Posted on 06/02/2011 8:10:38 AM PDT by TigerLikesRooster
China's Real Estate Bubble Is Making Your Cell Phone Obsolete--And Valuable
BY Greg Lindsay
Today
In the latest installment of Butterfly Effect, we follow the impact of China's bulging real estate market on commodities such as copper, the latest tech innovations those commodities enable, the scrap they create, and the subsequent recycling opportunities--in China.
1. China's Ghost Cities
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2. What Goes Up… Must Come Down?
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3. Warehouses Full of Copper
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It worked like this: They would buy copper on foreign exchanges, receive letters of credit from government banks or some other form of financing, and pledge the copper itself as collateral while they sunk the cheap money into real estate projects they could later flip at a profit. Until then, the copper, a valuable currency, kept piling up in China, while the developers' ability (and willingness) to pay back the loan depended on how their projects were doing, not how high copper prices climbed.
"More worryingly however is that the primary use of copper in bonded warehouse appears to be as a financing mechanism to provide cheap working capital for various types of business often unrelated to the metallic industry." As much as 80% of China’s warehoused copper was being used this way, mostly by developers.
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4. There's Gold In Those Phones
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If prices remain high (and China’s baseline demand should keep a floor under prices, barring the bubble bursting), Americans might finally realize they’re throwing away a fortune when they toss their old PCs and cell phones, which are loaded with bits of increasingly valuable metals.
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While European and Canadian smelters are busy doubling or even tripling their e-scrap capacity, the U.S. lacks even a single smelter. As a result, America is a major scrap exporter. To China.
(Excerpt) Read more at fastcompany.com ...
P!
Why would anyone attempt to open a smelting business in America?
On a somewhat related note, a couple years ago I spoke with the president of Lodge cast iron, the guys who make the skillets, dutch ovens, and such, at their annual open house and plant tours. I asked him why they aren’t making porcelain-coated cast iron cookware in the U.S. (they outsource this to China; Le Crueset’s stuff is made in France).
His answer boiled down to a three letter acronym: the EPA.
It sounds like the 21st century equivalent of 1900s Butte, Montana.
Arizona has a lot of copper - but to mine it and use it, we need freedom!
I think that’s not true, but I’ve got a message out to an e-recycler friend.
The title is bizarre. Your cell phone doesn’t become “obsolete” due to anything in the article.
Perhaps the author doesn’t know what “obsolete” means.
I thought Ordos was largely empty.
There aren't any primary smelters domestically (thanks to regulatory nightmares). We export homogenized lots to Europe where there are about a dozen or so smelters based on material type.
Yeah. I know. EPA, IRS, zoning, unions, etc., etc., etc.
There are several copper smelters in the US (Texas, Arizona and Utah).
I think what the article is saying is that there are no copper-scrap recycling smelters in the US.
Officially or unofficially? The smelting business I have heard about are dangerous, but as PMs keep rising there will be more people fooling with the acids, cyanide, mercury, etc.
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