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 Borad estimates that the economic value of this market is 500 billion dollars annually and that it provides an income for 20 million people. Borad is chair 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 the fact that we belong to a sunrise industry and that it has a very bright and promising future.
According to the OECD, currently 20 per cent of the scrap steel market is subject to import and export restrictions. (photos: BIR)

FREE TRADE BENEFITS GLOBAL RECYCLING MARKET

Booming business under threat

1 Dutch Waste Management Association September 2012

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 supplies 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 traditionally had a strong recycling industry, especially the member states of the European Union and the United States, now have surpluses

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 surpluses. A sustained fall in prices and bankruptcies 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 countries 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 recycled, half in Europe and the other half elsewhere. As Europe does not have sufficient processing capacity, we are left with a lot of plastic for export. If other countries close their borders, for example in retaliation for our export restrictions, then we will be left with a gigantic mountain of surplus plastic. That is why the recycling industry repeatedly emphasises the importance of free trade, which it argues is beyond dispute. No country is independent 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 increasingly efficient recycling infrastructure. And most importantly of all, a global market stimulates technological innovation.

RANJIT BAXI (BIR PAPER):

Many will not survive.

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 internationally oriented, some countries do not permit any imports, justifying their position 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 offering 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 prohibition 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.

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 that this 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 elements, 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 reasoning. 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 production 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 objective which 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

UNDER THREAT CHRISTIAN RUBACH (BIR FERROUS METALS):

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 between the euro and the dollar and high transport costs. But this sector too is under threat from intervention in the free market by

The EU is already burdened by a steel scrap surplus.

Dutch Waste Management Association

September 2012

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 incinerated 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.

BAREND TEN BRUGGENCATE (BIR TYRES):

Eventually, end of life tyres will be converted into a stream of profitable products.

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 unfavourable transaction costs. To reduce

costs the collectors are prepared to accept 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.

SURENDRA BORAD (BIR PLASTICS):

Europe does not have sufficient processing capacity.

Dutch Waste Management Association

September 2012

translation Derek Middleton, Zevenaar design suggestie & illusie, Utrecht