If you are one of the 2.5 billion smartphone owners around the world, you have a gold mine in your pocket. You probably also have an unusual concentration of palladium, aluminium and copper. And it is not just phones that contain precious metals. So do televisions, microwaves and other electrical products with chips and circuitry. 
Extracting these elements can be incredibly cost-efficient compared with traditional mining methods. A joint study published last year by Sydney’s Macquarie University and Beijing’s Tsinghua University showed mining from ore was 13 times more expensive than “mining” electronic waste — also known as e-waste mining or urban mining.
There is no shortage in the supply of unwanted gadgets for dismantling. In 2016 alone 435,000 tonnes of phones, containing as much as £8.3bn worth of raw materials, were discarded. UN research has estimated that the world is on track to produce a total of 52 million tonnes of e-waste a year by 2021.
The Thomson Reuters GFMS Gold Survey suggests more than three quarters of the world’s economically viable gold reserves have already been extracted. So there is a growing need to recycle these precious materials – and a growing commercial opportunity.
The darker side of urban mining
On the face of it, urban mining would appear to have the makings of a modern, sustainable industry. The concept is creeping into the mainstream: every winner’s medal at the Tokyo 2020 Olympic and Paralympic Games will be made from recycled metal collected from the Japanese public and businesses.
But this eco-friendly image is in stark contrast to the conditions in which most urban mining currently takes place. Until recently China accepted 70 per cent of the world’s e-waste and Guiyu, a town in Guangdong province, was the world’s urban mining capital.
The legitimate importing (and illegitimate smuggling) of millions of tonnes of discarded electronics into the town had driven a boom in the business of extracting rare materials from them. Without any regulations to protect workers, however, the results were catastrophic. Electronic devices may be a rich source of precious metals, but they also comprise toxic heavy metals like lead, mercury, cadmium and beryllium, polluting PVC plastic and hazardous chemicals.
A Greenpeace report on Guiyu found children climbing towers of waste and people working with open-top acid baths, unprotected, stripping electronics down to their metal components. Some 5,000 families were estimated to work in unregulated e-mining workshops. In an interview with the South China Morning Post, a former local worker said: “The whole town was blanketed by foul air that smelled of acid. I always felt like coughing.”
Two separate studies led by Shantou University Medical College found that a large majority of children assessed had unsafe levels of lead in their blood, which can hinder the development of the nervous system and IQ. Other reports have found a high incidence of skin damage, headaches, vertigo, nausea, chronic gastritis and stomach ulcers, as well as dangerously high concentrations of toxic flame retardants in workers’ bodies.
As a result of international condemnation, the Chinese government announced it would significantly reduce imports, banning 24 kinds of solid waste. The Guangdong provincial government made efforts to clean up Guiyu, building a 1.5bn yuan (£170m) industrial park isolated on the outskirts of the city to replace the individual workshops that once polluted its residential areas.
Better for China, better for Guangdong; but now the problem has been displaced to south-east Asia. Today governments in countries like Vietnam and Thailand are also looking to curb imports.
Brighter future
Governments now motivated to find solutions are considering compelling manufacturers to take greater responsibility for products over their whole lifetime, right through to disposal. This would encourage them to design electronics that are more easily recyclable. Last year Apple unveiled a prototype iPhone recycling robot named Daisy, an AI-driven machine that can take apart up to 200 iPhones in an hour.
By reducing e-waste, encouraging repair rather than upgrade would also help. Several phone manufacturers have already attempted to build modular phones that allow consumers to change individual parts. So far these models have failed because they are bigger, less elegant and more expensive, which makes them unlikely to appeal to consumers.
Academics are also addressing the problem. At Stanford University, chemical engineers are developing the first fully biodegradable electronic circuit using natural dyes that dissolve in acid with a pH a hundred times weaker than vinegar.
Meanwhile, professor Veena Sahajwalla and her team at the University of New South Wales have designed an e-waste recycling micro-factory. The facility extracts useful products by burning e-waste in miniature furnaces at temperatures calibrated for the desired metal, before passing the remains along a production line where robots pick out valuables. The process also turns plastic and glass waste into silicon carbide nanoparticles, which are used in a variety of industrial settings.
The whole production line is compact, so it can be used by communities or incorporated by businesses into their existing manufacturing process. Professor Sahajwalla says that one micro-factory would be capable of paying for itself in just two to three years.
This is a problem for which there is no simple solution, but governments, manufacturers and scientists the world over are working on it. With so much value in e-waste, there is genuine hope that urban mining could eventually become a paragon of 21st century sustainability.
Julian Chillingworth is chief investment officer at Rathbones. The views expressed above are his own and should not be taken as investment advice.