E-Waste - The hidden gold in the toxic truth

From over a billion mobile phones today, the number of mobile users in India is expected to rise to730.7 million by 2017. The proliferation of mobile devices and growing internet penetration has opened up the ground for massive innovation. We are already witnessing huge the number of startups riding this wave and trying to solve myriad problems. However, the same metric that has led to the blossoming of these new age businesses, has also, more silently, created in its wake, a large market opportunity in the reuse and recycling of these devices.

The average holding period of a mobile phone by a user has also been dropping and is estimated to be under two years now. As technology develops and better devices hit the market, replacement rates will only increase. We are looking at millions of devices being replaced every year, and add to this the millions of laptops, old computers, computer peripherals and kitchen electronics that are discarded unscientifically in landfills, and you have a cesspool of the most hazardous chemicals ranging from arsenic and lead to mercury that are rapidly polluting our water and soil. According to Comptroller and Auditor-General’s (CAG) Report, India generates over four lakh tonnes of electronic waste every year. While India has quickly ascended to the position of world’s second largest market for mobile phones, the topic of e-waste and its management has not received due attention. However, the size of the problem opens up a large opportunity for innovation as well.

In addition to spreading awareness amongst users, the solution really lies in ensuring devices remain in use longer so that the need for new devices to be brought into the market is minimised and when these devices reach the end of their life, they are optimally recycled to extract maximum value out of it. This is where innovation in re-commerce and recycling industries are beginning to happen. Re-commerce refers to the process of bringing back or recovering pre-owned, used or damaged devices and putting it back into the commercial distribution channels for purchase by others. Sales of second-hand devices has always been a thriving market in India though unorganised. A large section of our population is price sensitive but at the same time has aspirations to own the best brands and products. A refurbished device is the ideal solution for them. A 2016 Deloitte report estimates the global used smartphone market is about $17 billion. Several start-ups have sprung up in this space, focussing their efforts on systematic electronics reuse solving for this issue. They provide a transparent platform for individuals to sell old electronic devices and residential electronic waste online.These old devices are then repaired and refurbished and sold to users in semi urban and rural areas at a significant discount to the new device, greatly increasing the lifecycle of the electronic goods and reducing waste. Multiple business models are in play in the market and innovations in price forecasting of used devices, expertise in refurbishment and supply chain and distribution channels for sales are some areas of focus. They key to cracking the large opportunity will be to bring economies of scale with OEM and retailer partnerships.

Electronics recycling is also a large business opportunity. The US Environmental Protection Agency (EPA) estimates that recycling a million mobile devices can produce 16,000 kgs of copper, 350 kgs of silver, 34 kgs of gold and 15 kgs of palladium. EPA reports that a metric ton of circuit boards can contain 40 to 800 times the amount of gold and 30 to 40 times the amount of copper mined from one metric ton of ore in the US. We are sitting on a gold mine, quite literally! We need a supply chain that brings enough quantities of the e-waste consistently and at reasonable rates to the recyclers. Next is to have an extraction process which is not expensive. Both of these are areas where innovation can help unlock great economic value.

The unorganised and distributed nature of the supply chain leads to high logistics cost making the overall proposition of recycling unviable. According to an Assocham report, a mere 2.5% of India’s e-waste is recycled, while over 95% of the generated e-waste goes directly into the unorganised sector, especially scrap dealers. To achieve economies of scale and hence reduce supply chain costs, one needs to bring some organisation and aggregation. The government has formulated EPR (Extended Producer Responsibility) as a keyfeature in the 2011 E-waste rules and a notification earlier this year, making manufacturers responsible for safe e-waste disposal. EPR emphasises on targets and requirements to collect e-waste for hand over to authorised recyclers. This will hold the producer responsible for the entire life cycle of the product, especially for take back, recycle and final disposal of the product.  Producers with their extensive pan-India distribution, sales and service networks are best placed to bring about meaningful aggregation. Enforcement and compliance has been slow.

While we wait for this to happen, the retail market for electronics and particularly mobile phones has become ultra-competitive. To gain market share, OEMs/producers, as well as retailers are looking for ways to attract and retain customers. Emphasis on affordability through buyback and trade-in programmes and OEM certified refurbished products is getting more attention and is likely to become an important part of their business strategy. Those who have already been doing trade-ins need to find a scalable strategy of converting the used phones to positive assets. Apple’s push to sell Apple-certified refurbished products is a case-in-point.

The e-waste space as a market opportunity has grown tremendously in the last few years and the enablers to make it a viable business proposition are coming together. Many ventures with new business models and technologies have come up. Hopefully they will be able to scale up and build good businesses. And eventually all it will take is a little effort from each one of us is to deliver the used devices to a proper channel.

(The author is Vice President, Infuse Ventures at CIIE, IIM Ahmedabad)