Money shouldn’t be a dirty word for the recycling industry, says Damian Lambkin, head of projects for Circularety, Ecosurety’s online solution to the current packaging recovery note (PRN) system. But is it? And will it remain that way?
Recyclers are having a hard time. Over the last 18 months at least 10 have gone into administration. Whatever the reason, poor market conditions, PRN volatility or the ups and down of the London Metals exchange, one thing is clear, it is getting tougher to make margin. It’s okay to hold on if there are lots of PRN peaks, but the reality over the past two years is that the troughs have significantly outweighed the highs. It’s not clear how much longer reprocessors can continue to draw out slimline profits using their current business models, buffeted as they are by the Environment Agency on one side, and regulatory bodies on the other.
In an ideal world recyclers would have the time to apply for grants to improve their recycling infrastructure, however in these days of a laser focus on profit, and many of the plants run on shoestrings by successive generations, filling in forms for grants is the last thing on recyclers’ minds.
In the waste and recycling industry, it seems that money ironically is still a dirty word, when it really shouldn’t be. There is no conflict between wanting to make margin and improving the UK’s waste infrastructure. After all, that is what the PRN system was originally designed to do. However, the majority of recyclers don’t have the time or the resources for best practice. I should know, I used to be one. Most reprocessors are interested in upgrading equipment to get better returns and give something back to the industry. However, many just don’t have the time to join the dots.
There are several ways reprocessors can be helped. Firstly, they need help to apply for grants. Secondly, it would really help if they could collaborate with producers. To be frank, they don’t get much out of the relationship at the moment and better communication could lead to higher, or at least more stable, PRN prices. The producers we speak to every day are ready to engage more closely with recyclers because they realise it is in their best interests. The door is opening.
Thirdly, reprocessors need to diversify. By this, they should consider creating recycling product that can be used directly by manufacturers. Clean plastic or glass will attract up to four-fold profits than simply processing the waste versions of these materials.
For example, some of these projects have resulted in the plastic from PlayStations being turned into chairs, or used at the Eden project, or even for plastic bollards outside supermarkets. This is how to turn £60 a tonne into something worth nearer £300. Rather than seeing margin go off on a ship abroad, clean plastics and glass could stay in the UK and be reused for something else. With Brexit on the horizon, generating clean product makes sense both environmentally and financially.
Circularety could be the door that opens dialogue between reprocessors and producers. In return for joining, we could help reprocessors with their reporting. Circularety would want to have access to discounted PRNs in return, but in doing so we could increase the value of the waste material long-term.
Circularety is all about transparency; transparency of the market, where the money is going, and where it’s going to come from. We can show recyclers the whole money supply chain. We could also show them the money.