Advanced options: Settings -> All Settings -> Mods -> recycleage
When an item breaks it will no longer vanish, instead it will break in
pieces: wooden sticks from the handle, and metal scraps or mineral shards
for mese and diamond.
Metal scraps and mineral shards can then be turned into mese or diamonds
by cooking them into a furnace.
Wooden sticks will replace the broken tool into your inventory, while
scrap metals or shards will be dropped where your character is standing.