I don't know what happens with the waste.
What I do know is that surplus reels gets grabbed by traders. Sometimes I meet one of them at ham fests (trade show targetted at hams). Unfortunately I cannot order reels since this guy has too much. He rather shovels some of his wares into big boxes for potential customers to browse. Then he charges according to what it is e.g. Resistors €5, electrolytic caps, mini switches €25.