrap trader, and you can’t help but start to think that the odds—and the American scrap dealers—are arrayed against him. Broken appointments, sold-off stock, and employees who don’t bother concealing their racism. Those are just the affronts. The misdeeds run deeper. According to Johnson, and other traveling traders, scrap exporters don’t always ship scrap orders as quickly as they promise—especially if the markets are moving up and they can sell it again for more. “But when it is falling, then they cannot wait to send the metal to China!” Johnson laughs ruefully. “Also, when the market is up they like to load less weight than forty thousand pounds [allowed in a shipping container]. When I call to complain, they always say that they cannot risk being overweight because of highway regulations on how much scrap can be transported to the rail yard or port. But when the market is down, there are no highway regulations, and the container always comes overweight!

Those aren’t new complaints. Joe Chen, president of Tung Tai, repeated them to me as he recalled his days as a traveling scrap buyer in the 1970s and ’80s. “They load the container with not what we bought,” he told me softly in the back of his Mercedes as it sped through Foshan in November 2009. “If we saw this pile—and even if we are there—they push the other pile into the container.” When I asked Joe why this happened in his traveling salesman days—whether it was racism, or just the very human assumption that all foreigners are stupid—he answered, “Yes. You are correct.” I feel bad for Joe, but I also know that these tricks aren’t the sole provenance of American scrap dealers. Europeans use them; Japanese use them; Chinese use them. “Games,” as most scrap dealers call them, are part of the business no matter where it’s done. Johnson and the other traveling scrap dealers just have the misfortune of experiencing them in a foreign country. But trust me, if Johnson traveled the highways of China, he’d experience much the same.

We continue south, dusk falls, and we pass a police car parked behind a car with a flat tire on the shoulder. “Police are so nice in America.” Johnson sighs. “They stop to help you change a tire.” Both of us know that in China, they might stop and fine you for having a flat.

A few weeks later I talk to a very large, well-respected U.S. exporter who tells me that things are actually much worse than Johnson indicated. As an example, he tells me that his company recently “lost” a bale of copper—retail value around $20,000—somewhere between Hong Kong and the mainland, despite the fact that he’d taken precautions, and even paid to have the container weighed in Hong Kong before it was sent to the other side. But that didn’t dissuade the thieves. Later, though, I can’t help but wonder: Why would Johnson or this exporter be surprised? Guangdong’s scrap trade has always been quasi-legal, at best. If it’s tipping into criminality, that shouldn’t surprise anyone.

The call lasts twenty seconds, and when it’s over Johnson raises his price. To my surprise, he explains why: “It’s an easier [customs] declaration,” he says. “Lot of trouble with mixed loads lately.” In other words, there’s much less risk that a container holding a single kind of metal will become lighter en route to China from Hong Kong, presumably because it doesn’t need to be unloaded for inspection. From Johnson’s point of view, it’s worth the extra few cents per pound.

Then he reminds me of something. “Margins are so tight these days. It’s tough.” “So I’ve heard.” I tell him that I’ve been traveling with Johnson, seeing just how tough it is. And then it occurs to me to ask him a question that wasn’t yet a big question back when I worked in the business. “What would happen if you didn’t have a China to which you could send your metal?” He shrugs. “A lot of it would go into the landfill.

As I write this last chapter, there’s an iPhone 4S sitting on the desk beside me. It’s a fine phone, capable of far more than I need, but like high-end consumers everywhere, I’m aware that there’s a newer, better phone out there: the iPhone 5. Whether I need the upgraded iPhone or not (and I really don’t), I want the upgraded iPhone. However, I’m restrained by two considerations. First, it’s an expensive device; and second, I’m intimately aware of the environmental costs associated with manufacturing new electronics and disposing of old ones.

The January 2013 issue of the Journal of Consumer Psychology contained the results of two experiments that should concern anyone who embraces recycling as a means to preserve natural resources and promote a sustainable lifestyle. In the first, researchers asked study participants to evaluate a new product—in this case, scissors—by cutting up paper in various, preordained configurations. Half of the study participants did the evaluation in the presence of a trash bin, only, and half did it in the presence of a trash bin and a recycling bin. The results were troubling: those who performed the task in the presence of a recycling bin used twice as much paper as those who could only throw their excess paper in a trash bin. “This suggests that the addition of a recycling option can lead to increased resource usage,” wrote the authors, Jesse Catlin and Yitong Wang.

I leave it to others to write about how and why convenience—and not sustainability—motivates consumers around the world (one theory: consuming is more fun than conserving). Rather, I’ll just repeat what I noted at the beginning of this book: between 1960 and 2010, the volume of recyclables that Americans harvested from their homes rose from 5.6 million to 65 million tons. That sounds pretty good until you realize that during the same period the amount of trash generated by those same Americans rose from 81.1 million to 249.9 million tons. Americans—and the rest of the world—are consuming, and recycling, more than ever, in parallel. Clearly, increasing the recycling rate isn’t going to impact the volume of waste being generated unless we all develop a more nuanced understanding of what recycling can—and can’t—do.

If the goal is to promote the maximum recycling of what Americans throw away, then American recycling should be allowed to flow to the places where it is most needed. In other words: if Americans want Christmas tree lights, and Chinese companies need copper to supply the wires to make them, then those Chinese companies should be allowed and even encouraged to import used American Christmas tree lights that would otherwise end up in an American landfill. Likewise, if Chinese want to harvest reusable memory chips from broken American computers, then they should be able to import those computers. No doubt, those Christmas tree lights and memory chips won’t be recycled in facilities that meet every last health, safety, and environmental standard demanded by the U.S. government. But prohibiting the exports of recycling to developing nations won’t do anything to improve those standards, either.

On a hot August day, First America Metal in Joliet, Illinois, looks like any American machine shop. It’s located at the end of a cul-de-sac, surrounded by a green lawn, and accented by a tall flagpole that flies the American Stars and Stripes. Nothing about the place suggests it’s one of the most successful Chinese American–owned and –run scrapyards in the United States. In fact, most people don’t realize that scrap men with deep personal connection to China—and they’re almost all men—are quietly buying up and running scrapyards across the United States. The motivation isn’t hard to discern: they want to cut out the middleman—in this case, the American scrapyard standing between China’s raw materials importers and the Americans who toss all that metal and paper into their recycling bins. It’s harder than it sounds, as many Chinese scrap companies have already found out,

Titanium is an expensive, extremely strong, lightweight metal commonly used in aerospace—and golf clubs. A few years ago, while traveling in Taiwan, I visited the island’s biggest titanium recycler. It was a memorable visit: I was shown sheets of titanium from which putter heads had been punched out like cookies from dough. The scrap at First America, however, looks more like oily confetti, and I suspect it’s not easy to find somebody who wants to buy it. James, however, has the potential to surprise. “Fireworks,” he tells me. “Titanium burns white. So you sell them to the fireworks makers. They make white fireworks with them.” I glance in the box again. “Fireworks?” Maybe those shavings were ground off an airplane jet engine part destined for Boeing. Whatever the source, they’re now bound for a central China fireworks factory, where they’ll be packed into shells destined to turn the sky bright white. “How do you find those fireworks buyers?” “I know where to look,” he answers. “The American scrap guys don’t know where to look.” That’s true—American scrap guys don’t have connections with back-country Chinese fireworks manufacturers—and it’s one reason why James, and not an American junkyard owner, is the natural destination for titanium shavings generated in the United States.

No doubt it’s better than throwing something into an incinerator, and worse than fixing something that can be refurbished. It’s what you do if you can’t bear to see something landfilled. Placing a box or a can or a bottle in a recycling bin doesn’t mean you’ve recycled anything, and it doesn’t make you a better, greener person: it just means you’ve outsourced your problem. Sometimes that outsourcing is near home; and sometimes it’s overseas. But wherever it goes, the global market and demand for raw materials is the ultimate arbiter. Fortunately, if that realization leaves you feeling bad, there’s always the alternative: stop buying so much crap in the first place.