A few weeks ago, 60 Minutes aired a story about one of the most polluted towns in China. The town is in the business of importing electronic waste (old computer monitors, cell phones, etc.) from the U.S. and melting it down to recover valuable metals.
This is not the kind of high-tech recycling operation you would see in America. The methods are downright medieval, and the pollution controls non-existent. The children and adults of this town live in constant exposure to toxic substances such as lead, cadmium, mercury, chromium, polyvinyl chlorides, etc., and they have the health problems to match.
Obviously, if CBS reporters can find out about this operation, chances are the Chinese government knows about it too, and could halt these imports if it wanted to.
So why does China tolerate this inflow of electronic garbage that is so dangerous to the health of its citizens?
One alarming possibility is that China has recognized the impending shortfall in many metals and other elements and sees this garbage as an important source for the future.
Last week, we talked a little about how the Chinese generally see the world. One of the ways their outlook differs from ours is that they have a much lower regard for individuals. They want to do what is best for their population as a whole and for the survival of the government, and they don't mind sacrificing a few people along the way.
In addition to poisonous substances, electronic waste contains small quantities of gold, silver, palladium, and copper. Admittedly, you can't extract much gold from a ton of iPods, but then mining companies don't get much gold from a ton of ore these days either.
A 2006 article from the Proceedings of the National Academy of Science sheds important light on why China might go to such drastic lengths to get hold of these metals. The authors point out that the world simply does not have enough copper to bring the developing nations up to the same standard of living as the West.
All the copper in the world today can be found in one of three places. Either it is under the ground waiting to be mined, it is in use in some technology, or it is sitting in a landfill somewhere. Even if we extract all the copper from under the ground and from landfills, it is not enough to meet our future needs.
Peak Copper, the point where copper production enters a permanent decline, may be closer than we think. At that point, when supplies fall short of increasing demand, copper will be come very expensive indeed.
And the same is true for many commodities. We've done our part alerting the world to the risk of Peak Oil, but other commodities are just as crucial.
When that article was published, it appeared the authors had not considered the widespread adoption of hybrid cars. Hybrids use much more copper than regular vehicles, due to the bigger electrical system and batteries. They also use more lithium – another scarce resource.
In past updates, we have discussed the problems of meeting the world's future demand for silver. What we said about silver also applies to copper, zinc, platinum, palladium and many other elements.
So it may be that China is willing to accept the tons of electronic gadgets we discard each year in order to build a stockpile of these rare metals. And the nation doesn't mind sacrificing the health of some of its people to do so, knowing it will be better for the majority in the long run.
Technology may help us stretch out our supplies of these metals. But it can only delay the inevitable shortfall; it can't prevent it. The earth's crust has a finite supply, while our needs are ever growing. The rate at which we discover new reserves of copper and other resources is far less than the rate at which demand is increasing. It is uncertain which crucial element will run out first, but we will run out of economically viable deposits of all eventually — perhaps sooner than most people realize.
Meanwhile, gold and other commodities remain great investments. In time, waste management companies may be highly profitable as well, as even the U.S. may be forced to start sifting through the refuse for recyclable metals.
Turning to the near future...
