Of Diamonds and Dumps

Stephen DeAngelis

August 14, 2009

Consumers rarely think about where the products they buy come from or where they end up when they are finally discarded. There is even less thought about the fate of people who provide products that we no longer buy because of the recession. Even those who provide high end products like diamonds have been affected. Diamond mining is tough work, but being unemployed can be even tougher [“Digging in the dumps,” The Economist, 30 May 2009 print issue].

“The people of Sierra Leone’s Kono district, in the east of the country, know all too well about diamonds—for better and for worse. In the 1990s, the drugged-up rebels of the Revolutionary United Front controlled Kono’s mines by means of rape, murder and mutilation. When that bloody civil war ended in 2002, mining companies replaced the rebels but brought their own problems. The largest firm, South Africa-based Koidu Holdings, was pitted against locals over blasting schedules and environmental issues. Small-time local miners, little more than licensed freelancers prospecting by hand, were disappointed to find that most of the mines near the surface had been exhausted. The jobs, the volume of production and Kono’s cut of tax revenue from exports disappointed almost everyone. … Such are the growing pains of a nascent industry in a dirt-poor African country.”

The article isn’t trying to demonize mining companies. In fact, it reports that “bigger companies, such as Koidu Holdings, have negotiated profit-sharing schemes that will benefit the locals once the mines start making money.” The problem is that the current recession has caused commodity prices to plummet including the prices paid for diamonds.

“In response to collapsing demand, mining companies have been temporarily closing mines or reducing production. This does not hurt countries such as Australia and Russia all that much. But it squeezes poorer ones, particularly in Africa, very hard.”

With mines closing, it is not just the miners who have lost jobs. Workers throughout the supply chain have suffered.

“At least three-quarters of the companies in Namibia’s young cutting and polishing industry have closed. … In India, home to the largest diamond cutting and polishing industry in the world, at least 100,000 diamond polishers are out of work.”

Ghana is another country whose labor force has been affected by the recession [“Recession in the West Cuts Off An Economic Pipeline in Ghana,” by Karin Brulliard, Washington Post, 5 August 2009].

“When the U.S. housing crash triggered economic chain reactions around the world, one ended in a lush forest near [Aduase, Ghana], where on a recent day Emmanuel Awatey was tapping his machete on a log that he very much wanted to chop up. In previous years, Awatey would have done just that, and then carried the wood on his head to the red dirt road nearby. A truck there would have ferried it three hours to the Tekura handicrafts workshop in Accra, Ghana’s capital, where it might have been carved into a stool by an artisan, then shipped duty-free to the United States, then sold at Cost Plus World Market for display in an American home. But the U.S. housing market and the global economy collapsed. And so has work for Awatey, the carvers and others working what had been a thriving pipeline from Ghanaian rainforest to American retail.”

I wrote this post because I think it’s good to remind ourselves occasionally of the people behind the products we buy — people like Emmanuel Awatey. Awatey, like many other people trying to break poverty’s grip, had tapped into the global economy and gained a foothold to a better future. Unfortunately, they are now losing that foothold.

“The financial crisis has checked demand for African commodities, slowing the continent’s economies. Less visibly, however, it has also stunted small African exporters who had become fledgling trade success stories — and micro-level poverty busters — in a region often associated with gloom. In many cases, these exporters were lifted by a decade-old U.S. program meant to promote economic development through duty-free access to American markets. Now a U.S.-triggered meltdown is erasing many of the gains. … [The recession has] also reverberated through particleboard factories, mango farms and jewelry studios. As in many sub-Saharan countries, Ghanaian textile and apparel exporters have been particularly hard-hit, … among them is Prosper Adabla’s formerly humming factory near Accra, which manufactured tube socks for export. An end to worldwide quotas on Chinese apparel exports in 2005 brought stiff competition. Two years later, Adabla’s U.S. partner went bankrupt. Adabla shut his factory last summer, leaving $1 million worth of socks unsold and 1,000 workers jobless.”

In an ironic twist, Brulliard reports that “in an era when retailers are trimming inventories, cutting price points and closing stores, African accessories count as luxuries.” All of these stories underscore the fact that the world is more connected than ever before. Crises in the developed world have an exaggerated affect on the quality of life in the developing world. Other things that these stories confirm are the importance of economic diversification, supply chain resilience, and the creation of regional markets. I highlight the importance of these supply side issues during my discussions of the Enterra Solutions® Development-in-a-Box™ offering with government and business leaders of developing countries.

 

But people in developing countries are not just involved in the supply side of the economic supply chain, some of them are involved in helping get rid of trash. People in India dismantle old ships while people in China dismantle old computers and monitors that come from all over the world. Unfortunately, the conditions under which they work, and the toxic substances to which they are exposed, put their lives at risk. Even people picking through trash created locally are subject to these conditions. Their plight is eloquently discussed in a recent op-ed piece [“A Scrap of Decency,” by Bharati Chaturvedi, New York Times, 4 August 2009]. Chaturvedi is the founder and director of the Chintan Environmental Research and Action Group. He writes:

“Among those suffering from the global recession are millions of workers who are not even included in the official statistics: urban recyclers — the trash pickers, sorters, traders and reprocessors who extricate paper, cardboard and plastics from garbage heaps and prepare them for reuse. Their work is both unrecorded and largely unrecognized, even though in some parts of the world they handle as much as 20 percent of all waste. The world’s 15 million informal recyclers clean up cities, prevent some trash from ending in landfills, and even reduce climate change by saving energy on waste disposal techniques like incineration. They also recycle waste much more cheaply and efficiently than governments or corporations can, and in many cities in the developing world, they provide the only recycling services.”

Most of us have seen pictures of men, women, and children crawling over heaps of trash to find material that they can use or re-sell. We appreciate the desperation that drives them to sort through garbage, but probably don’t appreciate the fact that the current recession has made their desperation even more acute. Chaturvedi continues:

“As housing values and the cost of oil have fallen worldwide, so too has the price of scrap metal, paper and plastic. From India to Brazil to the Philippines, recyclers are experiencing a precipitous drop in income. Trash pickers and scrap dealers in Minas Gerais State in Brazil, for example, saw a decline of as much as 80 percent in the price of old magazines and 81 percent for newspapers, and a 77 percent drop in the price of cardboard from October 2007 to last December. In the Philippines, many scrap dealers have shuttered so quickly that researchers at the Solid Waste Management Association of the Philippines didn’t have a chance to record their losses.”

We all know that loss of income affects the worker as well as his or her family. Chaturvedi describes what is happening to the families of “urban recyclers.”

“In Delhi, some 80 percent of families in the informal recycling business surveyed by my organization said they had cut back on ‘luxury foods,’ which they defined as fruit, milk and meat. About 41 percent had stopped buying milk for their children. By this summer, most of these children, already malnourished, hadn’t had a glass of milk in nine months. Many of these children have also cut down on hours spent in school to work alongside their parents. Families have liquidated their most valuable assets — primarily copper from electrical wires — and have stopped sending remittances back to their rural villages. Many have also sold their emergency stores of grain. Their misery is not as familiar as that of the laid-off workers of imploding corporations, but it is often more tragic.”

For years, much of the developed world has simply purchased and discarded products without much consideration for environmental costs — including the cleanup of polluted refuse sites. Abuse of the commons has been allowed because it was thought to be an unlimited resource. We are learning that the commons are neither free nor unlimited. With land running out in many places for landfills, there has been some increased interest in recycling; but not enough interest. Until there is a robust aftermarket for recycled material (i.e., a way to make sustainable profits from recycling), getting rid of trash will remain a big challenge. In some European economic sectors, the concept of extended producer responsibility has been instituted. Under this concept, when a manufacturer produces a product it is also responsible for discarding it — hopefully by recycling its parts. This creates what William McDonough has termed a “cradle to cradle” process. Extended producer responsibility results in manufacturers building products specifically designed to be recycled. Walmart is now jumping on the cradle-to-cradle bandwagon [“Can Wal-Mart Be Sustainable?New York Times‘ editorial, 6 August 2009].

“Recently, Wal-Mart has been rolling out plans for what it calls a sustainability index — a measure of how green the products it sells really are. It is asking each of its suppliers, an enormous list of businesses, 15 questions about the life of their products from manufacturing through disposal: questions about greenhouse gas emissions, social responsibility, waste reduction initiatives and water use. It is a sound idea. And probably a very good marketing tool. … Wal-Mart has already created a Sustainability Index Consortium, which will include environmental groups and other nonprofits, universities and businesses. The consortium will create the criteria for the index, and will share with Wal-Mart the task of building a product-by-product database measuring the environmental impact of each product’s life cycle. … Wal-Mart has done consistently well by selling at low prices. Historically, however, cheap goods have often reflected careless and unsustainable environmental practices — clear-cutting entire forests, for instance, which is cheaper than selective logging. If Wal-Mart successfully combines cut-rate prices with high-class environmental stewardship, other businesses should follow.”

Because trash has limited value before it completes the recycling process, it makes little sense to transport it over great distances. The establishment of regional and local recycling centers around the globe would benefit local environments, provide jobs, and save energy. I realize that the vision of global recycling centers remains a distant dream; but I also believe that actions begin with thoughts. Chaturvedi believes that the dream can emerge slowly in small steps and that doing so will help those now providing informal recycling. He concludes:

“In the long run, though, these invisible workers will remain especially vulnerable to economic slowdowns unless they are integrated into the formal business sector, where they can have insurance and reliable wages. This is not hard to accomplish. Informal junk shops should have to apply for licenses, and governments should create or expand doorstep waste collection programs to employ trash pickers. Instead of sorting through haphazard trash heaps and landfills, the pickers would have access to the cleaner scrap that comes straight from households and often brings a higher price. Employing the trash pickers at this step would ensure that recyclables wouldn’t have to be lugged to landfills in the first place. Experienced trash pickers, once incorporated into the formal economy, would recycle as efficiently as they always have, but they’d gain access to information on global scrap prices and would be better able to bargain for fair compensation. Governments should charge households a service fee, which would also supplement the trash pickers’ income, and provide them with an extra measure of insurance against future crises. Their labor makes our cities healthier and more livable. We all stand to gain by making sure that the work of recycling remains sustainable for years to come.”

As I concluded in a previous post, “There is no doubt that the effort required to recycle waste material can be tedious and onerous. There is also no doubt that landfills are filling and waste streams will continue to grow as millions of more consumers are brought into the middle class as globalization helps lift them out of poverty. When recycling becomes a way of life and clean technologies help clear the skies, people will forget the burdens and appreciate the benefits.”