DWMA Booming Business Under Threat Sept 2012 01

7/28/2019 DWMA Booming Business Under Threat Sept 2012 01

1/3

1 Dutch Waste Management Association September 2012

The market in secondary raw

materials has rapidly become

global, but is now under intense

pressure. The worldwide

economic crisis is leading to

surpluses, falling prices and

import/export restrictions

imposed by countries to protect

their own industries. Many of

our colleagues will not survive.

The global recycling market is huge.

Surendra Boradestimates that the eco-

nomic value of this market is 500 billion

dollars annually and that it provides an

income for 20 million people. Borad ischair of the Plastics Committee of the

Bureau of International Recycling (BIR),

a federation and lobby organisation for

the international recycling industry. He

is also Chairman of Gemini Corporation,

an Antwerp based sourcing, inspecting

and logistics company for recyclable raw

materials, including plastics and steel.

During his speech to the Paper and Plastic

Recycling Conference held in February

this year in Dubai, Borad congratulated

the audience: Relax and be happy in thefact that we belong to a sunrise industry

and that it has a very bright and promising

future.

But how tenable is Borads vision? There

is a strong correlation between the gross

domestic product of a country and its use

of secondary raw materials. The motor

behind the global recycling market was the

phenomenal economic growth in countries

such as China, India, Russia, Brazil, Turkey

and South Africa, and the fact that sup-

plies of primary raw materials alone could

not keep pace with this rate of growth. The

production of primary raw materials has its

limits. Where will we plant the millions of

trees needed to supply the paper industry if

we dont collect and recycle waste paper?

points out Ranjit Baxi, managing director

of J&H Sales International in London and

president of the Paper Division of the BIR.

But even the growth countries have not

escaped the current global economic crisis

and have seen their growth rates fall. As

a result, countries that have traditionallyhad a strong recycling industry, especially

the member states of the European Union

and the United States, now have surpluses

FREE TRADE BENEFITS GLOBAL

RECYCLING MARKET

Boomingbusiness

under threat

According to the OECD, currently 20 per cent of the scrap steel market

is subject to import and export restrictions. (photos: BIR)


2/3

Dutch Waste Management Association September 2012 2

of secondary raw materials. In addition,

the recycling industry has been hit hard by

rising transport costs, making exports no

longer always an attractive option.

ECONOMIC NATIONALISM

To cap it all, the crisis has precipitated

a renewed economic nationalism. In a

growing number of countries there are

calls to restrict imports and exports of

primary and secondary raw materials in

order to protect their own industries. This

presents a serious threat to the European

recycling industry: in Europe much lower

volumes of secondary raw materials are

processed than are collected, which means

that export restrictions are leading to sur-

pluses. A sustained fall in prices and bank-

ruptcies are all too likely.

One of the material streams suffering from

such barriers is scrap plastic. Although the

market as a whole is growing, some coun-

tries are closing their doors to imports.

China wants only high quality material,

the United States have put scrap plastic

on the red list, and the doorway to the

Indian market has been reduced to just

a crack. Borad of the BIR sketches the

consequences: In 2010 Europe produced

about 24 million tonnes of scrap plastic.

Only about 6 million tonnes of this is recy-

cled, half in Europe and the other half

elsewhere. As Europe does not have suf-

ficient processing capacity, we are left with

a lot of plastic for export. If other countries

close their borders, for example in retali-

ation for our export restrictions, then we

will be left with a gigantic mountain of

surplus plastic. That is why the recy-

cling industry repeatedly emphasises the

importance of free trade, which it argues

is beyond dispute. No country is independ-

ent with regard to its raw materials needs.

Every country benefits from a functioning

international market for raw materials,

including those obtained from secondary

material streams, which is why industry

needs increasing harmonisation of the

environmental, public health and quality

aspects of raw materials. Free markets

lead to competitive prices and an increas-

ingly efficient recycling infrastructure. And

most importantly of all, a global market

stimulates technological innovation.

THE MIRACLE OF CARTAGENA

Not only the plastic sector, but also the

tyre industry is facing import and export

restrictions. This is a cause for concern

to Barend ten Bruggencate, who has

spent his whole working life in the tyre

industry and is chairman of the BIR Tyres

Committee. He says that although the

market for end-of-life tyres is interna-tionally oriented, some countries do not

permit any imports, justifying their posi-

tion by invoking the Basel Convention on

the Control of Transboundary Movements

of Hazardous Wastes and their Disposal.

In this respect, the outcome of the tenth

conference of the 118 member countries

of the Convention gives grounds for hope.

Some have already dubbed this agreement

the miracle of Cartagena, referring to the

Columbian city where the tenth Conference

of the Parties was held. The breakthrough

was that waste is now not just seen as

an unwanted and costly by-product of the

modern consumption society, but also as

a potentially valuable raw material offer-

ing numerous opportunities for green jobs

and green industry. According to Katharina

Peiry, the executive secretary of the Basel

Convention, it means Basel is no longer

synonymous with the control and prohi-

bition of waste transactions. This is an

extremely important change in the position

held by governments, she says. The UN

Conference on Sustainable Development

(Rio+20) last June let the opportunity slip

to endorse the value of waste as a raw

material.

UNDER THREAT

According to Christian Rubach, president of

the Ferrous Division of the BIR, the market

for scrap steel has so far been the freest

in the world. There are no monopolies,

and even the biggest scrap producer is a

relatively small player. Factors hindering

free trade are the exchange rates betweenthe euro and the dollar and high transport

costs. But this sector too is under threat

from intervention in the free market by

governments that prefer to keep scrap

steel for their own markets. According

to the OECD, currently 20 per cent of the

scrap steel market is subject to import

and export restrictions. Rubach fears thatthis situation will continue for some time.

Each country blames the others. Their

reasoning is as follows: If China imposes

export restrictions on its rare earth ele-

ments, we will block exports of our scrap

steel to them. Or: Why should we in the

EU export our cleanly produced scrap to

India or China, where dirty technologies

will be used to turn it into products that we

will then import? Rubach does not have

a good word to say about this line of rea-

soning. They are stupid arguments which

are only intended to bring down European

scrap prices. The ones to profit will be the

European steel producers. That is what is

behind it, nothing else.

The EU is already burdened by a scrap

steel surplus of 20 to 30 million tonnes,

warns Rubach, and each new export

restriction will lead to a further drop in

price. Producers of scrap steel also have

to cope with the fact that the proportion of

scrap steel used in global steel produc-

tion is declining. The main responsibility

for this lies with China, which reprocesses

extremely small amounts of scrap in the

manufacture of steel. According to Rubach,

China produces about 700 million tonnes

of steel per year and the proportion of

scrap used in the manufacture of this steel

is very low indeed, at about 10 per cent.

China hates importing raw materials if

it is not absolutely necessary, he says.

However, he believes it is simply a matter

of time. China is gradually improving its

capacity to recycle scrap steel, an objectivewhich is also stated in its five-year plan.

In about ten to fifteen years China will have

caught up with the rest of the international

RANJIT BAXI (BIR PAPER):

Many will not survive.

CHRISTIAN RUBACH

(BIR FERROUS METALS):

The EU is alreadyburdened by a steel scrap

surplus.


3/3

3 Dutch Waste Management Association September 2012

steel-producing community. The same

goes for the emerging economies such as

Brazil, Russia and India.

PAPER FIBRE SURPLUS

The European waste paper sector faces a

similar problem: a gigantic surplus that

has already risen to 8 to 10 million tonnes.

Europe recovers more waste paper than

it needs. The cause of this malaise is the

economic crisis and the low paper prices.

In many countries the ambitious European

recycling target of 70 per cent recycling

in 2015 has led to contracts between

waste collectors and governments that

include fixed prices for collection. These

take no account of a protracted economic

crisis in which the demand for paper has

declined substantially and prices have

fallen, including the prices collectors

receive from the paper manufacturers.

The result is a backlog of waste paper.

According to Ranjit Baxi, president of the

BIR Paper Division, the obvious solution

is to export the surplus, but this course

of action is frustrated by two problems:

the high transport costs and the unfa-

vourable transaction costs. To reduce

costs the collectors are prepared toaccept lower quality waste paper. Every

week that the economic crisis continues

lower quality paper fibre is exported to

Asia. In response, China, Indonesia and

other Asian countries are imposing strict

quality requirements for imported paper.

European waste paper was always Asias

second choice (after American paper),

but because of the lower quality it is in

danger of falling further down the pecking

order. This is not good news for European

recyclers, says Baxi, who expects that the

crisis will hurt many of his colleagues.

Many will not survive.

TYRE SECTOR THE RECYCLING CHAMPION

The European tyre sector is the champion recycler. In almost all the countries of the

European Union, mountains of end of life tyres have become a thing of the past. In 2011, 95

per cent of all end of life tyres were collected and reprocessed. According to the most recent

figures, 40 per cent of the end of life tyres go for materials recycling, 38 per cent are incin-

erated with energy recovery (mainly in cement kilns), 10 per cent are exported, 8 per cent

are retreaded and just 4 per cent are landfilled. For comparison, in 1994 only 17 per cent of

European tyres were recycled or incinerated with energy recovery and no less than 62 per

cent of end of life tyres were landfilled. Barend ten Bruggencate, chairman of the BIR Tyres

Committee, is pleased with these figures. In the EU and the United States we have moved

on from treating end of life tyres as waste; they are raw materials of considerable value.

The market value of the recycled material is the big issue surrounding end-of-life tyres.

Rubber granulate from end of life tyres is increasingly being accepted as a raw material for

the manufacture of synthetic playing fields, asphalt and noise barriers. For one thing, the

material is sound-absorbent. Eventually, end of life tyres will be converted into a stream

of profitable products. The recycling of end of life tyres has a bright future. Over the next

thirty years the rapid growth in the number of cars and lorries will lead to a doubling of

the demand for rubber. The supply of natural rubber will never be able to keep up

with this rate of growth. According to Ten Bruggencate, a growing number of

initiatives are being developed for mixing granulate and rubber.

SURENDRA BORAD

(BIR PLASTICS):

Europe does not havesufficient processing

capacity.

BAREND TEN BRUGGENCATE

(BIR TYRES):

Eventually, end of lifetyres will be converted into

a stream of profitableproducts.

translationDe

rekMiddleton,

Zevenaardesignsuggestie&i

llusie,

Utrecht

Documents

DWMA Booming Business Under Threat Sept 2012 01