IB Business Management HLTopic 8 — The Pre-Released StatementPaper 1Industry context~12 min read
Industry Background: Electronic Waste
E-waste is the opposite of concrete in almost every way: young instead of mature, growing fast instead of flat, and desperately short of raw material instead of drowning in it. Understanding why so little e-waste gets recycled is the key to understanding both the opportunity and the risk for ABC.
📚 What you need to know
E-waste means discarded electronics: phones, laptops, televisions, cables, consoles, and now solar panels.
The world produced roughly 62 million tonnes of it in 2022, and that is expected to pass 80 million tonnes by 2030.
Only about one fifth is formally collected and recycled. The rest is buried, stored, or handled informally.
Two kinds of firm dominate: collectors and IT asset disposal companies, and metal smelters and refiners such as Aurubis, Sims, Umicore and Boliden.
Processors sell recovered materials to other businesses — they do not sell finished goods to consumers.
The main risks are collection, informal competition, metal price swings and tightening regulation.
The number that explains everything
There is a lot of e-waste and hardly any of it is recycled properly. That single fact creates the opportunity ABC is chasing, and also the problem it will run into.
Every strong e-waste answer uses this gap twice: once as an opportunity, once as a supply risk.
How the industry works
E-waste processors sit in the middle of a chain, not at the end of one. They buy or collect other people’s rubbish, break it into useful materials, and sell those materials on to manufacturers. Everything is B2B.
ABC’s clever technology sits in the green box. The red and amber boxes are the ones that decide whether the factory makes money.
Who the big players are
Type of firm
What they do
Examples
Collectors and IT asset disposal
Gather used equipment from businesses and councils, wipe the data, sort it and do the first stage of processing.
Sims, which runs recycling sites in many countries.
Smelters and refiners
Take the sorted material and pull out high-value metals — gold, silver, palladium, copper.
Aurubis, Umicore and Boliden, all specialists in recovering metals from electronics.
Informal recyclers
Small, often unregulated operations that strip devices by hand or by burning them. Cheap, dangerous, and everywhere.
Widespread across parts of Africa and Asia; not registered firms.
ABC is a newcomer sitting between the collectors and the refiners. It has a better process than the informal recyclers but far less experience than the specialists. That is worth saying in any competition question.
The four problems ABC has just inherited
1. Collection is genuinely hard
Old phones sit in drawers. Broken laptops go in the bin. Councils and businesses may not have a system to hand equipment over. So even though 62 million tonnes exist, only a fraction ever reaches a formal recycler. A factory with nothing to process still has to pay for itself.
2. Informal recycling undercuts you
Informal operators do not pay for safety equipment, emissions controls or waste disposal, so their costs are lower and they can outbid formal firms for material. It is unfair competition, and it also causes real harm — the World Health Organisation has warned that large numbers of children and teenagers may be exposed to danger through informal e-waste work, and research in Ghana has found serious lead exposure near these sites.
3. Profit depends on metal prices
Revenue comes from selling gold and copper, and those prices are set on world commodity markets. ABC could process more tonnes than last year and still earn less, simply because the gold price fell. Compared with concrete contracts, that is unfamiliar risk.
4. The rules keep tightening
Governments are clamping down on shipping e-waste across borders, with the Basel Convention shaping how it can move internationally. Malaysia has moved to ban e-waste imports outright, and Thailand has seized illegal shipments. Tighter rules raise compliance costs — but they also push work towards firms that follow them properly, which is ABC.
Turn a threat into an opportunity. Stricter regulation squeezes informal recyclers hardest. A compliant, well-run operator like ABC can benefit from exactly the rules that look like a cost on paper. Examiners reward that kind of two-sided thinking.
Where the growth is
Asia produces the largest share of the world’s e-waste and recycles relatively little of it, so the growth potential is enormous.
Europe has the strongest collection laws and the highest recycling rates, though many countries still miss their official targets.
Southeast Asia has been receiving illegal shipments and is now enforcing hard against them.
Africa hosts some of the largest informal recycling areas, with limited safety equipment and growing international pressure to improve conditions.
Worked examples
WORKED EXAMPLE
Explain one benefit to ABC of forming partnerships with local governments for e-waste collection. [2]
Step 1: the business point
A partnership gives ABC a steady, agreed flow of material instead of leaving it to compete for scrap on the open market. [1]Step 2: apply it to ABC
Since ABC’s factory has fixed costs whether it runs full or half empty, securing supply raises capacity utilisation and lowers cost per tonne of recovered gold. [1]2 / 2Capacity utilisation is the operations link. It turns a vague “more supply is good” into a proper answer.
WORKED EXAMPLE
Analyse the likely impact on ABC of expanding its e-waste processing operations. [6]
Impact 1 — a second income stream
Expansion reduces dependence on concrete, which is cyclical. E-waste demand follows technology replacement rather than construction, so the two revenues do not fall at the same time.
Impact 2 — reputation and CSR
Diverting waste from landfill supports ABC’s environmental objectives and helps offset criticism of its cement emissions, which matters when governments award public contracts.
Impact 3 — the constraintMore capacity is only useful if there is material to feed it. With around four fifths of e-waste never reaching formal recyclers, and informal operators competing on cost, ABC could end up with an expensive plant running below capacity.
Two impacts and a well-evidenced limitationNaming the constraint, not just listing benefits, is what lifts a 4 into a 6.
💡 Exam tip
Lead with the supply problem. Most students write about demand. Supply is the interesting risk here and it stands out.
Use “capacity utilisation”. It links e-waste to operations management, which HL examiners like to see.
Mention commodity prices. Revenue that depends on the gold price is genuinely less predictable than a construction contract.
Regulation cuts both ways. Cost for ABC, but a bigger cost for the informal rivals it is competing with.
Keep the numbers rough and honest: about 62 million tonnes, about a fifth recycled, rising towards 80 million by 2030.
Remember it is B2B. ABC sells materials to manufacturers, so advertising and branding answers will miss the point.
⚠ Common mix-up
A big market is not an accessible market. Most of that 62 million tonnes is out of reach without a collection system.
Recycling is not automatically profitable. It depends entirely on what the recovered metal sells for.
Informal recyclers are competitors, not just a social issue. They take ABC’s raw material.
E-waste processors do not sell to consumers. No shops, no adverts, no retail pricing strategy.
Room-temperature recovery is not the whole process. Collection, sorting and shredding still cost real money.
Do not confuse tonnes processed with profit. Higher volumes at lower metal prices can still mean lower revenue.
Up next: Bringing SWOT and STEEPLE Into Your Answers — the two tools that turn all this background into structured marks.
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