JOHANNESBURG (miningweekly.com) – With production costs rising and gold resources being depleted, industrial gold recycling has the potential to become a far more significant contributor to overall future supply, particularly as legislative pressures rise around the recycling of electronic waste. Some even speculate that the industrial gold recycling sector could contribute up to half of all supply in the very long term.

The current contribution of the sector is far more modest, however. A report published jointly by the World Gold Council (WGC) and the Boston Consulting Group (BCG) in March calculates that industrial recycled gold – arising primarily from waste electrical and electronic equipment (WEEE) – currently makes up only about 10% of all recycled gold. Titled ‘The Ups and Downs of Gold Recycling: Understanding Market Drivers and Industry Challenges’, the report shows that the so-called “high-value recycled-gold sector”, which sources the precious metal from jewellery, gold bars and coins, still accounts for 90% of the total supply of recycled gold.

However, business strategy adviser Boston Consulting Group (BCG) principal Trinh Le-Fiedler points out that the industrial recycling sector is significantly newer than the high-value gold recycling industry and is driven primarily by legislation.

The industrial gold recycling sector originated with the implementation of the Electric House-hold Appliance Recycling Law in Japan in 2001, followed by the Waste Electrical and Electronic Equipment Directive in the European Union in 2003 which has resulted in the rapid growth of the sector in these territories.

Le-Fiedler notes that, compared to Europe and Japan, legislation in North America pertaining to industrial gold recycling is much less mature.

“Therefore, most of the WEEE is exported to Africa or Asia for dismantling, as these locations offer more affordable labour forces, which has resulted in very few WEEE recycling facilities being established in North America,” she says.

Le-Fiedler explains that reclaiming precious metals from WEEE is significantly more complicated than it is for high-value gold resources.

“Gold is used in the electronics industry, primarily in thin wires and as a plating metal. However, in addition to gold, these electrical and electronic items can contain up to 60 different elements as well as numerous and often dangerous chemicals,” she states.

The report further emphasises that extracting valuable metals from these items safely and efficiently is difficult, but says that, if managed effectively, WEEE material can make a positive contribution to a circular economy, “one in which valuable products and resources are reused and recycled”.

Some companies have developed state-of-the-art recovery operations to effectively extract gold and other metals from WEEE material.

“For example, global materials technology company Umicore’s Hoboken plant, in Belgium, recovers 17 metals from a range of waste streams, such as spent catalytic converters, chemical catalysts, industrial materials and various types of manufacturing waste,” the report highlights.

The report also states that even the slag is used as aggregate and sulphuric acid (a smelting by-product) is captured and used by Umicore.

Recycling Opportunity
Electronic Waste Association of South Africa (eWasa) chairperson Keith Anderson tells Mining Weekly that, on average, each person generates between 6 kg and 7 kg of WEEE a year, which, multiplied by seven-billion people worldwide, provides an indication of the potential size of the market. However, he says that, currently, on average, only 10% to 12% of global WEEE is being recycled a year.

Anderson notes that the amount of gold contained in this waste material can vary from a few milligrams to several grams, depending on the size of the equipment.

“Once the gold is removed from the rest of the material, it is referred to as fractions. These fractions, with the right technology, can be processed up to a level of 99.99% gold purity, which makes them very valuable,” he states.

Anderson avers that the industrial gold recycling process can be undertaken cost effectively and, in many instances, significantly cheaper than it costs gold miners to extract and process the precious metal.

“With WEEE being the fastest-growing waste stream worldwide and as technologies and legislation relating to the sector continue to improve, the sector will only become more viable and thereby lucrative,” he enthuses.

WGC market intelligence head Alistair Hewitt points out that, in 2014, gold recycling volumes fell to a seven-year-low of 1 176 t and the WGC expects these volumes to remain low for the remainder of 2015.

He attributed this to several factors, including the low gold price, which discouraged people from selling gold stocks until the price improved, and the depletion of near-market gold recycling materials.

Nonetheless, Hewitt highlights that the importance of gold recycling must be placed in context as, even in 2009, when gold recycling reached its highest recorded level of 1 728 t, it accounted for only about 1% of the overall above-ground global gold stock.

Therefore, he says, while gold recycling is important on a yearly basis as a percentage of overall gold supply, in the overall context of gold stocks, very little gold is recycled.

“Higher gold prices are crucial and economic crises are catalysts for promoting gold recycling.”

Concurring with Hewitt’s assessment, US- and Canada-based precious metals and minerals recycler KMG Gold Recycling president Michael Gupton says, if gold stays at around $1 200/oz, this will encourage more people to sell their gold.

“In Canada, our customers monitor not only the price of gold but also the value of the Canadian dollar against the US dollar.

“In the last five months, we have seen the Canadian dollar decline against the US dollar, therefore, in Canada, gold is selling for around C$1 500/oz, which is sufficient to trigger small and medium-sized businesses to sell their gold reserves,” he points out.

Gupton adds that the consumer market is KMG’s primary source of recycled gold, owing to individuals selling their scrap jewellery.

“In the industrial market, we receive large volumes of gold from jewellers who sell their industrial vacuums and bench sweeps, as well as dentists and dental technicians selling grindings, sprues and dental industrial vacuums,” he states.

KMG also recycles platinum-group-metals products such as thermal couple wires and platinum labware crucibles.

“We always try to find solutions to recycle precious metals wherever we can. Our latest solution is for recovery level silver content materials, such as the silver sludge from old X-ray films, which, in the process, destroys unwanted old X-rays that doctors have an obligation to effectively dispose of owing to their confidentiality requirements,” Gupton points out.

KMG’s gold processing facilities are located in North Dakota, in the US, and Winnipeg, Canada.

South African Insight
Local precious metals refinery Cape Precious Metals CEO Sharon Eades tells Mining Weekly that there is a “copious amount” of scrap gold being recycled locally, which is channelled through legitimate sources to refiners.

However, she says that the Taxation Laws Amendment Act, which was promulgated into law in April this year, put a stop to the incorrect claiming of VAT from gold that does not have claimable VAT.

Previously, a VAT vendor who acquired second-hand goods, including goods made from precious metals, from a seller who was not a vendor was entitled to claim a notional input tax deduction.

While the acquisition of gold jewellery by VAT vendors from non-VAT vendors should have allowed for the deduction of notional input VAT, in practice, this provision “significantly contributed” to creating an enabling environment for fraudulent input tax deductions.

Eades adds that the local jewellery manufacturing industry has decreased by about 50% over the past ten years.

She attributes this mostly to many of the new regulations that have been introduced during this period.

“Many of the regulations are necessary to ensure that the industry has the veracity it deserves. However, while the number of manufacturers has halved, the number of refiners has increased significantly.

“The industry is, therefore, very competitive. For refiners who focus on supplying the manufacturing industry products to produce jewellery locally, it has become increasingly difficult to cover overheads.”

Eades also notes that the margins for both refining and selling products to the industry are “extremely low”, particularly for companies with infrastructures based on servicing the industry with all products.

“Many jewellers that remain in South Africa import or have other companies manufacture their jewellery,” she states.

Meanwhile, local precious metal refinery Metal Concentrators South Africa CEO Bernard Stern says that, on average, Africa recycles about 50 t/y of gold. “South Africa [particularly] could increase gold recycling locally if government restricted the export of gold scrap and only allowed the export of refined or beneficiated gold,” he concludes.