There continue to be significant opportunities in the recovery of used electronics, on multiple fronts. Efficient e-waste recycling recovers valuable precious metals, non-ferrous, ferrous and plastics, for which demand is consistently strong. On the ITAD (IT asset disposition) and reuse side of things, individuals and businesses continue to need more refurbished computers and laptops, especially since the start of the global pandemic, and the accompanying trend toward working from home and home schooling.
Gary Diamond, originally from South Africa, recognized the opportunity in used electronics in 2010 when he founded Shift Recycling. In its early days, the company began as a partnership with Toronto scrap recycler Combined Metal Industries (CMI) which was looking to enter the e-waste recycling space, and grew to be one of the largest electronics recycling companies in Ontario.
"I thought it was a great opportunity and an interesting space to get involved," says Diamond. "We also then got into reuse and refurbishment of used electronics through a subsidiary company called Revolution Recycling. In 2019 we merged the operations of Shift and Revolution with GEEP Canada and, along with shareholders and partners CMI and the Giampaolo Group Inc., two of the largest scrap recyclers in Canada, we formed Quantum Lifecycle Partners LP."
He says there are really two sides to their business.
"On the end-of-life e-waste recycling side, we get supply mostly from municipalities and OEMs, scrap, waste and telecommunications companies," he explains. "The other side is ITAD (IT asset disposition), the reuse and refurbishment side of our business. Our customer base here includes large corporate and enterprise accounts to small to medium businesses. The whole goal is to reuse and refurbish as much as possible."
He adds that overall the margins are better if you can reuse or refurbish something, rather than rip it apart and shred it for recycling, but says the recycling side is much bigger in terms of volume and revenue. "The recycling operations require more space, more people and more capital. When it comes to a contributing margin and profitability perspective, the recycling and ITAD sides equal each other out."
Diamond says the global pandemic has made the business, at times, unpredictable. Overall though, they have seen improved margins over the last year or two along with increased demand for refurbished electronics due to demand from the increased number of people working and schooling remotely.
On the e-waste recycling side of the business, which depends on volatile commodity markets, he says through most of the last year or so, gold, copper and ferrous have all been consistently strong overall.
"The main commodity drivers of electronics are gold and copper," he says. "Anything with a circuit board has precious metals in it." He adds that particularly in LCD screens and rechargeable batteries there are also significant amounts of cobalt and lithium.
Integrating global operations
Quantum has eight facilities in Canada: Vancouver, Calgary, Edmonton, Brampton, Toronto, Barrie, Ottawa and Montreal, as well as a recently acquired former GEEP e-waste recycling facility in Costa Rica, making it the largest e-waste recycler in Canada, and one of the largest in North America, especially if including their ITAD business and recycling together.
"We're pairing down on complicated processing throughout locations and centralizing it in Toronto, mostly due to the amount of volume available and our current capital infrastructure," explains Diamond, who adds that they have made significant advancements with their shredding line at the Toronto facility where, this past spring, $2 million was invested into the line.
"The GEEP processing technology was outdated," he continues. "We shut down the use of that technology in Edmonton and Barrie at GEEP's facilities, and are now sending product from there to Toronto for processing. It more than makes up for the logistics costs because of the way we process it and maximize value through separation."
In early 2021, GEEP's e-waste recycling site in Costa Rica was also integrated into Quantum Lifecycle.
"This was really an opportunistic purchase, because it was part of the GEEP family. It was an orphaned operation, unsold mostly due to COVID, and it was just sitting there." He says they were at a point where they had things nicely under control in Canada, and because having a facility in Central America was attractive to some of their OEM and corporate customers who may need service there, it was an easy decision.
"It's very early days, but the nature of the material . . . in Costa Rica is much older than in North America," he says. "They ‘sweat' the asset much more and labour is much cheaper, so we're doing more things manually, versus through automation as in North America. And, because they sweat the asset so much more, there is less reuse potential."
He notes also that while the ITAD business is quite similar across North America, and globally, the recycling sector changes everywhere you go. "It is different between different jurisdictions because it's so heavily reliant or dependent on regulations," he says. "The business model for recycling is very different from B.C. to Alberta, to Ontario to Costa Rica.
"It's probably the most challenging aspect of our business," he continues. "Extended Producer Responsibility (EPR) is done differently in different places and getting all systems consistent is probably still a long way away.
"With the new EPR-based regulations in Ontario, the best part about it is it really does foster true competition. But, for e-waste, the actual targets that the government has set are too low.
"The targets are lower than what the marketplace collects. There is more material in the system than you have obligated parties that are required to pay to recycle it.
The Quantum process for ITAD and e-waste recycling
Upon receipt of used electronics at one of their facilities, Diamond says there's a significant "triage" component. On the ITAD side, incoming potentially reusable product goes through a proprietary process using Quantum software to audit, image and wipe information from all assets.
"What we're trying to do is separate each lot to the asset level," he explains. "It requires no significant capital infrastructure, other than the fact that our system has been 20 years in the making and it's a very dialed-in system for traceability and data security. We have it to a point that we can maximize the value of the asset while destroying the data and provide traceability to our clients."
Sources of materials on the recycling side of Quantum's business includes unusable electronics - fallout from the ITAD business - as well as material from their scrap recycling partners, municipalities, corporations and telecom companies.
"We're not receiving one skid at a time, we're receiving tractor-trailer loads of bulk material. Everything gets touched, because we can't shred anything without sorting out batteries and other contaminants in the stream. We use a combination of manually taking things apart and automated shredding and sortation systems.
"At the end of the day, it's about trying to make it as efficient as possible to create a sellable commodity," he says. "The truth is for our process, if we control the infeed, we really can get a very clean product on the back end without a lot of effort."
He adds that in 2020, through the pandemic, they processed 30,000 tons of e-waste in total. Their biggest output volume is ferrous metal and plastic, accounting for more than 50 percent of outgoing material, with plastics comprising about 30 percent of that amount. The most common plastic type they process in e-waste is HIPS (high-impact polystyrene) with the rest made up of many different types, and they also output significant amounts of glass and non-ferrous metals.
Diamond notes as well that while many think about electronics as the fastest growing waste stream, it's just not true. "It's actually a shrinking stream," he says. "The reason being is that there's more products, but every product weighs a little bit less. This concept of ‘light weighting' is a very real thing for us."
He continues, "The truth is it is hard to differentiate yourself on the efficiency of the shredded side of things. It's much easier to differentiate yourself by providing amazing customer experience and very efficient sortation to maximize reuse value."
Contamination in the stream
With respect to potentially hazardous items in their stream, such as lithium-ion rechargeable batteries, Diamond says part of the reason they just did the upgrade to their shredding line in Toronto is to add another level of sortation and safety.
"Basically, what we did is we put a pre-shredder on the front of our line in order to open the product up in order to make sure that we're not shredding batteries through our quad-shaft shredder - where that can really cause fires."
Quantum's first stage in this process is a manual, visual check by employees to sort out any batteries and other contaminants in their stream. He says batteries in the pre-shredder would be very unlikely to cause fires. After the pre-shredder, they have another person checking the line before material goes through their quad-shaft shredder.
While the trend toward light weighting of consumer electronics is in many ways a good thing, for e-waste recyclers it results in a higher number of products with more batteries, making contamination levels higher, and recycling is more difficult overall.
Over the next few years the expectation is that there's going to be more product overall coming through, including more mobiles, more connected devices and more lithium-ion batteries.
"You have to really manage the risk," he says. "We set ourselves up for success. The process is never going to be perfect, but we are setting ourselves up to catch any issue, or any hazard in the stream. It's a real challenge and the more you can identify it on the front end, the easier it is."
Navigating standards and regulations
R2 is the main e-waste recycling standard used by Quantum, and employee Mike Godfrey is on the R2 technical advisory committee. "We are very supportive of high standards, because we do it right. We want to do it right," says Diamond.
"Stewardship aside, the government has a long way to go in order to determine the right structure that works for e-waste management from a competition perspective and an economic perspective.
"In Ontario they have a competitive EPR model where producers can have choice as to who they use, but the targets need to be set high enough that the marketplace is challenged. They just have to figure out what the targets need to be."
With respect to global shipping and illegal dumping, Diamond, when asked, says that it feels like a situation that is improving.
"Most e-waste material gets recycled in Canada," he says. "The material we should be focusing on is what actually goes to landfill. The government needs to regulate small-stream products, such as small domestic appliances. Keeping that material out of landfill is our biggest opportunity. It is only there because of its low value."
With respect to the latest rules governing global export and import of recycled commodities, the Basel Convention Plastic Waste Amendments put in place this past January are definitely having an impact on their business. "These new Basel rules mean you can't ship plastic without an export permit," says Diamond. "It's a real challenge, and at the same time as COVID and the current global shipping challenges.
"But the truth is, we're starting to see more and more local solutions for plastics recycling. We are very encouraged by this. We need local solutions for plastics recycling, rather than just shipping it overseas, because it's just not sustainable."
He adds, "Anything, like the Canada Plastics Pact, that's going to promote local processing, local markets, is a good thing."
The year ahead for Quantum
For Quantum going forward, a major priority in 2021 is continuing to navigate the realities of COVID-19 and shifting regulations in Ontario. "COVID is on everyone's radar," Diamond says. "With respect to the regulatory changes in Ontario, just navigating those will be a priority this year, on the recycling side."
Other priorities include continuing to standardize all their recycling operations, all their facilities and fully integrating the GEEP Costa Rica business. "We're still in the middle of integrating the GEEP and SHIFT businesses. We still have big IT upgrades happening, to knock out in the next couple months, including HR policies and processes. It has taken us two full years to integrate businesses."
Growing the ITAD business is also a top priority.
"Part of that is getting better at a couple of types of products," Diamond says. "Mobile devices and enterprise gear are really high up as a priority. We're also really pushing to build out our e-commerce store. We really like the fundamentals and economics on the ITAD side. We have the process very dialed in and we're looking to continue to grow it."
This article was originally published as the cover story in the July/August 2021 edition of Recycling Product News, Volume 29, Number 5.
