Analysis: A step by step guide to recycling the ultimate consumer item

At last, a sensible use for the Millennium Dome. Apparently, the 15 million mobile phones replaced in Britain each year would fill it 14 times over. Certainly, putting the redundant ones in the Dome would turn it into a fitting symbol of a problem our consumer society is now facing: what to do with things that haven't worn out and won't decay on their own.

Mobile phones are a classic example because in the UK they tend to be replaced every 18 months on average, as people are led by the networks into upgrading. But that leaves the old phone, which could still work perfectly, gathering dust in a drawer, and a potential hazard if it is put in a rubbish bin.

Why? Because if it goes to landfill, the batteries could leach toxic metals such as cadmium, lithium, mercury, lead and palladium, and the plastic elements will not decay, using space that could be used for something that will rot. Even worse, many of the parts of the phone could actually be used for some other purpose, including making traffic cones, toys, alarm and sensor systems, and providing the essential elements for more phones.

The European Union has recognised this, and the growing pressure on landfill sites means that a directive coming into force in 2004 – or possibly early 2005 in various countries – will oblige mobile phone companies to pay for the recycling of phones. But some people have already seen the market: one recycling businessman said yesterday: "This is [already] a profitable business.

After the high-profile launch yesterday of a scheme to take old mobiles and their chargers and manuals free, Britain has two companies competing to provide a full service. Curry's, Tesco and Argos launched the first in April, using a British company called XS tronix, which has its headquarters in Munich, Germany. So far it had dealt with 280,000 mobiles, Colin Armstrong-Bell, its founder and chief executive, said. Yesterday Dixons Store Group joined the fray, backing a scheme called Fonebak, run by Shields Environmental.

Both companies have the same aim and, largely, methods. For both, the principal aim is to make sure the least amount of material is sent to landfill. And remarkably little has to. While a mobile phone may look the ultimate consumer item of the modern age, packed solid with electronics and surrounded in plastic, it can almost all be turned to profitable use.

Both schemes allow you to send the phone direct to the recycler, or get a discount on a new phone when you bring the old one in with its associated components such as the charger, boxes and manuals.

Getting the raw materials is fairly cheap, compared with many manufacturing processes. To begin with, a surprising number of phones can be smartened up (the companies prefer to say "remanufactured") and resold abroad, often to eastern Europe and African countries, which have nascent mobile networks.

"We can do that with about 40 per cent," Mr Armstrong-Bell said yesterday. "We'd like to get that up to 50 per cent, but the problem is that as people get to hear of these schemes they'll be bringing out the older phones, which are more difficult to tidy." But once the wave of stored phones has been cleared, the proportion that can be resold is likely to grow.

There are still millions that cannot be reused. Now the difficulties start. The phone is split into the handset with its associated electronics, the charger, and the battery. (The manuals can be sent for paper recycling.)

The batteries pose the biggest immediate problem because they cannot be incinerated: they might explode. "The older ones use nickel and cadmium," said Gordon Shields, founder and chief executive of Shields International. "The newer ones use lithium. There's only one company which can get those metals out; it's based in France, and we audit them to make sure they do it correctly." The process takes between four and six weeks, although the metals extracted comprise only about 1 per cent by weight of the phone.

The handset's plastic fascia and surround can be broken off and sent for "granulation", which grinds it into tiny pieces that can then be used in other processes: traffic cones are a popular application.

The chargers are sent separately and crushed: because they are transformers, they yield copper (the largest metallic yield from a phone, about 15 per cent by weight). The plastic can be reused.

Next, the phone's circuit board containing its chips is examined. Mr Armstrong-Bell said: "We can often use some of the memory for tracking or alarm systems or toys." Mr Shields said new chips tended to be cheaper than old ones, and had bigger capacities, which meant selling the recovered ones consistently was hard.

The final step is incineration of what is left: the plastics are burnt in a furnace at super-high temperatures, and the molten metal is collected below. That yields gold, silver, lead, palladium, manganese, selenium and aluminium.

The phones also contain coltan, short for columbite-tantalite, a metallic ore found in the eastern Congo and fought over by warring factions. The coltan at £250 a ton is the element of choice for capacitors, which store energy on circuit boards, but it is difficult to recycle.

"We use a Swedish refiner," Mr Shields said. "You can't grind the handsets down as you can the rest because of the chemicals in the liquid crystal displays. But the plastic burns, and the surplus energy heats the local community."

So is everyone happy? Certainly with mobile phones they apparently are. What is surprising about these schemes is that they are here at all, when Britain was caught out by the recycling directive on refrigerators that came into force at the beginning of this year.

Michael Meacher, the minister for the Environment, was personally embarrassed by that, and criticised by a Commons select committee for not acting quickly enough to deal with the predictable problem, which has left about a million fridges mouldering in local authority tips, awaiting proper recycling (see box).

But the key difference between mobile phones and fridges is in the "remanufacturing" – or resale – side. The average resold phone will garner the recycling companies about £20, far more than the individual elements will when extracted. But to make a profit on dead fridges and cars, which must also be recycled, is almost impossible.

XS tronix, which is setting up in Switzerland, the Netherlands and Austria as well as Britain and Germany, says this year it will donate £750,000 to charity through its £5-per-phone bounty.

Does that suggest, as 2004 looms when all electrical goods must be recycled, that other companies will push into the niche and cause the prices of second-hand phones to collapse, rather as prices of recycled paper have slumped through oversupply? Mr Armstrong-Bell insists not. "Some companies might go down if they aren't smart about how they do business," he said. "But not us."

Yet with the number of phone recycling schemes increasing, and with nearly two years until the directive comes fully into force, the possibility must remain that mobile phones could join cars and fridges among the items that should be recycled, but for which insufficient markets exist. Especially when one considers the appetite for "remanufactured" phones will not be limitless.