Tough stan­dards, and min­i­mal waste, at Ap­ple’s iphone rein­car­na­tion sites

▶ Re­cy­cling Ap­ple’s devices re­quires a global net­work with on-site mon­i­tors ▶ “Any­thing that’s made out of alu­minum could have been an iphone”

Bloomberg Businessweek (North America) - - Contents - �Tim Culpan, with Olga Kharif

The com­pa­nies that put to­gether iphones have to agree to abide by Ap­ple’s strict fac­tory stan­dards and to main­tain a cer­tain level of se­crecy. So do the com­pa­nies that de­stroy them.

In an un­marked build­ing at an in­dus­trial park in Hong Kong’s Yuen Long district, Ap­ple con­trac­tor Li Tong Group runs a 300-worker fac­tory ded­i­cated to metic­u­lously grind­ing up and re­cy­cling some of the half-bil­lion iphones sold, used, and dis­carded glob­ally over the past nine years. The plant is one of a hand­ful Ap­ple has em­ployed to de­stroy its old devices.

While HP, Huawei Tech­nolo­gies, Ama­zon.com, Mi­crosoft, and other com­pa­nies have de­tailed pro­to­cols for re­cy­cling their prod­ucts, Ap­ple’s are the most rigid, say three peo­ple in­volved in the com­pany’s pro­cesses. To make sure no ma­te­rial goes miss­ing, the Li Tong fac­tory weighs the iphones it’s de­stroy­ing and the shreds that re­main after­ward. This rigor helps keep many of Ap­ple’s phones out of land­fills—and off the re­sale mar­ket.

In the elec­tron­ics-re­cy­cling busi­ness, the stan­dard goal is to col­lect and re­cy­cle 70 per­cent, by weight, of the devices a com­pany pro­duced seven years ear­lier. Lisa Jack­son, who over­sees Ap­ple’s en­vi­ron­men­tal and so­cial poli­cies, says the com­pany and its con­trac­tors typ­i­cally reach 85 per­cent, mean­ing they’ll de­stroy the equiv­a­lent of more than 9 mil­lion of 2009’s iphone 3GS mod­els this year around the world. Ap­ple says it col­lected more than 40,000 tons of e-waste in 2014 from re­cy­cled devices, in­clud­ing enough steel to build 100 miles of rail­way track. “I think peo­ple ex­pect it of us. I think our cus­tomers hold us to a high stan­dard,” Jack­son says. “It’s dif­fi­cult, be­cause th­ese are in­cred­i­bly com­plex pieces of prod­uct.”

With iphone sales climb­ing to 155 mil­lion units last fis­cal year, grind­ing them up is a growth busi­ness. Li Tong, which also re­cy­cles equip­ment from other man­u­fac­tur­ers, has three sites in Hong Kong and 12 in China, Ja­pan, and else­where. The com­pany says it’ll ex­pand its global ca­pac­ity by more than 20 per­cent this year, in­clud­ing a new fa­cil­ity in San Fran­cisco.

Along with Li Tong, Bright­star in Mi­ami, TES-AMM in Sin­ga­pore, and Fox­conn Tech­nol­ogy are part of a net­work of re­cy­clers that have agreed to Ap­ple’s more than 50 phonede­stroy­ing rules, which cover ev­ery­thing from se­cu­rity and in­sur­ance to let­ting Ap­ple mon­i­tor their pro­cesses with on-site staff. The com­pa­nies de­clined to pro­vide ac­cess to their fa­cil­i­ties for this story.

The re­cy­cling process starts at hun­dreds of Ap­ple Stores world­wide or on­line. Ap­ple lures iphone own­ers by of­fer­ing credit in ex­change for phones it will re­use or re­cy­cle. In the U.S., pay­outs for a work­ing phone range from $100 for the small­est-ca­pac­ity iphone 4 to $350 for the largest-ca­pac­ity iphone 6 Plus. Test­ing, in­clud­ing by-hand in­spec­tion, shows whether the phone can be resold or must be bro­ken down. Ap­ple and its con­trac­tors de­clined to say how many devices they re­claim an­nu­ally, how many are resold, or how many go to the crusher. Once a phone is deemed ready for the scrapheap, it be­gins a 10-step de­con­struc­tion process that looks a lot like Ap­ple’s pro­duc­tion model in re­verse. The com­pany pays for the ser­vice and owns ev­ery gram of used phone, in­clud­ing the pile of dust left at the end, says Linda Li, chief strat­egy of­fi­cer for Li Tong.

To pre­vent waste from be­ing dumped in land­fills abroad, dead iphones aren’t shipped across re­gions. The con­trac­tors wipe the phones’ stor­age and re­move their lo­gos be­fore send­ing them to be re­cy­cled. The com­pany re­quires its scrap to be kept sep­a­rate from that of other brands, so re­cy­clers must have ded­i­cated Ap­ple fa­cil­i­ties, Li says. Each step of the process in­volves vac­uum-sealed rooms, which cap­ture the chem­i­cals and gases re­leased as the devices are bro­ken down.

Ap­ple’s full-de­struc­tion pol­icy is more strin­gent than those of com­peti­tors, which typ­i­cally sal­vage chips or other com­po­nents. “The con­tracts with Ap­ple al­ways in­volve ex­ces­sive amounts of de­struc­tion,” says Kyle Wiens, co­founder of Ifixit, a re­pair web­site that sells parts. “Any­time you are re­duc­ing the sup­ply of parts in the mar­ket, you raise prices. What would re­ally shock peo­ple is just how much value you lose when you shred some­thing down.”

Li Tong says it ad­vises other clients on ways to re­use parts of their elec­tron­ics— tak­ing cam­eras from smart­phones to be used again in toy drones, say, or adapt­ing screens from Mi­crosoft Sur­face tablets for use in New York taxis. Jack­son says that Ap­ple’s ap­proach makes it tougher for phony iphones to show up on the gray mar­ket and that the com­pany is work­ing on ways to re­use com­po­nents. “There’s an e-waste prob­lem in the world,” she says. “If we re­ally want to leave the world bet­ter than we found it, we have to in­vest in ways to go fur­ther than what hap­pens now.” She de­clined to elab­o­rate.

Once an iphone is ground into bits, the haz­ardous waste from the com­po­nents (such as cad­mium and ar­senic) gets shipped to a fa­cil­ity li­censed to store it. De­pend­ing on the terms of their deal, the re­cy­cling part­ners take com­mis­sions on sales of ex­tracted ma­te­ri­als such as gold and cop­per. The rest of the com­po­nent el­e­ments will be rein­car­nated as win­dow cas­ings, of­fice fur­ni­ture, and a host of other items. “Any­thing that’s made out of alu­minum,” Wiens says, “could have been an iphone.”

The bot­tom line Ap­ple’s re­cy­cling con­trac­tors put old iphones through a scrap­ping process al­most as com­plex as the devices’ as­sem­bly.

Phones that fail in­spec­tion go di­rectly to re­cy­cling, with cus­tomer con­sent

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