There are a number of 'unknowns'; in attempting to estimate the size of the market for the recycling of computers:
- How many computers are currently in storage will be released and at what rate will they come on to the market?
- It is reasonable to expect that as the price of new computers continues to decrease, the realization will dawn on householders that their old equipment has no commercial value and it should be dumped or scrapped. As more recycling facilities come on stream to make the disposal of old computer equipment easier then the 'legacy'; of old equipment will be released and the stockpile will decrease.
- As computers operated by major businesses reach the end of their lease [usually about 3 years] how many will come on to the market and be absorbed by the household sector?
- Will these computers 'push'; older machines out and thus make them available for recycling?
It is estimated that the total market for computers continues to grow in Australia thus there will be a net increase in the number of computers in use. It is difficult to estimate this number.
Industry sources report that in calendar year 2005 there were 2,360,000 new desktop units imported into Australia. The growth rate of shipments into Australia over the period from 2000 to 2005 was 34%.
The estimate by the people interviewed for this report agreed that about 1 million existing computers would be available for recycling and the balance would be absorbed into the market. However everyone was unsure about the accuracy of this number but in the absence of any research it was the number that most people supported. Note that the 'Total Environment Centre'; is quoting a figure of 1.6 million computers dumped each year in landfill around Australia.
The figure of 1 million is supported by the figures available from the 'Byteback'; programme in the City of Boroondara. Note however that income levels would suggest that areas with higher incomes would probably own more computers and thus have more available for recycling. The unknown of the existing stock of computers held by households and businesses still remains, with no accurate information available about the possible volumes that could be released for recycling.
For the purpose of this report the number of 1 million computers per annum available for recycling from households has been assumed as being reasonably accurate. It is further assumed that there is a 'shuffle effect'; in the business sector where new computers replace computers coming off lease. The older machines are typically taken back by the computer suppliers who then refurbish and sell them into the used computer market, typically for purchase by households or small businesses or they are shipped overseas. The net effect is that the machines ex Government and larger businesses do not directly pass into the recycling stream but enter it via households etc over a longer time period.
The total value of the market based on 1,000,000 computers per annum with fees of say $25 per computer and with a value for the disassembled components of say $4 per computer would be:
1,000,000 x ($25 + $4) =$29,000,000. This number has been rounded to $30,000,000.
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Economics of Recycling for a Business Service
Revenue Streams
There are three potential main sources of revenue:
- Fees earned by dismantling and recycling computer components and materials. Based on the current 'Byteback'; programme they would be paid by Sustainability Victoria at the rate of $25 per computer.
- Sales of computer components and materials to the scrap metal market. Two of the computer recycling companies have indicated a figure of around $3 to $5 per computer. Say $4 per computer.
- Sale of reconditioned/rebuilt computers. The sale price will depend on the specification, the age of the equipment and the prices being charged by competitors in the local market. Prices quoted on 'E-Bay'; also have an influence on the selling prices. The figures range from $50 to $450 with a 'typical figure being $100.
Cost of Inputs
Labour
Based on an average hourly cost of $2.90 for a typical client in a Business Service and allowing for a 25% surcharge to cover superannuation, holiday pay etc the effective hourly rate would be $3.62.
To cover the cost of facilities and other overheads assume that a doubling of the hourly rate will be required to cover all these costs, which would then give an effective hourly rate of $7.25.
Based on figures supplied by a Business Service that estimates the time taken to dismantle a computer is around half an hour and assuming fifty per cent efficiency this would give a time of one hour per computer for the dismantling process.
Transport
Assume the computers would need to be collected from say a transfer station and transported back to the Business Service for dismantling. Allow $1 per computer for transports costs.
Consumables
The replacement of gloves, hand tools, bulka bags and/or other packaging for the despatch of components to scrap metal dealers is assumed to cost a further $1 per computer.
Facilities
The assumption is made that the Business Service would either own a forklift or have access to a forklift. The factory space required does not need to be configured in a special way nor require buildings with high stud heights or other special characteristics. It would be possible for example to use an area equal to a say a double domestic car garage for low volumes of throughput. Storage space would be required for inwards and outwards goods.
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Worked Example
Based on a rural centre with a population of 60,000 the key pieces of information are as follows:
- The number of computers to be recycled annually, based on the information from the 'Byteback'; programme above would be 3,000. [Based on the minimum number of hours per week of 8 per employee this would result in the employment of around 8 people per annum.]
- The hourly labour cost would be $7.25. [See above]
- The revenue per computer when selling the components would be $4. [See above]
- Assume two computers per week would be sold in a 'going condition'; at a selling price of $100.
- The 'Byteback'; programme or its equivalent would pay $25 to the Business Service for every computer recycled.
Worked Example
| Revenue |
|
Fees |
$25 x 3,000 computers |
$75,000 |
|
Material sales |
$4 x 3,000 computers |
$12,000 |
|
Computer sales |
$100 x 2 x 50 |
$10,000 |
|
Total |
$97,000 |
| Costs |
|
Labour |
$7.25 x 3,000 computers |
$22,000 |
|
Transport |
$1 x 3,000 computers |
$3,000 |
|
Consumables |
$1 x 3,000 computers |
$3,000 |
|
Total |
$28,000 |
| Surplus |
$69,000 |
NOTE: This assumes that the operation is operating fully loaded for a year with volumes similar to the City of Boroondara. This possible outcome looks to good to be true. The numbers used have been checked with a Business Service and they have confirmed that they look reasonable.
Break Even Point
Assuming that competition 'forced'; the recycling fee lower, the estimated break even point would be reached when say the fees for recycling were reduced to $3 per computer and the transport costs were doubled to $2 per computer or another $3,000 per annum.
Thus one measure of the sensitivity to changes in recycling fees, assuming all other costs remained similar, would be a price decrease of over 80% and a freight increase of 100%. These figures suggest that Business Services have a reasonable margin of 'safety'; in operating a computer-recycling centre.