Chapter 3 - Recycling

Introduction

In terms of assessing the scale of North American gold and silver refining of recycled material, as a starting point it is worth reviewing Metals Focus’ data for this segment and the recycling activity captured in the LBMA COO dataset. Looking first at Metals Focus’ statistics, in 2022 (as a reminder, this being the most recent year available for the COO survey) North and South American gold scrap supply stood at 86t and 52t respectively; see Table 10. This accounted for 8% and 5% of global recycling, which totalled 1,140t that year. For the COO data, the Americas’ gold recycling stood at 367t, out of total global recycling of 3,428t.

Turning to silver, in 2022 according to Metals Focus, North and South American recycling were 1,427t (26% share) and 136t (2%), respectively, with total silver recycling in 2022 of 5,506t; see Table 11. By comparison, the COO data reveals 2,016t of silver recycling across the Americas, which accounted for 14% of a global total of 14,482t.

Recycling Methodology

Unfortunately, it is not a straightforward exercise to compare the two datasets. On the one hand, the COO definition of recycling is broader than that of Metals Focus and so may offer a better guide to overall refining activity. For example, it includes the treatment of production scrap and the melt of GDL bars, both of which are excluded from Metals Focus’ scrap series. On the other hand, the COO data excludes activity of a considerable number of North American-based non-GDL refineries, especially in the US.

As a reminder, Metals Focus’ scrap series only covers the melt of a fabricated good that has been sold or was intended for sale. This is done as this melt generates supply to the bullion market and is therefore a price signal. The melting down of a retail investment product also generates a price signal, being supply into the bullion market, but we would classify this as disinvestment. In contrast, production scrap is a circular flow between
a fabricator and a refiner, and the melting down of GDL bars is excluded as this is not considered a fabricated product, which does not generate a price signal either. Lastly, our default is that we capture scrap in the
country where it was generated rather than where it was refined. There are certain exceptions to this however, such as electronic and autocatalyst scrap.

Below, we walk through the main segments of scrap supply to understand some of the key areas of the refining supply chain. (For clarity, we have again included a full comparison of Metals Focus’ and LBMA’s recycling that was first published in last year’s LBMA’s COO Survey.)

Recycling Activity

Gold Jewellery

Looking first at gold, the largest area of recycling will be in the jewellery market, which in turn will capture the melt of products sold back by consumers, the return of unsold product from the supply chain and process scrap generated by jewellery manufacturers (as the scrap definition in the Appendix highlights, the latter is not part of Metals Focus’ recycling series).

Production scrap here also includes jewellery sweeps, which is a good example of scrap being generated within North America, but some of which is refined elsewhere.

Looking first at old jewellery scrap, large retailers and pawnbrokers will often have a direct relationship with either a GDL specialising in high-grade scrap, such as Asahi (in both the US and Canada), Metalor USA or the Royal Canadian Mint. By contrast, individual retailers and pawnshops will tend to have a relationship with aggregators/collectors or a non-GDL refinery, such as David H Fell, Dillon Gage, Gannon & Scott, Mid-States Recycling & Refining, QML MST, Sibanye-Stillwater Reldan or United Precious Metals. In Mexico, it appears that jewellery scrap will be aggregated locally before being shipped to a US/Canadian-based refiner.

In Canada, while consolidators are quite active, actual refining will be concentrated among the country’s two GDLs, Asahi Refining Canada and the Royal Canadian Mint, and the non-GDL, Umicore Precious Metals Canada. That said, some jewellery scrap generated in both Canada and the US will also be refined across the border, and so not just in the market where it is generated. From a volume standpoint, the quantity of old jewellery scrap that is now processed in North America is a shadow of that in the early 2010s in the wake of the global financial crisis (and thanks to sizeable near-market stocks), when gold scrap supply exceeded 300t in 2011, against just 71t last year. Gold recycling in Canada and Mexico was also far higher in the early 2010s, around double current levels.

There are two reasons for putting current gold recycling volumes into a historical context. First, the trade has had to contend with the steep fall in old gold scrap, which now has both plateaued at a low level, with little prospect it seems of seeing a marked recovery, given the decline in consumer jewellery stocks. Second, production (or process) jewellery scrap, generated by jewellery manufacturers, has therefore assumed greater importance for the high-grade refiners. While it is difficult to gauge the scale of this activity, as a reference point what is clear is the overall stability of North American gold jewellery fabrication, of around 88t last year versus 80t back in 2010. There will be other, low grade, waste streams from the jewellery industry, including sweeps, that will either be recovered in North America, for example, by Advanced Chemical, Colt Refining, Gannon and Scott, Metallix, QML MST or Umicore Precious Metals Canada, or shipped overseas, notably to Europe.

Silver Jewellery, Silverware and Coins

From a refining standpoint, the generally low retail price point for silver jewellery means that refining is geared towards production, rather than old, scrap. However, the latter has also been in decline reflecting the drop in North American silver jewellery fabrication, which has fallen from 693t in 2010 to 552t last year. In terms of old scrap, the recycling of silverware is far more important.

Those treating hi-grade gold scrap will typically also take in silverware. Interestingly, while silverware fabrication has been depressed for some time, it seems that consumer stocks are still quite sizeable, reflected in the jump in silverware receipts that some North American refiners have benefited from so far in 2024. Refiners can also be sent plated silverware (which has a very variable silver content of 1-5%), although this is often discouraged because of the temperatures needed to melt the brass core.

It is also worth mentioning the niche of coin scrap. This is primarily composed of the melting down of unsold commemorative coins and old circulating coins. Neither are classified as disinvestment as there was no investment to begin with.

Industrial Products

The refining of precious metal bearing industrial products covers several
waste streams, including: end-of-life consumer goods (mainly electronics); a wide range of industrial products; industrial process scrap; low-grade refining waste, spent batteries (those containing silver oxide) and ethylene oxide (EO) change-outs.

Looking first at the North American end-of-life industrial scrap value chain, this covers a wide range of streams, including e-scrap, medical devices (such as diabetes test strips and insulin pumps) and the relatively small area of secure destruction. Aggregators/collectors will deliver to those with shredding, sampling and assaying capabilities, including Gannon and Scott, Glencore Canada, Mastermelt America, QML, Sibanye-Stillwater Reldan, Sims Precious Metals, and SIPI Metals. With the exception of Glencore Canada, these companies will either produce a doré bar or milled scrap that will typically be exported for final processing, notably to Europe and East Asia. The exception is Glencore Canada, which will feed smelted material into its CCR GDL. It is also worth highlighting the growth in North American precious metals smelting capacity, notably the recent opening of Heraeus Precious Metals’ smelter in Wartburg, Tennessee and the opening next year of the Aurubis Richmond facility.

Turning to process industrial scrap, this covers a wide range of waste products, including waste sludge, sputtering target chambers and plating baths. Depending on the size of the manufacturer, the scrap will either first be aggregated and then delivered to a refinery, or in the case of an OEM shipped directly to a refinery. Those involved in North America do include some companies that treat old scrap, but also some that specialise in process scrap. As such, some of those North American operations that take in process scrap will include: Colt Refining, Gannon and Scott, Mastermelt America, Metallix, Sibanye-Stillwater Reldan, SIMS Precious Metals and SIPI Metals.

Turning to the ethylene oxide (EO) market, this is a significant consumer of silver oxide. There are roughly 190 EO plants globally, although the volume of contained silver in each will vary considerably, from as little as 7-8t to well over 30t. From a recycling standpoint, these plants tend to be changed-out on average every 2-5 years. Despite the large number of plants around the world, the recovery of the silver is concentrated geographically. In the US, this will include Ames Goldsmith, which is involved in both the recovery of silver and the production of silver oxide for new EO plants (as well as the fabrication of other precious metal-bearing industrial products).

With regards to photographic silver scrap, which covers the recovery of silver from liquids (including fixers and developers) to consumer film and x-rays, this has been in structural decline for the past 20-25 years. As such, US refiners are now less involved in this market. Those that are active, to some extent, in this field include Pyromet (part of Ames Goldsmith since 2023), Rochester Silver Works (owned by Technic) and Gannon & Scott.

Mining filters also feature in the low grade waste that refiners process, although never having been a fabricated product, it should technically be classified as a part of mine production. These products filter waste water streams at mines and the resultant metal-bearing paper is then burnt (raising the purity to about 1%) before being delivered to a final refiner.

With regards to photographic silver scrap, which covers the recovery of silver from liquids (including fixers and developers) to consumer film and x-rays, this has been in structural decline for the past 20-25 years. As such, US refiners are now less involved in this market. Those that are active, to some extent, in this field include Pyromet (part of Ames Goldsmith since 2023), Rochester Silver Works (owned by Technic) and Gannon & Scott.

Mining filters also feature in the low grade waste that refiners process, although never having been a fabricated product, it should technically be classified as a part of mine production. These products filter waste water streams at mines and the resultant metal-bearing paper is then burnt (raising the purity to about 1%) before being delivered to a final refiner.

Product Outturn

The type of final product, generated from recycling activity, will vary considerably by industry and type of operation. For example, the three GDL refiners Asahi Refining, Metalor USA and the Royal Canadian Mint have manufacturing capabilities (either internally or through a subsidiary) and so can capture a value-added component, as opposed to exclusively producing lower margin 1,000oz silver or 400oz gold GDL bars. That said, depending on market conditions, for example, when US retail investment weakens noticeably, the above three may increase their outturn of GDL bars, which can then be delivered to London’s terminal market. This strategy will often contrast with the base metal-focussed GDLs in North America who’s precious metals output will typically be geared towards GDL bars.

With regards to non-GDL operations, most will produce an intermediate product that will usually be delivered to a GDL, either in North America or further afield. For example, Gannon & Scott delivers doré bars to a third party, while the outturn from Heraeus Precious Metals’ Wartburg facility will typically be sent for final refining at the company’s GDL operation in Europe.

This approach contrasts with industrialists like Ames Goldsmith that will often consume the silver they recover from EO change-outs. It is a broadly similar outcome for Umicore Precious Metals, David H Fell and Rochester Silver Works (RSW), who will either internally re-use the silver they recover or, in the case of RSW, deliver the metal to Technic to be consumed in other industrial products. Turning to jewellery, United Precious Metals uses the precious metals recovered from several streams to produce semi-finished products Finally, some refiners have become vertically integrated, such as Glines & Rhodes which has introduced its own silver grain, as well as bars and coins.