UK recycling industry in a slump: what happened?

The Telegraph 14 Nov 08;

The once booming UK recycling industry is in crisis. Mounds of now worthless tin cans, paper and plastic bottles are piling up in warehouses, attracting rats and posing a fire risk. So what happened? Asks Jimmy Lee Shreeve.

Only a matter of months ago recycling firms could get up to £40 a tonne for waste cardboard and around £200 a tonne for discarded plastics.

The recycling industry was riding high, mostly from feeding the hungry markets for waste in the Far East.

Environment minister Jane Kennedy proudly announced that 9 out of 10 town halls were ahead of their recycling targets and the Government's hopes of recycling 40 per cent of household rubbish by 2010 were well on the way to being achieved.

The future looked rosy – until the bottom fell out of the market.

The plunge in prices was down to a sudden fall in demand for recycled materials, particularly from China, as manufacturers reduced their output in line with the global economic downturn.

In one fell swoop it rendered waste paper, aluminium cans and plastic bottles as good as worthless, and has left the UK recycling industry and local authorities reeling.

Paul White, who runs Norfolk-based waste paper merchants MW White, says the crisis is the worst he's seen in the 35 years he's been involved in running the family business.

"Six weeks ago you could sell anything you could lay your hands on," he says. "Prices were steady and in some cases rising. Six weeks later the market is decimated. It was an unbelievable turnaround in such a short space of time."

The industry and local authorities alike were taken by surprise and now there's a growing mountain of waste with no buyers to take it off their hands. "There's nowhere for these materials to go at the moment," said Steve Eminton of LetsRecycle.com. "It's rapidly becoming a serious problem."

He added that the situation was likely to get worse by Christmas, with the big surge in packaging and drinks bottles put out for recycling.

The Environment Agency which regulates waste in England and Wales, admitted that the sudden drop in demand for recyclable materials was "severe" and "unprecedented".

On November 11, with little other choice, it announced that it would make it easier for recycling companies to store material for up to six months, or even longer in exceptional circumstances.

With recycling and waste depots overflowing, the Local Government Association will be asking the government for help to pay for the warehousing of rubbish. "If we send it to landfill it will incur tax," an LGA spokesperson.

By storing recyclable waste, local authorities and recycling firms are banking on the markets picking up again.

Stuart Foster of Recoup, which advises on plastics recycling, is confident that the low value is temporary and believes that, with proper management, plastics, paper and metal products can be stored safely until they can be sold again.

"We think there's a light at the end of the tunnel," he says, "but it's going to take some work."

Not everyone is so confident. In a statement the Confederation of Paper Industries said that demand in China for waste paper would probably recover in the medium term, but warned that there were "no obvious signs of Far East buyers returning to the market soon."

The CPI added that, even if there was an upturn in demand, "it is very doubtful that prices for the material will be anywhere near where they were during the middle of 2008 and excess stored material is likely to suppress prices for a much longer period."

There is no denying that the recycling of household waste has been successful. According to Defra's annual waste statistics, released in early November, each of us is now recycling 171kg of rubbish each year, compared to 75kg five years ago, and 3kg in 1983.

Ironically, the very success of recycling could make the current situation even worse. With little chance of selling the collected materials, warehouses are likely to become stretched to capacity, not to mention attracting vermin and posing a fire risk.

"These warehouses will not be pleasant places," says Doretta Cocks of the Campaign for Weekly Waste Collections.

"Not everybody washes tins out – they will be full of old cans of beans and tins of pilchards. They will attract rats."

Then there is the question of where all the waste will go if the recycling market doesn't pick up in six months.

For Cocks the answer is obvious: "If this situation continues, I would almost guarantee that all in storage will be landfilled."

Peter Seggie, recovered paper sector manager at the Confederation of Paper Industries, echoed her concerns: "The worst-case scenario is that some material collected for recycling could go to incineration or landfill."

But in a statement on November 12 the government insisted that stored materials would only be sent to landfill as "a last resort" adding that it remains committed to ensuring that the price drop "does not undermine public confidence in the value of recycling, nor lead to unacceptable environmental consequences."

Tory MP Eric Pickles said the crisis called into question Labour's claim that recycling has soared during its time in office.

"It is the death knell to any claim that the government is green," he says. "What will be the cost to the taxpayer of storing all this rubbish? Once again we have a government policy that beggars belief."

Paul Bettison, chairman of the Local Government Association's environment board, however, wants the government to help provide more secure places for waste storage until demand recovers, and suggests the "commandeering" of unused military bases, mills and factories. He insists an increase in storage capacity is crucial if the government is to avoid reversing the progress it has made in boosting recycling rates.

"We've worked hard to get people to amend lifestyles to embrace recycling and we can't afford to get them out of that habit," Bettison says.

"They will accept that material is stored for a while before being recycled, but they will not accept the material they have put out to be recycled ending up in landfill – it will take five years to build up UK recycling capacity so in the meantime storage is the only answer."

After being let down by a private contractor for its plastic waste collections, Hertfordshire County Council was forced to take a different route to deal with the crisis – it asked residents to buy food and other goods with minimal packaging.

Councillor Derrick Ashley told the St Albans & Harpenden Review: "Residents are... encouraged to reduce or reuse their plastic waste, for example by avoiding products with excessive plastic wrapping or by using tubs for storage."

But as far as Doretta Cocks is concerned, the whole viability of recycling ought to be called into question.

"Should councils continue to collect recycling materials from householders when there is no end market?" she asks.

"I would love a return to weekly collections of general waste, but I doubt councils would consider doing so as they would not want to affect the 'behavioural change' in residents they proudly boast as a result of alternate weekly collections."

Only time will tell whether it comes to that or not. But the prognosis doesn't look promising. Paul White, for one, doesn't foresee any improvement in the situation before Easter – "and as to what happens after that, how long is a piece of string?"

He also points out that UK paper and board mills are severely overstocked, with some announcing they'll be shut for at least three weeks over the Christmas period.

"They've all got finished product coming out of their ears," says White. "But if they can't sell it now, they're not likely to move it too quickly after Christmas, what with January and February being the two slowest months of the year in our industry. There's no doubt about it, the industry is in for a very rough ride."