In a world of increasing pressure on finite resources, historic resource management strategies of single-use, bury or burn are no longer tenable. Mitsui & Co. Ltd. (Mitsui) is therefore developing a new business model for a sustainable future, by bringing existing networks and expertise in underground metal resources to new approaches in above- ground metal resources recycling. The aim is to secure a stable supply of key metal resources while creating sound business solutions to pressing environmental problems-not only in metals, but also in other materials central to a sustainable social infrastructure.

A Sims metal scrap depot in the U.S.

Japan, a relatively small, resource-poor nation with a high population density, is said to be 10 years ahead of the world in many aspects of recycling. Pressures on resources that have only recently emerged in larger countries have been a feature of Japanese society for decades, leading to advances in waste management and recycling. Despite some significant progress, however, there is still an enormous amount of work needed to create truly sustainable societies in Japan and abroad.

Recognizing both the need and the opportunity to take the initiative, Mitsui envisages creating an integrated business model for metal management-encompassing waste collection, sorting, reprocessing, and insertion back into the value chain either as thermal energy or recycled materials-and has tasked the environmental solutions office with driving the development of this concept as a new business pillar. Creating an economically viable business model in this area for the modern age is a formidable challenge, but as we will see, one that Mitsui is ideally placed to meet.

A quick review of the factors driving the emergence of a recycling-orientated world would suggest that in many ways Mitsui is building a business from the center of a perfect recycling storm: existing resources are being depleted, environmental problems have assumed an increasing urgency, and regulations are becoming stronger. Concurrently, high commodity prices, which underwent a step change upward in 2003 and 2004, have created new economic incentives to recycle.

Concomitant with these changes, social attitudes have also evolved. Recycling has become a major social theme, along with becoming 'low carbon', and manufacturers are having to assume new responsibilities that extend to the full lifecycles of home appliances, automobiles and other products. Environmental compliance is now top of the corporate agenda as societies make an urgent shift from a waste mentality to a recycling mentality. The transition is by no means complete, but momentum is steadily building.

A Sims recycling plant in the U.S.

Mitsui is making a classic adaptation of its strengths to create a new business model, combining a global business network, extensive client base in multiple sectors, logistics know-how, strong capital base and more than 40 years' experience in metal scrap trading. The lynchpin of Mitsui's metal recycling business is its investment in Sims Metal Management ("Sims"), established in 1917 and the world's No. 1 comprehensive metal scrap and recycling solutions business with operations at more than 240 sites across four continents.

In pursuing the investment in Sims, Mitsui gave deep consideration to the needs, trends and opportunities arising in the recycling solutions business, and decided that the time was right to develop a comprehensive new business model that could become a robust business pillar for tomorrow. Mitsui currently owns 17.8% of Sims and is the largest shareholder in the company, following completion of a share sale agreement reached in March 2007 and a subsequent acquisition of additional shares. In the year to June 2009 Sims had sales of A$8.6 billion, derived mainly from recycling activities in developed countries worldwide with established consumer cycles.

In addition to Sims, Mitsui is the 100% owner of Mitsui Bussan Metals, a leading domestic metal scrap and recycling company in Japan with more than 20 years' experience in metal, automotive, home appliance and other recycling programs. Mitsui also has a 33.5% stake in Kyoei Recycling, Japan's leading recycler of ASR (automotive shredder residue), general waste, plastics, liquids, medical waste and other waste items requiring specialized handling procedures for final disposal. Kyoei Recycling also has advanced material-to-thermal processing capabilities, in which waste materials are used as fuel in further processing and manufacturing.

Involvement with these three companies means that Mitsui is in a unique position to address the issue that defines the success of recycling initiatives everywhere: scale.

The success of any recycling program depends greatly on achieving economies of scale. A recycler has to be able to amass sufficient quantities of scrap to make processing efficient, cost effective and sustainable. Gathering waste materials into a single location for processing is a challenge in itself, with associated collection, transportation and storage costs to be factored into the business case. This is where Mitsui's extensive domestic and global network comes into play. Through Sims, Mitsui Bussan Metals, Kyoei Recycling and regular trading activities, Mitsui has the potential to pursue recycling on a scale that will enable the development of viable new forms of recycling.

History has shown that regulation is a major driver of growth in the recycling industry. As mentioned above, the new social contract emerging in today's world of environmental awareness is leading to the spread of effective recycling regulation in many countries worldwide. Japan introduced a home appliance recycling law in April 2001, as part of which manufacturers assumed a responsibility for their home appliance products beyond the time of sale. A similar law was introduced for automobiles in April 2005. Both these laws have stimulated significant positive developments in recycling. In January 2011 China will introduce its first comprehensive regulations on home appliance recycling. The impact of these regulations is expected to be far reaching, and Mitsui is looking to leverage its recycling experience within the wider context of promoting recycling solutions through its network worldwide.

Old mobile phones retrieved as part of urban mining

Automobiles and home appliances are relatively easy to collect for recycling. They contain large quantities of metals, and are typically among the first products societies target when trying to build a recycling culture. But what about small home appliances-so small that there is no real incentive for crowded households to get rid of them? Mobile phones, computers and digital cameras fall into this category, and they all tend to remain dormant for many years beyond the end of their working life. And yet, contained within them are significant quantities of common and rare metals. To give just a few examples, 1,000kg of mobile phones contains around 400 grams of gold, and 1,000kg of digital cameras contains around 230 grams of gold. By comparison, an underground mine that produces a mere 5 grams of gold per ton of earth is considered economically viable. This gives us the concept of urban mining-finding ways to reuse the above ground mineral resources contained in unused items all around us.

Like any underground mine, the size of the available 'deposits' in urban mining have been carefully estimated-with surprising results. Research has shown, for example, that the amount of platinum in Japan's urban mines alone is equivalent to more than six years' of current global demand, with equivalent figures of more than two years' global demand for gold and copper, three years for silver and more than one year for iron and nickel.

So the urban mines are large enough. But how can they be commercialized? The challenges of urban mining can be summarized as attraction and extraction; namely, gaining access to a sufficient quantity of items for recycling, and developing an efficient means of extracting the precious metals contained in them. Mitsui has been working with a range of government and private entities to address these challenges in the Japanese market, and has already trialed innovative nationwide programs. In one such program, Mitsui collected approximately 570,000 mobile phones over a period of 100 days ending February 2010, using a lottery concept to encourage consumer participation.

Mitsui's approach to recycling is based on a belief that true sustainability in society can only come about if recycling businesses themselves are economically sustainable. At the same time, recycling is no longer an option: it's the way of the future. So what the world needs now is comprehensive, whole-of-product recycling, using innovative new processes to add value and address long-term environmental and resource concerns. This will require an approach that Mitsui is ideally able to provide-offering commitment, experience, social trust, and sound relationships with businesses and governments around the world.