Does recycling increase resource extraction?

August 16, 2006 10:21 PM

Does recycling aluminum cans reduce the market price of aluminum?

If so, could that possibly cause mining companies to have to mine more aluminum to maintain the same profits? Does anybody know enough specific details to say if there's a connection? Has aluminum mining gone down with the rise of can recycling, raised or stayed the same?

posted by Citizen Premier to grab bag (16 comments total)

No, currently recycling aluminum costs more (I.e. money and energy) than mining. At least this is what my high school photography teacher told me years ago.
posted by nintendo at 10:29 PM on August 16, 2006 [1 favorite has favorites]

No, currently recycling aluminum costs more (I.e. money and energy) than mining.

I strongly, strongly doubt that. Producing aluminium from bauxite requires electrolysis of the moulten oxide. Which means, massive amounts of heat, combined with massive amounts of electricity. 211 MJ/kg in fact, based on an Australian study. It's my understanding that aluminium plants can often use a noticable percentage of a city's electricity generating capacity. For instance, the aluminium plants in the Australian state of Victoria use about 18 % of that state's total electricity supply.

On the other hand, aluminium as a metal has a low melting point, and so is relatively easy to melt down and re-use. That's why we're encouraged to do it.
posted by Jimbob at 10:43 PM on August 16, 2006

According to these people recycled aluminium cans take about 5% of the energy to create than the alternative.

Having said that, I'd doubt the downward pressure on the price is much (though I'd grant that it must exist). Aluminium is used for a lot of things which aren't cans.
posted by pompomtom at 10:53 PM on August 16, 2006

Does recycling aluminum cans reduce the market price of aluminum? If so, could that possibly cause mining companies to have to mine more aluminum to maintain the same profits?

You're not factoring in demand. If lowering the price would increase demand enough to not only keep profits at the same level but also make up for the shortfall caused by increased supply from recycling, the market would have done it already.

No, currently recycling aluminum costs more (I.e. money and energy) than mining. At least this is what my high school photography teacher told me years ago.

Aluminum requires an insane amount of energy to extract from its ore (it apparently accounts for half of Iceland's electricity consumption), whereas the finished product melts at a very low temperature, so this is extremely unlikely.

On preview: What Jimbox said.
posted by cillit bang at 10:53 PM on August 16, 2006

Actually I can phrase that better. The price going down is due to the market being flooded with recycled aluminum. If the mining companies increased production, it would flood the market with even more aluminum, lowering the price even further, probably eliminating any profit margin.
posted by cillit bang at 11:06 PM on August 16, 2006

I agree that recycling is much cheaper. And may I also mention, common sense dictates this! What's the only thing you're actually paid to recycle? That's right...aluminum. Everything else just makes tree huggers feel better at night because it costs more to recycle than to extract more raw material.

{rant}
Think about it. All those recycling trucks spewing exhaust to come pick up the stuff in the green containers, to haul them to a center paid for with your tax dollars, with workers paid for with your tax dollars to sort through it all, and then FINALLY that sorted material can start actually being recycled. Recycling is a public program created with one part alarmism, one part government subsidizing, and a big dash of guilt. Stuff is better off in a landfill, which by the way are very ecologically friendly. It's not like they just dump the crap in a random hole. Heck, they even siphon the methane produced from the giant rotting mass to create electricity and then build a park on top! {end rant}
posted by crypticgeek at 11:15 PM on August 16, 2006

Yes, recycling can have an effect on prices.

There was a huge spike in scrap metal prices here in Chicago a couple of years ago. It was over 200.00 per ton. The alleymen were having a field day. Guys were advertising "We pick up scrap metal FREE". I knew guys that were in the construction business that started picking up scrap. Hell, I even brought in a couple of truckfulls. After a couple of months of the high prices, things cooled off. I was in the scrapyard office getting paid for a load and asked the girl behind the counter what happened to the prices. She said "Too many people bringing in too much stuff".
posted by Bighappyfunhouse at 11:49 PM on August 16, 2006

Recycling aluminum requires much less energy, but it's not at all clear that it's cheaper than refining aluminum from bauxite. The problem with recycling aluminum is that the labor cost per ton is a lot greater. Bauxite is found in concentrated deposits and can be dug and transported efficiently by large machines using a relatively small number of employees.

Aluminum cans are distributed over a huge area in a very thin later and have to be collected together by human labor which is not aided much at all by machines. Some of those humans work for free but a lot of them have to be paid.

It would be interesting to see which is actually cheaper (in money); I'd suspect that recycling still has the edge, especially in this day of expensive energy. But it isn't a 20:1 edge. What you save (in money) from reduced energy required you lose (at least partially) in increased labor costs.
posted by Steven C. Den Beste at 11:56 PM on August 16, 2006

That should have been "very thin layer"...
posted by Steven C. Den Beste at 12:36 AM on August 17, 2006

Recycled aluminum is a supply source like any other, so more recycling will drive down prices.

The huge energy cost of creating new aluminum, however, puts something of a floor under prices. If the price goes too low for very long, new production will slow or stop, since companies can no longer make a profit. Eventually, recycling will be inadequate to meet demand, and prices will rise until the factories are restarted.

That's the 50,000 foot overview; the actual details are often messy and painful. (unemployment, bankrupt factories, like that.)
posted by Malor at 1:24 AM on August 17, 2006

Crypticgeek: "Think about it"

Where I grew up, the recycling program was (and is) handled by a for-profit company. There is not a subsidy or similar market distortion in play, and the profits this company reaps from the recycling program are pretty huge. The economics therefore indicates quite firmly that recycling is not just feel-good, but rock solid sound policy. If your local recycling program is running at a loss, it ain't doing it right. (Or, quite likely, it has other priorities, such as doubling as a government program to provide lots of people with jobs, rather than be a super-efficient business).
posted by -harlequin- at 2:00 AM on August 17, 2006

If so, could that possibly cause mining companies to have to mine more aluminum to maintain the same profits?

Think about that for a moment. If lower prices caused more mining, more mining would then cause even lower prices, and that would cause even more mining, until we were extracting an infinite amount of aluminum!

In actuality, if you own a mine of some sort, you want to extract as much of the stuff as you possibly can regardless of price. The more you mine, the more you make! Unless you have a monopoly like OPEC.

Imagine if the price of aluminum was $10 a pound, and the miners mine 200 pounds a day. That's $2000. But if the price drops to $5 a pound, they'd need to mine 400 pounds to make as much money. But if they could mine 400 pounds, they would have been able to make $4,000 a day. And no person when presented with the opportunity to make $4,000 a day would pass it up because they would rather be making $2,000 a day, unless they were trying to game the market.
posted by delmoi at 3:09 AM on August 17, 2006

Aluminum cans are distributed over a huge area in a very thin later and have to be collected together by human labor which is not aided much at all by machines.

One could argue that the cost of collecting aluminium cans is a sunk cost - garbage collectors would be out and about regardless of whether they were collecting aluminium cans or not. The only direct, incremental cost of producing recycled aluminium is the cost of melting it and reforming it into bars (or however aluminium is stored in bulk). So that's the only cost that should be considered in the pricing of recycled aluminium.
posted by GuyZero at 6:02 AM on August 17, 2006

I am not sure how this relates, but as I understand it, the thickness of the aluminum in the cans is getting less and less. That is the walls of the cans are getting thinner allowing for less aluminum to be used and thus less either less demand for can usage or more supply from recycled depending on how you view it.
posted by JohnnyGunn at 6:53 AM on August 17, 2006

crypticgeek writes " What's the only thing you're actually paid to recycle? That's right...aluminum. Everything else just makes tree huggers feel better at night because it costs more to recycle than to extract more raw material. "

Not even close. In the last year I've been paid by scrap dealers for: stainless steel, cast iron, tin, aluminum, copper(C$2.20 a pound!), brass, potmetal(zinc), cardboard($50-$100 a tonne), bronze, lead (including auto batteries), gypsum, used oil, and of course aluminum.

Recycling iron is as lucrative as aluminum because it is so easy. Even back in the 50s scrap cars were ground up to make new cars.
posted by Mitheral at 7:24 AM on August 17, 2006

Delmoi:
Imagine if the price of aluminum was $10 a pound, and the miners mine 200 pounds a day. That's $2000. But if the price drops to $5 a pound, they'd need to mine 400 pounds to make as much money. But if they could mine 400 pounds, they would have been able to make $4,000 a day. And no person when presented with the opportunity to make $4,000 a day would pass it up because they would rather be making $2,000 a day, unless they were trying to game the market.

Um, isn't that pretty much how OPEC works? We don't produce as much as we could because then we can't charge as much for it?
posted by baylink at 11:19 AM on August 17, 2006