ARE: Raising Roots & Rising Returns

Japan is widely regarded as a global leader in recycling and is strongly committed to achieving carbon neutrality and the SDGs by 2050. However, some have pointed out that the country still lacks comprehensive framework to align the roles of government, manufacturers, and recyclers, and many challenges remain. As a company expected to play a central role in this field, how would you assess the current state of recycling in Japan, and what structural and regulatory challenges do you believe exist?

As you mentioned, many challenges remain in establishing a well-functioning circular economy in Japan. The government has already launched initiatives, and two years ago, it established a committee to develop related policies. The Chairman of Veolia Japan and I serve on this committee as representatives of the resource recycling industry.

Fundamentally, I believe the question is to what extent the free market economy can be shaped through regulation. In Japan, there is little distinction between a company profiting at the cost of environmental pollution and our company generating the same level of profit through environmentally conscious resource recycling. We need to place greater weight on profits that contribute to sustainability rather than treating all profits equally. When I visited Europe in June, I found that local governments and institutional investors there clearly recognized the distinct value of resource recycling industries in advancing sustainability.

Investment is actively directed toward companies contributing to carbon neutrality and the circular economy, while companies that undermine these goals face restrictions. As a first step, the government needs to clearly differentiate between companies that generate positive impacts and those that generate negative impacts, using natural and social capital as the key criteria.

In Japan, business sectors such as industrial waste management and resource recycling are collectively referred to as the so-called “venous industry.” Strengthening this venous industry is essential for establishing a circular economy. As the significant public value of the venous industry becomes more widely recognized and greater capital is invested, it will be possible to facilitate a shift from labor-intensive to capital-intensive operations and evolve toward a business model that is more strongly aligned with sustainability.

In addition, Japan’s industrial waste management market is estimated to be worth approximately JPY 8 trillion, with roughly 100,000 companies active in the sector, highlighting its highly fragmented and small-scale structure. The regulatory framework poses a major challenge in this context. For example, if a manufacturing company’s products sell well, it can rapidly expand its operations by building additional factories or sales offices. By contrast, such freedom is not available to the venous industry. Even when companies provide high-quality, competitive services, obtaining the necessary permits to introduce new equipment or establish new facilities can take several years.

To avoid such strict regulations, companies in the industry face systemic incentives to remain small. Within the same venous industry, responsible companies should be differentiated from those that are not, and the former should be granted greater freedom to expand their operations. Without such measures, this industry—meant to serve as a foundation for the circular economy—will not be able to develop.

Gold granules produced from recycled metals, reducing CO_² emissions by 98%.

When we look at the global landscape of electronic waste, much of it ends up in unregulated or informal markets. This makes it difficult for proper recyclers to secure high-quality, traceable raw materials, hindering scaling as you pointed out. In such a fragmented global supply chain, how does your company secure traceable and appropriate electronic scrap?

Unfortunately, this remains a challenge. In response, we have built an integrated value chain for recycling. Specifically, we manage the entire process in-house—from sourcing recyclable raw materials to manufacturing final products. We took this approach because we believed it was the only way to ensure both the quality and traceability of our recycled products.

We have recently established a new site in Thailand to expand our electronics-related business, and we plan to further accelerate the establishment of additional sites across Southeast Asia. This strategy is aimed at securing high-quality, traceable raw materials on a global scale.

Green Gold is made from recycled sources, certified by LBMA, and minimizes environmental impact.

Your company is engaged in advanced precious metals recycling while also providing a digital waste management system called DXE Station. How does this combination set you apart from competitors?

Our core business is precious metals recycling, and its linkage with DXE is relatively limited. However, we have long-standing experience in industrial waste management and are acutely aware of the social challenge of promoting resource recovery in this sector. To transform waste into resources, access to accurate and comprehensive information is essential. For this reason, we position DXE—which enables us to track the nationwide flow of industrial waste through a cloud-based platform—as a vital bridge connecting waste collection with resource recovery.

Manufacturing process of gold bullion at our Bando Plant in Ibaraki Prefecture.

Your company's sustainability efforts are progressive. For instance, recycled gold from your factories achieves a 98% reduction in CO^₂ emissions compared to mined gold. In addition, you have obtained multiple major certifications and comply with Japan's GX League. How do you leverage these achievements to generate new customers and attract investors?

We actively communicate our ESG performance across a variety of forums, and we sense that understanding of these efforts is expanding across society at large. We aim to further highlight the societal impact of recycling-based production and intensify our efforts to translate this impact into tangible economic value.

Previously, the value creation process of our precious metals recycling business was limited to collecting raw materials and producing high-purity bullion. Today, however, our value creation continues beyond bullion production. This transformation was driven by new demand from leading European luxury jewelry houses, which adopted policies to prioritize recycled materials in their precious metal products and effectively incorporated this approach into their brand identity.

The brands have not only shifted their sourcing of precious metals from mines to recyclers, but have also attached a green premium to recycled precious metals. In other words, secondary precious metals refined through recycling are now priced higher than primary precious metals extracted from mines. As a result, the profitability of the precious metals recycling business has further improved, enabling us to scale up our collection activities. We also set up dedicated production lines for precious metals recycling at our North American refining facilities, intensified our sourcing of jewelry scrap generated in New York and other markets, and expanded production of recycled precious metals eligible for the green premium.

Our recycled gold production this fiscal year is projected to exceed 80 tons, surpassing even the annual output of Nevada Gold Mines, the world’s largest gold mine. We will continue to reinforce our global sales efforts to secure green premiums across all our operations worldwide.

Our new Bando Plant received ZEB certification, reducing energy consumption and executing environmentally conscious operations.

Since last year, we have been supplying recycled palladium and platinum to the Japanese automotive industry, at premium prices. Platinum and palladium are precious metals critical to industrial applications, yet their primary sources are heavily concentrated in countries exposed to geopolitical risks. As a result, domestic recycling is widely regarded as a key contributor to supply chain stability from the standpoint of economic security. We see this as another important factor that enhances our value proposition in the Japanese market.

In addition to your strong presence in the United States, you have also established subsidiaries in India and Thailand. As part of your international strategy to respond to growing demand for sustainable precious metals, which countries and regions are your priorities?

We aim to continue our growth by replicating our successful precious metals recycling business model overseas. As noted earlier, we are prioritizing Southeast Asia and South Asia as key regions for sourcing raw materials for precious metals recycling. In addition to our existing sites in South Korea and Malaysia, we established a subsidiary on the outskirts of Bangkok, Thailand, in October 2024, with a factory scheduled to commence operations there next spring. Leveraging the Indian government’s vehicle scrapping policy, we have also established a local subsidiary near Delhi in June 2025 to collect automotive catalysts. Looking ahead, we intend to accelerate these initiatives across Southeast Asia.

According to economic growth forecasts for the next five to ten years, Southeast Asia and South Asia are projected to emerge as key global growth engines. Ongoing supply chain restructuring, driven by recent US-China tensions, will further enhance the strategic importance of these regions as destinations for industrial investment. In particular, the electronics industry is projected to experience robust growth in this area. With trade frictions between the United States and China making it increasingly difficult for Asian companies to do business with Chinese firms, capital and investment flows are expected to shift from China to ASEAN countries and other parts of the region.

The establishment of Asahi Pretec (Thailand) in 2024 has paved the way for global expansion in ASEAN.

What types of partnerships are important for your expansion in the ASEAN markets?

When conducting business locally, we may engage partners to help secure licenses and meet other regulatory requirements. However, as noted previously, our approach is to independently build the value chain in order to ensure the quality and traceability of our recycled materials and products.

Therefore, in most cases we expand independently through wholly owned subsidiaries. For example, we previously operated in Shanghai, where that business was likewise conducted as a wholly owned subsidiary. At the time, we were encouraged to consider partnering with a local company; however, we declined in order to safeguard our proprietary technology and business model.

The bullion products of ASAHI METALFINE are produced with 100% recycled precious metals.

If we were to return to this conversation again in five years, what would you like to have accomplished by then, and where do you see your company positioned at that point?

In five years, I believe we will have established ourselves as the definitive leader within the entire venous industry. Please visit us again.

For more information, please visit their website at: https://www.are-holdings.com/english/company/corporateinfo/