The e-waste issue has never been a problem with the waste itself.

For quite some time, affected by the soaring prices of storage chips, the prices of new mobile phones have generally increased, unexpectedly triggering a boom in the recycling of used mobile phones. The recycling prices of some models have increased several times. What were once dusty "e-wastes" have now become sought-after "cyber gold". According to relevant data, the total number of idle used mobile phones in China has reached as high as 6 billion, with a potential value of over 600 billion yuan.

However, for a long time, the proportion of mobile phones recycled through formal channels has only been 10%.

Consumers generally worry about privacy leakage. Even if they manually delete data, there is still a risk of it being recovered through technology.

In addition, pain points such as poor recycling channels and inconsistent industry standards also restrict the development of the market.

Facing this dilemma, China Resources Recycling Group, the "national team" in the field of circular economy in China, is actively exploring solutions.

In January 2025, its demonstration project for the safe recycling and disposal of mobile phones was put into trial operation.

Users place an order through the "Core Shatter Worry-Free" mini-program, and the mobile phones are then safely transported to the disposal base. There, they are disassembled, crushed, and smelted in a confidential workshop, with the entire process being visualizable and traceable.

This model has established an integrated chain for recycling, disassembly, and smelting, with the recovery rate of precious metals reaching over 99%.

Driven by the "national team", 20 enterprises, including Huawei, Lenovo, and Aihuishou, jointly launched the "Partnership Program for the Circular Utilization of Used Mobile Phones", making concerted efforts in multiple aspects such as standard setting and technological innovation.

All signs indicate that a profound transformation regarding resource security seems to be taking place, from "drawer phones" to urban minerals.

But is this really the case? Today, let's talk about this topic.

Why Can't the Regular Army Defeat the Guerrillas?

On the outskirts of Barcelona, Spain, Gonzalez, the CEO of ACS Recycling, stood in a factory filled with discarded electrical appliances and said something that silenced the entire industry: "We are fighting against scrap dealers, and we are losing this war."

Why? Because the economic model of e-waste recycling is collapsing.

In the European Union, a formal recycling facility certified by WEEELABEX has direct costs of up to 34,000 euros per year just to maintain its compliance status. This money is spent on environmental monitoring equipment, worker safety protection, waste gas and wastewater treatment systems, and management systems in preparation for surprise inspections at any time.

If a recycler chooses to follow the formal route, it means it must continuously invest in equipment depreciation, personnel training, environmental insurance, etc. These investments all constitute competitive disadvantages in the battle for the pricing power of e-waste.

The informal operators across the street don't need these.

They can operate in open-air sites, disassemble in the most primitive ways, directly discharge toxic wastewater into the soil, and hire temporary workers without social security.

Their cost structure is so low that they can offer higher cash returns to waste holders.

In the scrap market in Spain, a used server motherboard is quoted at 10 euros by a formal dealer, while the grey market can offer 15 euros or even more.

High-value materials naturally flow to the party offering a higher price.

What formal recycling plants receive are the residues after being sorted two or three times, the circuit boards with the lowest gold content, and the empty shells from which the core chips have been removed.

The value that can be recovered from these materials on advanced processing lines is often lower than the electricity and maintenance costs of operating these equipment. A factory designed to process 20,000 tons of materials per year can actually only receive 6,000 to 8,000 tons of qualified raw materials, and its capacity utilization rate has long been struggling below the break-even point.

There is an economic term for this phenomenon, called "adverse selection".

In a market with information asymmetry, inferior participants can offer higher prices to purchase goods due to their cost advantages, and high-quality participants are gradually squeezed out of the market.

When e-waste recycling becomes a price competition, following the rules itself becomes a form of commercial self-punishment.

The EU is not unaware of this.

Environmental law enforcement agencies in various countries regularly carry out special rectifications and shut down illegal disassembly dens, but the results have always been limited.

Once an illegal den is shut down, within two weeks, the equipment and personnel will resume operations at another location. The driving force behind this is not the stubbornness of a certain criminal group, but the arbitrage space between the raw material price and the compliance cost. As long as this price difference exists, supervision is like playing an endless game of whack-a-mole.

Moreover, the market prices of the precious metals and strategic minerals contained in e-waste are globally unified.

The costs of formal recyclers are local, affected by local labor laws, environmental protection standards, and energy prices; while the costs of informal operators are almost negligible.

These two groups compete for raw materials in the same global commodity market, and the outcome of the competition is written at the intersection of the cost curves from the very beginning.

This is one of the biggest problems in the circular economy.

We leave waste disposal entirely to the market mechanism, but the market naturally chooses the path with the lowest cost, and environmental and social costs are precisely the heaviest burdens for formal channels.

To make the circular economy truly "circulate", it doesn't rely on moral appeals. Instead, we must change the game rules that put those who follow the rules at a disadvantage.

The Price of Metals Determines the Fate of Recycling

The downstream links of e-waste processing follow a more brutal logic.

In the process of ACS Recycling, the printed circuit boards disassembled are sent to professional metal refineries, which often belong to traditional mining groups.

Their high-temperature smelting furnaces can process both primary ores and used electronic components, but the fate of the latter entirely depends on one variable, which is the real-time quotation on the London Metal Exchange.

Gonzalez said in an interview: "When the price of cobalt is high, it's worth extracting cobalt from waste; when the price is not high, it's not worth it."

What he means is that the application of recycling technology doesn't depend on whether the technology is feasible, whether it's beneficial to the environment, or even whether the resources are scarce. It only depends on whether the current market price can cover the marginal cost of the extraction process.

A used smartphone contains about forty kinds of metal elements, including gold, silver, copper, palladium, cobalt, lithium, and various rare earths. In the idealized narrative of the circular economy, urban mines should replace natural mines, and used electronic products are high-grade ores lying in drawers.

But on the screens of metal traders, these elements have only one identity, which is commodities. Their values are simplified into numbers in dollars per ton, and these numbers fluctuate every day.

The price of cobalt was about $35,000 per ton at the beginning of 2023 and dropped to $28,000 by the end of the year. During the low-price period, refineries piled up cobalt-containing waste battery materials in warehouses or directly transferred them to downstream processors without even starting the extraction process.

The situation of lithium is even worse. After the price of lithium carbonate reached a peak of nearly 600,000 yuan per ton in November 2022, it plummeted by more than 80% within a year.

The lithium recycling production lines built during the high-price period were shut down or switched to other businesses during the low-price period.

This is not the operational mistake of a single enterprise. The entire recycling industry's business model is built on unpredictable commodity prices.

This extreme dependence on price exposes a contradiction. There is a decoupling between the use value and the exchange value of substances. Cobalt is still the same cobalt. Its physical and chemical properties haven't changed, its function in battery cathode materials hasn't changed, and its importance for the clean energy transition hasn't changed.

However, if the market price drops below a certain critical point, this real and objectively existing social demand becomes "unfulfillable" because in the capitalist production system, only the demand that can bring profits is considered effective demand.

The primary mining industry is also affected by price fluctuations, but mines have many more coping strategies than recyclers.

Mines can adjust the mining grade. When the market is good, they mine high-grade ores; when the market is bad, they mine low-grade ores to maintain operations. They can extend the investment cycle and wait for the price to recover before promoting expansion projects. They can also get various implicit subsidies from the government under employment and tax pressure.

Recyclers, on the other hand, are faced with piles of disassembled waste, intermediate materials that generate daily storage costs, and waste-producing enterprises that will face environmental protection penalties if the waste is not processed.

They can't afford to wait, and they can't adjust the grade. They can only passively accept all the impacts brought by price fluctuations.

This is why, in the current global e-waste processing volume, the types of metals that are truly fully recycled are actually very limited. Gold and palladium have recycling value in almost any market condition because their unit prices are high enough. Copper and silver come next. And the recycling rates of a large number of key minerals such as lithium, cobalt, rare earths, indium, and gallium, which are widely considered to be of strategic significance, are still extremely low globally.

It's not that the technology can't do it; it's that the economics don't work out.

This problem can't be solved by waiting for technological progress.

No matter how mature the recycling technology is, it still requires the consumption of electricity, chemical reagents, and labor hours. These costs are rigid.

As long as global metal prices continue to be dominated by capital games in the futures market, and as long as recyclers don't have a buffer mechanism to counter price fluctuations, then "urban mining" will always remain just a title in mining textbooks and won't be able to truly become a reliable pillar of resource security.

The Embarrassing Paradox of Green Barriers

In recent years, the EU has intensively introduced regulations restricting the export of e-waste. The latest version prohibits the export of almost all categories of e-waste to non-OECD countries.

The intention of the legislators is obvious. They aim to prevent developed countries from shifting pollution to developing countries and to keep valuable secondary resources within Europe to enhance the supply security of key raw materials.

However, the implementation of the bill has hit an unexpected wall.

Gonzalez reflected the common reaction of front-line recyclers: "If there is no local manufacturing, no one will consume these materials."

This is a structural defect in the entire European circular economy strategy.

In the past thirty years, Europe has undergone a large-scale deindustrialization process. High-energy-consuming manufacturing sectors such as printed circuit board manufacturing, consumer electronics assembly, and basic metal processing have long been transferred to East and Southeast Asia.

What remains in Europe are design centers, brand headquarters, research and development laboratories, and high-end service industries.

This means that when used electronic products are disassembled into copper powder, aluminum ingots, and precious metal concentrates, the consumers of these raw materials are not within Europe.

A Dutch recycler extracts 99% pure recycled copper from waste. Its most natural customer is a copper foil manufacturing factory, and copper foil is the base material for printed circuit boards. However, in Europe, the production capacity of copper foil manufacturers is so small that it can almost be ignored.

Who must it sell this batch of copper to? If it sells to Asian customers, although there are no restrictions on exporting pure copper, the transportation costs, time costs, and the complexity of trade terms make the transaction much less attractive.

If it sells to the few remaining secondary processors in Europe, the price offered by the other party is often much lower than the international market price because they know you don't have many options.

This creates an absurd situation. The legislation requires resources to be kept in Europe, but Europe doesn't have enough demand to absorb these resources. The copper, aluminum, and precious metals produced by recyclers are either piled up in warehouses waiting for the price to rise or are forced to be sold at a lower price, with the profit margin being squeezed to almost nothing.

Moreover, the trade ban has also had unexpected chain reactions.

In the past, a significant portion of the high-value waste collected by informal recycling networks would eventually flow into the export channels and enter the recycled metal industry chain in Asia. Now that the export is blocked, these informal channels haven't disappeared. Instead, they have shifted to more concealed transportation routes, falsely declaring the waste as second-hand goods or bypassing the ban through transit countries.

The difficulty of law enforcement has increased, and the scale of the shadow economy may even become more difficult to track due to the ban.

Of the used electronic products blocked within Europe by the ban, some have indeed entered the formal processing system, but a larger portion has been hoarded, abandoned, or quietly flowed overseas through more uncontrollable routes.

If a policy is introduced without considering the carrying capacity of the entire industrial chain while only focusing on the goal setting, its actual effect may deviate from the original intention.

Therefore, the circular economy can't just be half-cycled.

No matter how perfect you build the recycling end and how strict you manage the export, if the consumption end - that is, the manufacturing industry - is not in the same economic system, then the closed-loop of resources is broken.

Green barriers can't protect non-existent manufacturing capabilities. Instead, they will put recyclers in an embarrassing situation where they are caught in the middle.

Thrown-Away Phones and Burned Circuit Boards

In Agbogbloshie, Ghana, tens of thousands of workers are engaged in the same kind of work as the workers at the ACS Recycling factory in Sabadell, Spain, on the other side of the earth - separating valuable materials from used electronic products.

The difference is that the workers in Agbogbloshie use an open fire, stone hammers, and manual disassembly. The smoke released during the processing contains dioxins, furans, and heavy metal dust. The cancer incidence rate and the neonatal malformation rate in the surrounding communities are significantly higher than in other areas.

A significant portion of this waste comes from Europe, which has established a strict recycling system.

They are labeled as "second-hand goods" or "donated materials" and shipped in containers to West African ports. After being unloaded, they are directly sent to incineration plants. Although the law prohibits this, there is a huge gap in management between the customs supervision and enforcement capabilities after the containers reach the destination port and the intention of the legislative body in Brussels.

Why does this kind of trade exist?

It's not just because of the profit-seeking instinct of unscrupulous traders, but also because of the price signal transmission mechanism in the global value chain.

When formal recyclers in Europe can't digest certain types of waste due to high costs, there will inevitably be someone willing to take it over with lower standards.

This "someone" is often the group of people living near the extreme poverty line, lacking any social security and development opportunities.

Don't they know that burning cables with an open fire will harm their health? Most of them do. But when a family's daily income depends on how much copper they can strip, long-term health risks are a luxury they can't afford.

This is the most fundamental logic of capitalist globalization. The poor are not only exploited economically, but their lives and health are also given a lower value in the pricing process of global waste transactions.

The EU's ban on exporting e-waste to non-OECD countries is a morally necessary measure. However, this policy lacks a supporting plan. Since the flow of waste has been stopped, should there be alternative compensation for the communities that used to rely on this waste industry chain for survival? Should local governments be funded to establish safe and standardized recycling facilities? Should it be recognized that developed countries have externalized environmental costs to the Global South for decades, and this in itself constitutes a historical debt that needs to be settled?

Currently, the answers to these questions are silent.

After the ban was introduced and the container shipping routes were redirected, the moral anxiety in Europe has been relieved. However, on the coast of Ghana, the chimneys are still smoking, only the source of the goods has changed to other countries with looser supervision.

What about China? China is currently the world's largest producer and consumer of electronic products, and the total number of idle used mobile phones has reached 6 billion. The potential value calculated by industry data exceeds 600 billion yuan, but the proportion recycled through formal channels is still only about 10%.

The vast majority of old mobile phones are lying in drawers gathering dust because the owners are worried about privacy leakage, don't know where there are reliable recycling channels, and the recycling prices lack transparency.

Concerns about information security are indeed a key obstacle to improving the recycling rate.

Mobile phones store not only photos and chat records but also bound bank cards, identity verification text messages, and login credentials for various platforms. Even if the phone is