Apple Partners Look to Clean Up
Sustainability is not a term commonly associated with metals and mining. Historically, the sector has been characterized as dirty and non-environmental companies. But Alcoa (AA) and Rio Tinto (RIO) are joining forces to clean things up.
In May, the two metals companies announced a joint venture to market carbon-free aluminum. Its technology has the potential to revolutionize the 130-year-old practice of smelting one of the most widely used metals in the world. In 2017, global consumption of primary aluminum, which is produced directly from extracted ore rather than recycled, amounted to 63 million tons.
Located in Montreal, the Joint Venture (JV), Elysis, will replace all direct greenhouse gas emissions from the traditional smelting process. Since 1886, the aluminum industry has been based on a production process that uses large pots, lined with black carbon and connected to an electric current. Carbon is burned during the smelting process, releasing greenhouse gases. The new technology applies a strong electric current to alumina (an aluminum oxide) that replaces black carbon with an advanced conductive material, releasing oxygen instead of carbon dioxide. Elysis plans to adapt existing foundries in addition to developing new facilities. The technology is expected to be available for large-scale production and commercialization in 2024.
Direct impact on the consumer
The partnership has significant implications for consumers of aluminium and other metal products at various stages of the supply chain. In addition to the investment of Alcoa and Rio Tinto, Apple (AAPL) has invested $ 10 million in research and development of the JV, as have the governments of Canada and Quebec, for a total of $ 144 million.
Apple began using aluminum to wrap its PowerBook laptops in 2003 and has expanded its use of the material since then. Aluminum has a key environmental purpose for Apple. In 2017, Apple announced its commitment to a closed-loop supply chain. The company seeks to manufacture all its products from responsible recycled or renewable materials and return an equivalent amount of material to the market, either through recycling or supply regeneration. According to Apple’s 2018 Environmental Sustainability Report, aluminum accounts for nearly 25% of the company’s manufacturing emissions. Apple also seeks to remove toxins from its manufacturing and recycling processes, protecting the people who manufacture and disassemble its products and keeping contaminants out of the land, air and water.
In 2015, three Apple engineers approached its aluminum supplier, Alcoa, in search of a cleaner approach to mass production of aluminum. By 2017, Apple diverted 71% of its total waste from landfills through recycling and composting efforts. The team leveraged Rio Tinto, the world’s second-largest miner, to expand its capabilities, recognizing Rio’s global presence and deep experience in smelting, international sales and marketing. Rio executive Vincent Christ will lead Elysis.
Alcoa and Rio Tinto’s new approach to aluminum manufacturing could eliminate direct greenhouse gas emissions from the global smelting process. With the Trump administration renegotiating the North American Free Trade Agreement (NAFTA), it can also strengthen the closely integrated aluminum and manufacturing industries between Canada and the United States.
Focus on supply chains
The news follows Apple’s broader announcement in April that it intends to have all of its facilities run on 100% clean energy. In response, 23 of its suppliers have pledged to do the same. Apple also recently debuted Daisy, a robot that can disassemble iPhones more efficiently to recover valuable parts for high-tech recycling, as part of the company’s goal of eventually manufacturing all its products with recycled or renewable materials.
While Apple is one of the most visible consumer companies to make such radical changes, value chains are changing around the world. Due to the rise of the media and the public focus on sustainable business practices, companies have increasingly focused on cleaning up their supply chains. That means sourcing sustainable suppliers, incorporating responsible waste management and recycling initiatives, and quantifying the results of your sustainability initiatives. Companies in the metals and mining sector, along with other industrialists competing for capital, are reluctant to fall behind.
Recycled scrap has increasingly replaced primary resources as production material. The amount of aluminum produced from old scrap metal has grown from one million tons in 1980 to 17 million tons in 2016, according to the International Aluminum Institute. In fact, the extraction of metals from electronic waste has made financial and environmental sense for manufacturers. And although the recovery of gold, copper and other metals from e-waste is already sustainable, it is actually 13 times cheaper than extracting metals from mines.
PCs and other electronic products are complex products, but also a source of various value flows, whether for reuse in similar products or in other sectors. Dell recently launched a limited edition jewelry collection produced by the United States called Circular Collection by Bayou in conjunction with actress Nikki Reed. The collection, named after the “circular economy,” uses gold recovered from Dell’s recycling programs. Since 2012, the company has converted more than 50 million pounds of post-consumer recycled materials into new products.
Elysis, Daisy and Circular Collection are the latest of many examples of how innovative technology can drive future sustainability gains across supply chains, even in some of the so-called dirty industries.