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The future of recycling David Palmer-Jones CEO, SITA UK 23/05/2017 The future of recycling 23/05/2017 I SITA UK I 2 The future of recycling > Asian growth fuels demand for materials > Competition for materials increase values > Commodity prices mirror GDP / virgin prices > Industry and Government recognise resource efficiency and scarcity issues 23/05/2017 I SITA UK I 3 Hundred million tons > Global resource extraction 900 800 700 600 500 400 300 200 100 0 Mineral ores + 200% Fossil fuels + 81% Biomass + 68% Non-metallic minerals + 114% 1980 2002 2020 The future of recycling > UK still in infancy - 45 million tonnes still going to landfill, only 24 million tonnes is active waste. > Municipal targets 50% in England The average is 38%, resulting in a 12% short fall of 2 million tonnes > Industrial and Commercial recycling driven by cost, resulting in 5 million tonnes shortfall > Need new infrastructure and investment to extract value, between £0.5 to £0.7 billion > Zero waste = three per cent landfill, energy and recycling 23/05/2017 I SITA UK I 4 The future of recycling > Infrastructure develops, resulting in more volumes recycled, resulting in the need for markets, leading to export > Lack of reprocessors in UK force export alternative > China develops local recycling market reducing demand for imports > Lack of reprocessing capacity in the UK and demand from Asia leads to a drop in commodity prices and higher quality demands 23/05/2017 I SITA UK I 5 The future of recycling > Industry recognises resource agenda – business sustainability > Voluntary producer responsibility deals become key to cost control and material capture Examples > Tesco reverse vending > Car manufacturers owning stakes in metal reprocessors (Renault) 23/05/2017 I SITA UK I 6 The future of recycling Mattresses > Legislative and fiscal drivers (i.e. landfill tax) create new markets > Problem material becomes valuable resource > Large market disposed of per annum > Cost increasing for disposal with tax > Consistent supply of valuable materials - such as wood, textiles, metal results in a positive environmental impact 23/05/2017 I SITA UK I 7 The future of recycling Street sweeping > Landfill tax creates a new market > Low grade material becomes of value > Recycled materials reused in construction > Rare earth metals? 23/05/2017 I SITA UK I 8 The future of recycling ELP diesel > Market led problems - one million tonnes to landfill > Increasing cost - landfill tax burden > Environmental benefits - 20% lower CO2 emissions > Synergy with SITA UK’s business - ‘natural hedge’ > Local reprocessing - 23/05/2017 ‘waste to product’ I SITA UK I 9 The future of recycling Conclusions > Resource extraction growth and increased scarcity resulting in the value of secondary raw materials increasing > Recycling moves from a political/environmental ideal to integral to sustainable growth > From ‘laissez faire’ to interventionist – Government begins to aid the circular economy > Minimisation and re-use strategies begin with the re-engineering of products leading to the creation of more easily repaired and recycled materials > Cultural acceptance increases as ‘recycling generation’ grows up 23/05/2017 I SITA UK I 10 The future of recycling Conclusions > Industry reacts in ‘resource wars’ moving to ‘closed loop’ take back schemes > Commodity values intrinsically linked to economic volatility increasing risk profile for market / industry > Speed of infrastructure development influences speed of landfill diversion – planning hurdle > Active private sector investment needed to develop this new infrastructure - but limited > Export demand diminishes as Asia internalises own recyclables – 70% by 2015? > Government react too late to create stimulus for development of UK / European reprocessing industry > Recyclers move up the value chain to refill the export loss producing higher grade base materials 23/05/2017 I SITA UK I 11