Elsevier

Resources Policy

Volume 32, Issue 4, December 2007, Pages 183-190
Resources Policy

Copper recycling and scrap availability

https://doi.org/10.1016/j.resourpol.2007.08.002Get rights and content

Abstract

According to existing estimates, available old copper scrap has more than tripled over the past 40 years. Secondary production (that is, copper produced from recycling old scrap), however, has only doubled. Indeed, over the past 10 years, while copper consumption and primary production have continued to expand briskly, while available old scrap has increased by over 35%, secondary production has actually stagnated.

For a world concerned with sustainable development and the quality of the earth's environment, this performance is disappointing and in need of explanation. Other things being equal, one would expect the amount of recycling to increase with the availability of scrap, as many econometric models of the world copper market developed over the past several decades explicitly assume.

The key to understanding sluggish growth in secondary production, this paper argues, is distinguishing carefully between (1) the flow of old scrap that arrives each year from products reaching the end of their useful lives during the year and (2) the available stock of old scrap that was not recycled during earlier years presumably because it was too costly to do so. Using an econometric model, the paper shows that old scrap stocks, which have contributed most of the increase in available old copper scrap over the years, have a very modest impact on secondary production. Old scrap flows have a much greater effect, but they account for only about 4% of the available old scrap for any given year.

Section snippets

Modeling secondary copper production

A common specification for modeling secondary copper production—used for example by Fischer et al. (1972), Vial, 1988, Vial, 2004, and Valencia (2005)—assumes that secondary copper production (QSt) depends on the real price of refined copper (Pt), the available old scrap (At), the lagged value of the secondary copper production (QSt−1), and a disturbance term (εt) as shown in Eq. (1)QSt=f(Pt,At,QSt-1)+εt.

The price of refined copper (Pt) is included for the usual reasons. Since the supply of

Data

The 40 years of data covering the period 1966–2005 used to estimate Eq. (4) are shown in Table 1. The price of refined copper was converted into real (2005) dollars using the US Producer Price Index (IMF, 2006).

Like Valencia (2005), we have estimated annual old scrap flows using the method of Slade (1980). She estimates the percentage of total copper consumption used by the construction, transport, consumer durables, electrical and electronic, and industrial machinery sectors and the average

Results

The coefficients of Eq. (4) estimated using Ordinary Least Squares are shown in Table 4 under the first column headed OLS. As expected, the estimates for β1, β2, and β3 are all positive. The first and third coefficients are statistically greater than zero (using a one-tailed test) at the 5% probability level, and the second at the 8% level. In addition, as expected, all three estimates are less than 1. The estimate for β1 suggests that a 1% increase in price promotes a 0.107% increase in

Conclusions and implications

The secondary industry accounts for only a small share (less than 20%) of total copper production. In addition, the industry contains many small and secretive firms, making comprehensive and reliable data difficult to obtain. For these and other reasons, economists and others have devoted relatively little time to studying secondary producers. While this is now changing due in part to the growing concerns about the environment and sustainability, there is still much that we do not understand

Acknowledgments

The authors are grateful to Roderick G. Eggert and Claudio Valencia for their helpful comments.

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