Your junk is needed for the new electric era

Shredded cellphones, obsolete computer cables and chewed-up cars are heaped 30 feet high outside Glencore’s 97-year-old copper smelter deep in Canada’s sparsely populated boreal forest. There, the scrap is melted with copper concentrate from mines to produce fresh slabs of metal.

Old electronics have long augmented the smelter’s input. But these days Glencore and other copper producers are casting wider nets for scrap and spending big to boost recycling capacity.

Shifting from fossil fuels to more renewable electricity promises to remake commodity markets. If America requires less crude oil and coal, it will in turn need a lot more lithium for electric-vehicle batteries, precisely shaped pine trees for bigger utility poles—and copper for everything electric.

“In the next 25 years we will consume more copper than humanity has consumed until now," said Kunal Sinha, Glencore’s global head of recycling. “That’s the scale of the challenge."

Copper consumption surged in recent decades as China modernized. Demand got another boost from 2022’s climate and tax law, which promotes renewable energy development in the U.S. The data centers being built to facilitate artificial intelligence and store smartphone videos are full of copper. So are the phones.

Glencore estimates that global copper supply must grow by about one million metric tons a year through 2050. That would require annually adding the equivalent of the world’s largest mine, Chile’s Escondida.

Scrap value

Even if such rich deposits are found, it can take decades to bring mines online. That prevents miners from responding quickly to new demand, which leaves scrap to balance the market, said Citigroup metals strategist Tom Mulqueen.

Unlike commodities such as oil or corn, copper never goes away and is infinitely recyclable.

Miles worth are strung through homes and cars and along rights of way, carrying electricity and drinking water. But a lot sits in junk yards and landfills. When prices rise, there is more incentive to get it. Copper prices are currently among the highest ever.

“Scrap is really determining, in some respects, what price level you’ll get to," Mulqueen said. “What price level will you need to get to above today to incentivize sufficient scrap recovery?"

Demand forecasts could be derailed by economic weakness in China, a manufacturing slump or a stall in the energy transition.

The day after Donald Trump was elected, traders considered his campaign promises to escalate trade tensions with China and roll back clean-energy incentives. Futures fell more than 5% in New York that day and are now down about 19% from the record reached in late May.

Citi’s base case is for prices to notch new records by the middle of next year, though Mulqueen said that forecast is at greater risk since Trump’s election and Chinese economic policies that have disappointed investors.

Nearly half of demand will be met with recycled copper by 2050, up from about a third today, estimates energy-data firm Wood Mackenzie. A lot of U.S. scrap is sent to Asia, but copper producers are building up North American recycling capacity.

Germany’s Wieland began construction in 2022 on a $100 million recycling facility in Shelbyville, Ky., and is negotiating a $270 million grant with the Energy Department to enlarge it.

Aurubis, another German firm, is building an $800 million recycling facility in Augusta, Ga. It has begun sourcing scrap and expects to produce copper next year, a spokesman said.

Glencore acquired the Horne Smelter in Quebec in its 2013 merger with Xstrata. Copper was first recycled there when shell casings were melted down after World War II. Electronics recycling was pioneered there in the 1980s after the local mine ran out.

Previous owners established a San Jose, Calif., collection facility for old computers and another in Rhode Island to receive, sample for copper and precious-metal content, and price materials such as circuit boards, factory-floor choppings and even old silverware. Glencore recently bought a failed electronics recycling facility in Arkansas and will use it, too, to gather scrap, Sinha said.

A global search

Glencore traders in Toronto, Switzerland and New York are assigned to find scrap. Material from about 40 countries winds up in Rouyn-Noranda, having come to Glencore in quantities ranging from small packages to full shipping containers. There is even a bin at the smelter’s gate, where the remote town’s 42,000 residents dump old wires and broken toasters.

Glencore is also working with manufacturers of electronics and solar panels to design products so that they are easier to break down and recycle, Sinha said.

“Most people don’t produce things with their end of life in mind," he said.

It is also looking in landfills where automobiles have been dumped. When cars are junked, useful parts and much of the metal is stripped away before the rest is reduced to a material called auto shredded residue, or auto fluff.

Glencore already buys copper stripped from cars before they are shredded. Its suppliers are starting to excavate landfills packed with fluff to get the copper that wasn’t worth the trouble for earlier scrappers. In trials, Glencore found that the concentration of copper in landfilled auto fluff can be more than twice that found in geologic mines.

The scrap piled up in Quebec is shredded further and fed into the smelter, where temperatures reach 1,200 degrees Celsius. Scrap usually makes up about 15% of the input, Sinha said. The smelter’s chief metallurgist blends it with concentrate from mines, accounting for plastic and other materials that affect the process’s heat and chemistry.

“We can change this recipe as long as we can still chemically balance it," Sinha said. “We can feed more recycling and we can feed more of one type of recyclable material if that’s better for us to buy."

Eventually, 750-pound anodes are formed by pouring molten metal into a revolving casting wheel. The red-hot slabs are hung to cool, then hauled 400 miles to Glencore’s Montreal refinery. There, they are melted anew to remove and collect the remaining traces of other metals: platinum, palladium, silver and gold.