Strike gold at your local rubbish dump
Miners shift tonnes of ore to extract a mere gramme of precious metal. But there is an easier way – and it could prove to be the next gold rush, says Eoin Gleeson.
The crew of the Ocean Guardian have landed right in it. Within days of sinking their semi-submersible oil drilling rig off the coast of the Falkland Islands, they've managed to set off the most explosive diplomatic row between Britain and Argentina since the 1982 Falklands War. The Argentines have accused them of piracy. President Cristina Kirchner has been rallying allies across Latin America to banish the crew from the region.
This is the last thing Falkland oil explorers needed. Up to 60 billion barrels of oil are thought to lie beneath these waters. But the treasure trove is proving a nightmare to get to. Forget the diplomatic problems. It took almost two years of wrangling to secure the Ocean Guardian. And having hauled it across the South Atlantic for 62 days, there's still no guarantee the crew will strike oil after drilling 3,500 metres through sandstone. It's not getting any easier to find this stuff.
Gold miners will say the same. At the Kloof and Driefontien mines in South Africa, Gold Fields is drilling as deep as four kilometres below ground to mine gold. The company will spend $0.7bn deepening the mines and it gets more expensive the deeper into the bowels of the Earth you go.
There's an easier way to find gas and gold. If you venture to the outskirts of any major city, you'll find huge deposits of gold, silver, cobalt and gas just waiting to be shipped. Where are they? In your local rubbish dump. This is where the next mining rush will take place. To mine one gramme of gold, most companies will move a ton of ore. But you can pull the same amount of gold from just 41 mobile phones, according to a United Nations report on electronic waste published last week.
Silver, cobalt, palladium metals that are increasingly sourced from unstable, despotic countries are all found in abundance at your local landfill. And it's not just electronic waste there's money to be made from landfill methane, animal grease and medical waste too.
Electronic waste is the fastest-growing form of rubbish worldwide. China alone will produce 2.3 million tons of electrical refuse in 2010 dumping 500,000 tons of refrigerators, 1.3 million tons of televisions and 300,000 tons of computers. Huge mountains of electronic refuse are piling up outside China's cities. And locals clamber over the parts left by recyclers, tearing apart televisions and computers for copper wire and gold from circuit boards.
The trouble is that this waste is highly toxic. The cadmium from just one mobile-phone battery is enough to pollute 600,000 litres of water a third of an Olympic swimming pool. In Britain, we discard a million mobile phones every year. So governments have been introducing laws that require electronic companies to use professional recycling groups to deal with their waste. The European Union's Waste Electrical and Electronic Equipment (WEEE) directive now law in Britain and across the EU has set firm targets for the collection and recycling of electronic goods.
In practice, this means that electronics manufacturers and retailers are dumping their wares into public recycling sites. There, the computers and TVs are stripped for reusable microchips and parts. These are sent back to the likes of Apple for remanufacture. Then recyclers strip the rest for the metals. A tonne of scrap from discarded PCs contains more gold than can be produced from 17 tonnes of gold ore, Christian Hagelcken of Belgian recycling group Umicore tells Spegil.
Not every electronics firm has the scruples to recycle their waste like this. It's far cheaper to ship your waste off to less closely-regulated foreign lands, where it is dumped in huge toxic piles outside the likes of Nairobi and Shanghai. Germany alone exports around 100,000 tonnes of electronic scrap each year, says Hagelcken. "Old cars awaiting export in Hamburg harbour are often stuffed to the ceiling with electronic scrap."
But other electronic items are quite lucrative to recycle. Take mobile phones. The average phone returned to retailers has a working life of between six and seven years, notes Paul Hill in the Precision Guided Investments newsletter. Each mobile phone that we dump in Britain is worth around £16 to a recycling group. The Chinese are particularly interested in importing laptops and mobile phones to source rare-earth metals. We look at the leader in mobile-phone recycling here: Five ways into the waste sector.
The last few years have brought a series of breakthroughs for gas explorers. Vast reserves of hydrocarbons were found thousands of feet beneath the sea floor from Africa to the South Atlantic. And explorers in the Marcellus Shale region of America have perfected a method of horizontal drilling, whereby they lower drills thousands of feet into the fractured rock and twist them to reach once unreachable reserves.
But it would have been far cheaper to source the gas from the dump. Landfill is an excellent source of methane gas. As rubbish degrades, methane rises up to the surface. When waste is subjected to heat, it breaks down to yield a blend of hydrogen and carbon monoxide called syngas, which can be burned in engines and turbines. There are some 1,000 projects underway worldwide selling gas gleaned from degrading rubbish to industrial outfits. By fermenting the cellulose in paper at landfills, you can also produce pretty decent ethanol.
But who buys the methane siphoned from landfills? Utilities for one. The US turns about 12%-15% of its solid waste into electricity a year generating enough energy to serve 2.8 million homes. Already the world's 700-odd waste-to-energy plants generate more power than all its wind turbines and solar panels put together.
Last month, British Airways said it plans to start sourcing some of its fuel supply from rubbish. A jet fuel plant, set to be built in east London by US bioenergy group Solena, will initially supply 16 million gallons of "green airline fuel" a year about 2% of BA's fuel consumption. The plant is expected to begin active production by 2014, according to Kevin Hammond of Biofuels Watch. The biggest problem for the companies developing these waste-to-energy projects is that there are cheaper ways to deal with rubbish. A plant with a capacity of 1,300 tons of waste per day is likely to cost around $30m-$180m to build, according to a report this month from research group Frost & Sullivan.
But governments worldwide are offering big incentives to waste firms to fund these projects. While methane only accounts for 4% of greenhouse gas emissions largely from rotting food landfill gas is one of the few sources of emissions over which they have jurisdiction. In Britain we discourage waste firms from allowing their dumps to fill, by taxing them heavily. The tax has risen by £8 a tonne in recent years (it's now at £32). And by recovering energy from waste, governments can compensate for dwindling energy resources.
There are also a number of waste-to-energy technologies that could radically cut the costs of producing gas from landfill. Waste Management, the biggest waste group in the States, has been experimenting with a type of landfill called a bioreactor. This is designed to speed up the decay of biodegradable waste by pumping in air, water and recycled leachate (the liquid that drains from a landfill). This produces gas four times faster than normal and cuts the volume of waste of 35%, says The Economist. Waste Management is already operating 115 gas-to-energy facilities across America. We take a closer took at the company here: Five ways into the waste sector.
Not everything at the dump is worth recycling. As the price of paper, glass and plastics dived during the recession, recycling efforts rapidly tapered off. And a lot less is being dumped too. If you'd visited your local landfill six months ago, it would have been very quiet. Operators at the Puente Hills Landfill in San Francisco, one of the largest in the US, recorded a 30% drop in tonnage around this time last year.
But one type of trash has been thriving during the recession: junk food. "Eating healthily has been one of the big casualties of this economic downturn," says Harry Balzer, author of a recent report on eating patterns in America. Cash-strapped consumers are finding solace in their local fast-food chains. In Europe, McDonald's recorded a 6.9% jump in same-store sales last year.
That keeps the landfill sites busy. But it's the organic waste that's the really interesting sideline here. Cooking meat generates a lot of fat that you can't simply dump. So there is a steady business in collecting and handling animal grease and other byproducts from restaurants and slaughterhouses particularly in the US, where a few independent groups dominate. Why is animal fat useful? Because you can run a car on this stuff. We've long known that you can fuel a car with chip fat. But it turns out that biodiesel from animal fat is far better than vegetable oil. A number of major oil refiners have already developed green diesel plants in the US with the government handing out loans that cover 80% of the building costs for anyone who'll ask. We look at one group leading the green biodiesel industry here: Five ways into the waste sector.
American hospitals create a huge amount of waste each year. Discarded medical devices are often shipped to hospitals in developing countries that could never afford themotherwise, or recycled for re-use in US hospitals.
But much of this waste can be extremely dangerous if not dealt with properly, or if thrown away with ordinary garbage. In Gujarat last year, for example, officials seized hundreds of tonnes of recycled medical equipment after an outbreak of Hepatitis B killed at least 70 people and left about 240 infected. So as with any other form of hazardous waste, there's a steady line of business available for companies that can deal with it safely. A few specialist groups do very well disposing needles, equipment and devices from hospitals throughout the West. We have a look at one group here: Five ways into the waste sector.
This article was originally published in MoneyWeek magazine issue number 476 on 05 March 2010, and was available exclusively to magazine subscribers. To read more articles like this, ensure you don't miss a thing, and get instant access to all our premium content, subscribe to MoneyWeek magazine now and get your first three issues free.