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A report by Gartner predicts that new EU recycling rules will raise the production costs of PCs and lead to faster consolidation in the European PC industry.

The report refers to two recent EU directives aimed at managing electrical and electronic waste. The Waste from Electrical and Electronic Equipment directive requires manufacturers to collect, treat, recycle and reuse their electronic products and sets a date of December 2005 to begin collection of the waste.

Meanwhile, the Restriction of the Use of Certain Hazardous Materials (RoHS) directive requires manufacturers to find replacements materials for lead, mercury, and cadmium, as well as for chemicals such as flame retardants that are used in circuit boards and plastic covers. The lead used in the manufacture of computer monitors is the only component exempt from the RoHS directive. The deadline for compliance is January 2008.

Gartner, a US-based research company, claims that that the waste management directives would "raise production costs, reduce margins and accelerate consolidation among mid-tier and small European PC vendors."

The new laws, which cover a range of electrical and electronic goods, from fridges to televisions, will affect huge multinationals such as Dell, IBM, Apple, and HP, as well as smaller indigenous PC makers such as Iqon Technologies, Osmosis and PC Pro.

Gartner asserts that recycling programs depend upon large volumes in order to be economically viable and that most medium and small PC vendors will not be able to generate these economies of scale. Additionally, those vendors won't be able to invest in the R&D required to eliminate hazardous waste from the PCs, Gartner claimed.

However, it has been suggested that compulsory recycling may create a profitable business opportunity for recycling specialists, who could handle the recycling at no cost to the manufacturer.

It has also been suggested that because PCs are built from components that are mass-produced commodities, the original component manufacturers may ensure that all of the banned materials are eliminated prior to being shipped to small and medium PC assembly companies.

The new laws will also affect US manufacturers, which annually export up to USD6 billion in consumer electronics. "If these manufacturers can't - or won't - comply with the directives, that export number could drop significantly," the report observed. © ENN

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