Where to from Here? Q4, 2015
01-12-2015

With recovered paper prices down to the 2009 level and with CDS now almost in sight, when will the sprint for waste to energy begin.

After attending the October Paper and Plastics conference in Chicago I was left with the impression that certainly most of America`s recycling industry are no longer living the dream and rarely listening to Europe and certainly not Japan who at least have the culture and the sustainable recovery ability to add value to recovered materials.

If we take plastics first in Europe, only one third is recycled with the remainder transferring equally into landfill and energy. In America E-waste processing is mainly unprofitable and MRF`s lose even more money as the value of plastics and metals weaken during this recession as a consequence of weakening oil and iron ore prices. One school of thought in America is just to invest even more in MRF technology and replace the single stream, which has never been unsuccessful, with a single bin to include food and green waste, just to make sure even less is fit for recycling and more going to energy.

The bottom line is that no one in developed countries can afford to manually sort and no one can make most single stream materials with the best technology fit for purpose. Positive sorted OCC and metal excluded.  MRF`s for kerbside and mobile shredders for data destruction have only lowered the value of potential recycling materials with fewer willing buyers. The devaluation of the Renminbi and the strengthening of the USD have accelerated domestic recovery in Asia. A few South American countries are now exporting into Asia undercutting all historical developed countries which will only increase when price is the universal Asian language. The added dilemma is that many Asian paper and board manufacturers are only surviving from credit from overseas trading companies and or commercial claims.

The optimists state that China`s fibre demand remains stable. American domestic OCC and Mixed demand from 2016 will strengthen but fail to mention that pulp prices are weakening, especially for BHK. China remains overinvested in production capacity for all grades. Demand for printing and writing papers have not yet bottomed nor for newsprint. So who can live on OCC alone when ex factory prices head towards US$100 per tonne.

Whilst some of this scenario is cyclical the recovery and processing quality deterioration is now almost entrenched for two decades. Single stream does not always equate to less trucks, just simpler routing of the same number of vehicles. Sure this is more cost effective for pick up but what are the true costs of processing and materials rejection to landfill when they can run between 8-24%. It should also be added that processed and baled materials can also still container 6-10% prohibitives which must be removed prior to production then accounted for somewhere.

The ultimate question of who is to blame comes back to governments. As they say in America government is not always there to solve the problem but to prolong the problem. Always remaining in denial with the false belief that being government must be correct, just look at their growth. Ignorant government is easily lead by companies with deep pockets. Bigger must be better until the Green Fence really goes up higher or buyers just disappear no longer trying to recycle someone else`s worst practices.

Reversing two decades of the reality that participation without quality outcomes is not economical and environmentally dangerous will take a decade to reverse. The CDS will highlight further recovery and processing weaknesses. Persistence with outdated almost dirty MRF`s is not the solution but dedicated facilities for source separated fibre for kerbside / commercial and beverage lines are. This can mean an additional MGB. Drop off centres with more localised processing facilities to reduce transport distances, creating more frequent daily pickups with fewer trucks.