Waste.net strives to assist you with determining what are the facts about what is recyclable and what things are not recyclable and provide an overview of the sustainable and subsidized Waste Economy and the fundamentals and economics of operating a recycling venture.
Dispelling a Myth
We would like to address the generally accepted false statement that we hear repeated time and again that
"IT IS NOT RECYCLABLE".
The fact is, that all materials are virtually
100% recyclable
and by following the
4 Rs strategy
we can achieve a zero waste society.
Lean more about
Waste Materials Markets.
Is there a market ?
As long as there is manufacturing of new products then there is always a
market
demand for secondary commodities.
Provided that recycled materials can meet the grades and specifications acceptable as secondary commodities then they can be
fed directly into the manufacturing stream to
replace
or integrate with virgin materials.
In a new automobile, you can not tell what percentage of steel is recycled or virgin, with an
aluminum soft drink can, you are not able to determine what percentage is recycled or virgin.
The manufacturer will use whichever material is available and is the most economically beneficial.
Recycling 101
During the 1980's and 1990's a program was developed to pass along some of the fundamentals of the recycling industry.
This service called
Recycling 101
was offered as a method to provide a reference to
entrepreneurs and recycling business operators.
We have shared some of the key points of that program here on our website
to give you some context of the history and current recycling industry status.
Recycling Fundamentals
Several fragmented
Recycling industry segments
exist that share three basic fundamental guiding factors that direct the business of Recycling.
Learning
Identification
and understanding
Conversion
and
Logistics
are basic skills of a recycling entrepreneur.
An experienced recycler should be able to identify a waste material, assess what is required to convert the raw waste into
a secondary commodity that meets the
grade
and specification required by the
market
and understand the economics and logistics
to get the material delivered.
Waste Stream Identification
To identify waste or scrap materials you require the ability to understand what the material is made of
and where in the manufacturing waste stream it occurs.
Performing a
waste audit
you may determine the quantity and types of materials contained in a particular waste stream.
Conversion of Scrap
Waste Conversion demands an understanding of what it takes to Convert the
finite
raw waste or scrap material into the required
grade and specification
of a marketable secondary commodity (a circular commodity). Whether it is just
sorting
and packaging or if further
processing
is required.
Grades and Specifications
To gain an understanding of the grades and specifications of secondary commodities that are
generated from a wide spectrum of waste materials you may browse the specific
recycling industry segment
that is of interest to you.
The
Recycling 101
sessions also provide exposure to the major sectors of the recycling industry.
Valuation of recyclables is determined by the type of material and its quality, to optimize the
value
you may yield from a recycling stream
in many cases it is dependant on your grading skills.
Over in ScrapIndex.net there is a list of categories that will link you to the
details
of the specifications by the grade.
Recycling Logistics
The main activities of a recycling operation are focused around the efficiency of freight and material handling.
The collection of scrap, waste materials or by-products and undertaking the material handling through
the conversion process to produce a quality specification of commodity.
This process may include a variety of manual or automated segregation and preparation technologies.
Reverse Distribution
Unlike the standard wholesale to retail distribution models,
the recycling industry operates a reverse distribution system or a LTL to TL Model.
This describes the method of collecting or accumulating small quantity or LTL (less than truck load) materials
and consolidate into TL (truck loads) for transport to markets worldwide.
Segregation
The art of sorting or converting of waste materials into a secondary commodity entails a large component of
the material handling efforts.
The preferred method of acquiring
source separated
scrap is through a variety of recycling industry
Participants,
this segregation method results in obtaining the best quality materials with the least effort.
Alternatively
central separation
of wastes has more complex ramifications and handling expense.
Typically the segregation of recyclables falls into one or more of the 6 common
methods,
manual sorting, mechanical separation, thermal processing, chemical processing and electro-recovery and
Bio-Refining.
Sustainable Waste Economics
The traditional recycling industry has been driven by a self sustainable economic model where the
current market values of the recovered commodities exceed the costs incurred for freight and material handling.
This perpetual entrepreneurial for profit business model functions well providing that
market access is not interrupted or the market price for commodities declines below a profitable level.
Subsidized Waste Economics
When current market values for recyclable materials are less than the cost of freight and material handling,
then some sort of subsidy must be applied to justify the economics of any waste diversion efforts.
Tip Fees
Tip Fees are commonly applied to cover the costs of collection and processing of low valued recyclable materials.
This is typically a fee charged to the generator of the waste materials to counterbalance the costs of waste diversion
as an alternative to disposal.
Waste Diversion Offsets
With the proliferation of greater quantities of complex low valued waste materials
some sort of subsidy program needs to be established as a solution to ensure
the capture of potentially toxic elements and to eliminate their introduction into
the disposal stream and ultimately their release into the atmosphere.
Waste Diversion revenue streams can be established to account for the environment benefits of recycling
in the form of
offset credits,
grants and
in todays socially conscious world some variation of crowd funding or donation programs.
Recycling Economics
The economic factors of secondary commodities markets are diametrically opposed to traditional economic theory,
or to say it differently, the economics are in reverse or upside down.
Typical manufacturing businesses invest in labor and capital expenditure to turn raw materials into
value added complex manufactured products,
while the recycling industry invests in labor and capital expenditure to de-manufacturing complex products and turn them
back into lower valued raw materials.
Value Chain
A recycler has very little latitude in the sale price of their products,
the value is largely determined by the current worldwide commodity markets.
The total freight and material handling costs incurred by each recycling operation
minus the current commodity market value will determine the incoming value of scrap materials landed at their door.
The over-the-scale purchase price paid by a scrap dealer or recycling depot will fluctuate
dependant upon worldwide commodity values and local industry
Market Dynamics.
Companies that provide collection or processing of recyclable materials as a contractor
charge a fee for this service and those fees typically are not directly connected to the
commodity values.
The Informal Economy
One key fundamental factor in the traditional waste recycling industry, that is often overlooked,
is the service provided by the informal economy.
This informal economy sector tends to be a less visible group since they are typically
individuals
that operate independently and that are largely responsible for the conservation, salvage and upgrading of
discarded or excess materials.
Due to the vast array of individuals, who are not easily identifiable, that operate within this informal economic sector
the importance of their contributions has been largely ignored in waste stream assessment, academic research,
governmental regulatory planning and corporate business strategies for the circular economy.
In some countries we see the operation of a highly organized and well established networks within the informal economy.
Participants in the Informal Economy achieve a critical function that retrieves material out of the waste stream
that was destined for end of life oblivion (disposal)
and rejuvenates or introduces them back into the beginning stages of a new life cycle.
Some refer to this critical step as Reanimation.
These skilled and knowledgeable individuals provide an essential, legal, legitimate service that
applies the human touch to determine how to best extract value from each item.
Experienced individuals have the ability and flexibility to assess the path for collection, dismantling
and segregation of materials into the vital raw feedstocks for the repair,
refurbishing
and recycling industries.
Most central separation waste treatment processes destroy the opportunity to capture the value added items.
Disruption or disturbing the flow of source separated materials in the Informal Economy
limits the ability to achieve true sustainability in the circular economy.
A healthy and brisk trade within the Informal Economy fosters the potential development and specialization of
custom and unique upcycled markets.
The combination of the flow of materials generated by the individual reanimators becomes the life line of
raw feedstocks that fuel the waste economy.
Once an article has been reanimated it begins it journy on its extended or new life cycle.
The reanimating individuals are just the tip of the pyramid of a network or community of cottage industries,
artisans and skilled tradespeople that make up the
reuse
repair, refurbishing and repurpose industry.
These people tend to specialize in particular items or groups of materials and each of the participants
contribute to moving the recovered articles threw the value chain.
Economic Risks
If you wish to speculate on secondary commodities it may not be wise to invest in operational infrastructure.
If your going to invest in your operations and capital expenditure then you should try to limit your risk and exposure.
Establish a business module based on a turn over margin
A recycling operation should maintain the same margin on each ton handled, regardless if current commodity market value
is $100/ton or $1/ton or even with a negative value in the event you are required to pay $ 100/ton net cost.
Liability Transfer
Transfer of Liability - many inexperienced recyclers make the mistake of receiving materials for free. What you are doing is in
fact transferring (or you are accepting) the liability for the end of life management of the goods.
The responsibility to insure the
ultimate disposition
of all materials handled in a environmentally sustainable method falls upon the recycler.
The practice of selective salvage or cherry picking certain items and abandoning the balance of the materials is
not a responsible solution and not acceptable.
The intentional or unintended behavior of fringe radical individuals calling themselves recyclers
has resulted in a taint across the whole industry.
Professional recyclers pride themselves on
responsible practices and are long standing champions of the environment.
Technology Trap
Technology
guys tend to fool themselves into thinking that their process makes them a profit.
If you are in the secondary commodity business, all of the profit is between the buying and selling of the commodity
and the processing or machinery is just a cost.
They eventually realize that the one person in the room with no windows that buys and sells every pound of material is the only one
that can insure that there is a profit margin, they recognize that they are actually in the commodity trading business.
Recycling Start-Ups
One recurring thing the we have seen from the Recycling 101 clients,
new ventures had a strong founding idea and then they put blinders on in the early execution steps of organization.
Several new operations approached us after they had committed multiple million dollars in capital expenditure
but had not committed any time, money or effort on the commodity market side
(the primary driver) of their business.
One person with a small budget may start trading the commodity they are involved with and
they can quickly gain an understanding and establish either profitability or a clear path to profitability or
alternatively realize or expose potential flaws in their business assumptions.
This approach can save all the time, effort and money of a catastrophic business failure.
Future Trends
Evolution of technologies and sophisticated manufacturing techniques that result in
producing more complex materials that comprise of multi layered items
with less and less quantity of raw materials that have increasing specialized properties and performance.
Many of the materials may be exotic, difficult to obtain and possess various levels of
residual
toxicity.
Environmentally Sustainable social altitudes shift to a responsible focus on
conserving resources or not releasing potential toxins to run wild in the environment.
The development of precision recovery processes that capture small amounts of raw materials or even trace elements
from waste streams is expected.
Support Recycling
We encourage everyone to support the thousands of businesses and hard working men & women that are daily, diligently
buying, selling, processing and converting
scrap and waste materials to preserve our planets valuable resources.
Often unrecognized and un-thanked your contribution to society will be appreciated by future generations.
With Skill, Knowledge and Experience of physical recycling
fundamentals
and endurance of
economic
cycles, recyclers are indeed a unique breed.
Source Separation Market Infrastructure
The traditional legacy scrap recycling industry has been established and driven by a
natural economic value chain under which source separation infrastructure may be maintained.
In order to establish and maintain a source separation market infrastructure,
a key principal BUYER must be present.
In the case where
centralized mills
have a distinct need for the raw materials, a free market
economic value chain is rapidly established and maintained.
The waste resource recovery streams tend to follow a
central separation
path and produce a variety of default outputs that may or may not have strong economic market value.
In light of a changing regulatory environment and the realization of the need for establishing a
reliable strategic supply chain in order to maintain resilient raw materials sustainability,
a fresh look at our market infrastructure is required.
One fundamental approach may be to establish a key principal BUYER for each or any of the designated raw commodities targeted.
This approach may be applied to any strategic material including
critical minerals
and rare earths.
If the economic stimulus and strategic deployment of the principal BUYER is strong enough it may result in
the rapid establishment of a sustainable free market Source Separation collection Infrastructure.
A network of local or regional depots or collection points may act to consolidate
the ongoing accumulation of any specified material.
The establishment of a proper economic incentive may unleash an unquantifiable entrepreneurial force
that results in securing a supply flow of any source separated recycled or recovered material.
Closed Loop
Closed Loop Recycling or the concept of
manufacturing widgets from recycled material poses some interesting challenges. It is difficult to design, manufacture and market
any widget from new material with a stable supply of raw materials. By adding the complexity of restricting your supply to
finite
recycled material you add a whole new level of risk in your supply chain.
The dilemma is that recycled commodities are finite, if you are successful in marketing your widgets you will create competition
and the cheap supply of raw materials will be effected or the supply of raw material may disappear all together.
Finite Commodity
Recyclable materials are finite in nature, unlike virgin materials that have the ability
to increase production and supply with an increase in demand.
There is only so much scrap in circulation and
as demand increases the access to the limited supply drives competition and prices
and ultimately depletes the availability of supply.
