Why Apple Can't Stop Digging Holes
Just before Earth Day, Apple Inc. announced a new goal: to make its computers and phones and watches without mining any new raw materials. Instead, Apple would one day build its products "using only renewable resources or recycled material." This is what's known as a "closed loop," in which new products are made exclusively from older versions of the same product. If successful, Apple would no longer have to worry about digging holes in the ground, avoiding conflict minerals and the other messy details of high-tech manufacturing in the 21st century.
It's a bold idea, even for Apple, which can boast several past successes in promoting sustainable manufacturing and operations. Given both technological and commercial obstacles, however, it's almost certain to fail.
Closed-loop recycling isn't a new idea. In the 1930s, Ford Motor Co. spent several years operating a money-losing factory devoted to recycling old Fords into raw materials for new ones. More recently, Dell Inc. developed a breakthrough computer made using materials from old devices. The company and its manufacturing partners have been making plastic parts for those computers from old electronics since 2014, and the process has shrunk Dell’s costs and environmental footprint.
For its part, Apple plans to focus on recycling 44 elements found in its products. Yet while some -- aluminum, for example -- are already recycled commercially, many others never will be. For example, according to Apple, an iPhone 6 contains .01 ounces worth of rare earth elements (17 chemical elements essential to today's technology) in components that include the handset's speakers and touchscreen display. That's a trifling volume that can't possibly be extracted and separated in a commercially viable manner using current technology. (Apple admits that its goal is aspirational at the moment.)
Apple could look to recycle rare earths from products it doesn't make itself; new technologies have made it possible to extract rare earths from old magnets and LED bulbs, for instance. But that would obviously break the closed loop. Other common elements found in Apple technology -- such as tantalum and tungsten, two rare metals used in small quantities -- will be similarly hard to recycle in any cost-effective fashion.
As daunting as the technical challenges are, Apple faces another, more immediate problem: how to get its hands on enough old iPhones and iPads to sustain a true closed loop. Apple currently encourages customers to return old devices through its Renew program, in some cases in exchange for gift cards (or at least, healthier consciences).
Yet even a casual scan of eBay and other global marketplaces reveals that Apple's buyback program isn't terribly competitive. For example, a used iPhone 4 in good condition can fetch over $100 online, whereas Apple offers no compensation whatsoever. 1 Apple's highly touted Liam recycling robot is designed to dismantle the 2014-vintage iPhone 6, which currently sells for over $300 used.
And it's not just the phones themselves that have value, either. In the Chinese city of Shenzhen, old components are used to manufacture a multitude of new products -- even knock-off iPhones, as documented in a recent viral Youtube video in which a novice built a working iPhone from a hodgepodge of Shenzhen-sourced parts.
Nothing prevents Apple from paying market rates for its old electronics. But that would require admitting that the re-use value of Apple products oftentimes exceeds the commodity value that the company would like to extract from them. That's a difficult mental leap for a company devoted to convincing consumers that they constantly need to upgrade to the latest device.
If nothing else, Apple should focus less on the impossible dream of creating a closed loop of Apple products and instead commit to including greater volumes of recycled material into its current product lines, without regard to whether the material comes from MacBooks or Ford automobiles. (To its credit, Apple has started using recycled tin in the iPhone 6S.) Such an approach would allow markets -- and not Apple -- to decide when a product should transition from useful device to commodity, and likely save the company money and trouble for years to come.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
One result is that Apple products make up a small percentage of the devices the company recycles under U.S. state programs that require firms to recycle electronics -- any electronics -- based upon annual sales in a state.
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