Is gold the locomotive of precious metals prices? Or does it run on a separate track from other precious metals? And how does it compare with base metals, such as ferrous scrap?

There is little doubt that the lofty price of gold has affected scrap trading. One of the traditional rules of thumb cited in precious metals trading is the silver-to-gold price ratio. During the last 30 to 60 days of 2012, the silver-to-gold price ratio hovered just above 50:1, meaning it would take approximately 50 ounces of silver to equal the price of one ounce of gold. That ratio reached nearly 53:1 in mid-November.

Taken alone, it is a meaningless metric. In historic context, the silver-to-gold ratio throughout the past decade has been anywhere from a high of 83:1 to a low of 31:1. That would indicate that the ratio as of mid-November is roughly in a middle range.

Some observers scoff at the ratio. They maintain that the whole idea of a silver-to-gold ratio is a dated concept, going back to the days when the U.S. government’s currency was based on gold bullion and the mint issued silver certificates in place of dollar bills.

The absolute price of gold was floating in the range of $1,700 to $1,725 per ounce in mid-November, while the price of silver was in the $32 range. During that same time, platinum was selling at $1,537 per ounce, and palladium was in the neighborhood of $600 per ounce.

While recyclers typically hedge each purchase and do not stockpile metals to speculate on the markets, the question of price ratios is more than academic because many of those selling various metals have an eye on prices. Hoarded supplies from small-time generators and jobbers tend to show up for recycling when prices make headlines. Popular press articles trumpeting record prices for gold or platinum have a way of bringing other metals out of storage and onto the market—even if those other materials are not moving in tandem with the record-setter.

Think Small
Bill Rockett, vice president of M&K Recovery Group, North Andover, Mass., says the high price of gold has had a slight impact on prices for other metals. “But it hasn’t made things jump through the roof,” he adds.

He says people who run across precious metals in small volumes have been more aggressive in their pricing and processing demands. M&K’s regular customers, however, conform to the norm, riding each surge and dip in price as part of the normal cycle. “Our regulars are keeping to their business plans,” Rockett says. As a result, M&K has seen no major increase or decrease in the supply of material being shipped to the company for processing.

The scenario is similar at Universal Scrap Metals Inc. in Chicago, where Jack Whalen says he sees a preponderance of silver come through the company’s precious metals department. He says the flow of silver tends to be steady, coming as it does from busy medical facilities processing X-ray film and publishers who still use film for graphics. They are not speculating, he says, rather converting a resource to cash.

“That supply of silver is drying up since everyone is going to digital,” Whalen adds. That said, silver prices in the $32 range have attracted attention.

“Everything is at historic highs,” says the president of another Great Lakes-area metals firm. “Values are up across the board.”

Whalen says, “Every day is a different day. We have several jobbers who buy from the smaller places and sell to us.” Those customers are price sensitive, he says, but most of the larger generators of silver move their scrap material out the door as it is generated.

Some sources say more than 95 percent of all of the silver ever mined has already been consumed. That silver is gone forever, unrecoverable at any price. As virgin, mined supplies dwindle, there is more pressure to draw silver—and other precious metals—from the recycling stream.

The quality of the material in the recycling stream may not be everything a recycler could want, however. Volumes are up, in particular, in the lower grade materials. It seems that any of the top-grade material that was stockpiled was lured off for recycling long ago. However, as supplies got tighter for the top grades, the high value placed on any precious-metals-bearing recyclables made it worth the time and hassle to extract these metals from almost any source.

“The current prices make it viable to sell now because before it was not worth processing,” Whalen says.
 

Other Metals
Even the more prosaic metals—iron, aluminum and copper—are feeling the price pressure. The entire metals market seems to be buoyed by the high prices of gold and other precious metals.

“Ferrous, nonferrous and other metals have had more fluctuations [in pricing] than precious metals,” Rockett says. He points to the considerable volatility seen in pricing for metals such as copper and aluminum.

Yet, he says strong or weak precious metals markets are not necessarily a factor in the price swings of nonferrous materials. “I would not say they are related,” Rockett adds.

Whalen sees a similar situation. Universal does more business in the basic metals and colored metals than it does in precious metals. He sees those base metals reacting more to the price of a particular related commodity than to the sky-high levels of precious metals such as gold.

“We see a lot of copper, aluminum and brass,” Whalen explains. “When the market goes up, they sell off. If copper, for example, drops 40 or 50 cents a pound, they will sit on it.”

Someone with copper will keep an eye on copper prices—not gold or silver prices.

“After a year, if the market is still trading down from its highs, they will trade it off, if for no other reason than sheer space availability,” Whalen says. Machine shops, for instance, might hold copper or brass until there is an uptick in price. But, they can store only so much material because of space restrictions before they have to send it to market. Copper has been all over the map this year, starting in the $3.30-per-pound area, touching $3.90 in late winter, dropping back to the $3.30-to-$3.40 range in the summer and finishing the year somewhat healthier in the $3.50 range.

The copper run-up in March paralleled a rise in the price of gold, which hit highs near $1,800. The October jump in gold prices, again approaching $1,800, did not seem to have as much of an effect on copper the second time around, though copper did bounce one dime at the same time.

The value of the U.S. dollar can make more of a difference in gold and silver prices than in the prices of other metals. In early November, when the dollar hit lows against the Indian rupee, purchases of gold by Indian buyers jumped. India is the world’s largest consumer of gold.

At the same time, gold prices had fallen from October highs in the $1,800-per-ounce range to the low $1,700s and then into the upper $1,600s. If there ever was a “buy” signal for Indian consumers, the lower price of gold and the higher value of the rupee became a beacon for those looking to purchase gold.

Platinum paralleled silver more closely than gold in 2012, with the same run-up in March that most precious metals experienced. It topped off just below $1,700 per ounce before diving to $1,550 per ounce in May and continuing down to less than $1,400 in early summer. By August, platinum still hovered near $1,400 per ounce (with one spike). But the fall saw prices move to $1,700, again before dropping in November to the $1,550 range.

Palladium started 2012 down from its fall 2011 price range above $650 per ounce, dropping below $575. However, it bounced back to $650 in February and traded between $680 and $720 for most of the spring, with some minor exceptions. The price took a quick dive in May, dropping below $600 per ounce and trading near $575 for much of July and August. In September, the price nudged to $700, took a breather, then came back to $675 in early October before continuing to drop to the $590-to-$620 range as November progressed.

While platinum was setting lows in February, palladium was nearing an annual high. Both experienced declines into the summer months, however, and both showed real life, in terms of pricing, in October.

Gold, silver, platinum and palladium all experienced the late summer run-up, even though their industrial uses vary. (Platinum and palladium are used similarly in automotive catalytic converters.)

However, available supplies of recyclable metals fluctuated very little.

Down the Road
“I don’t foresee any softening in the prices of gold, platinum or palladium,” Rockett asks. His outlook for 2013 is that all of the precious metals will fluctuate in roughly the same price ranges that they moved in late in 2012.

“Will they all lose $100 an ounce?” Rockett says. “I’d say no.” He bases his outlook on supply and demand. “The market for precious metals, fundamentally, is economics driven,” he continues.

Rockett notes that there might be a dozen reasons for the price of gold—or any material—to move up or down. People can point to each or any of those factors and be correct in their analysis.

One of those factors is politics. Whalen notes that all metals will move one way or the other in the postelection climate. “Supply and demand plays a big role,” Whalen says, “but other factors like regulations [and] political outlook affect prices.”

Where the price of gold, silver, platinum and palladium go in 2013 is anyone’s guess. Most industry sources say that if they could pick metals prices with any accuracy and consistency, they would be on a beach somewhere sipping umbrella drinks.

For commercial recycling operations, the tried-and-true approach of being conservative in outlook and working the margin game remains the best approach in 2013. While it is fun to overlay charts of copper price movements on gold prices, or to compare silver price movement with that of palladium, the truth is that the market sets commodity-specific prices every morning and closes in the evening at a level specific to that metal. Trying to play a guessing game based on price movement of other commodities is for the speculator—not for the recycler, who is in business for the long-haul.

The author is a contributing editor to Recycling Today based in Cleveland. He can be contacted at curt@curtharler.com.

Electronics recycling has become one of the fastest growing segments of the recycling industry, attracting increased interest from strategic and financial investors. Positive dynamics that point to continued growth and consolidation in the e-cycling industry include:

• Heightened regulatory pressures and legislative support for e-cycling;
• Significant increases in e-scrap volumes driven by the proliferation and shorter lifespan of electronics; and
• Development of an innovative and cost-effective recycling infrastructure.

In light of recent growth and the highly fragmented nature of the industry, electronics recycling companies have become attractive targets for investors. The industry is in the early stages of consolidation, and considerable opportunities exist for new participants to make platform investments or for existing companies to supplement their growth through acquisitions.

Industry Overview
The e-cycling industry consists of companies that provide a variety of services dedicated to the responsible recovery, recycling, refining and remarketing of unwanted electronics. Globally, e-scrap represents the fastest growing municipal waste stream. It is estimated that from 20 million to 50 million metric tons of e-scrap are generated worldwide annually, representing more than 5 percent of all municipal solid waste (up from 3 percent in 2009).

Significant attention has been directed toward the effective management of e-scrap in recent years because of rising concerns about environmental pollution, high and volatile commodity prices and resource scarcity.

According to ABI Research, Oyster Bay, N.Y., global revenue generated from e-cycling is expected to reach $14.7 billion by the end of 2014, up from $5.5 billion in 2009, representing a five-year compounded annual growth rate (CAGR) of 21.7 percent.

While the e-cycling industry spans multiple continents, it remains a highly fragmented sector with up to 1,000 active companies, according to industry estimates. Companies tend to be local or regional, leveraging an understanding of localized market dynamics and supplier relationships. Very few e-cycling companies have established a global reach; however, companies such as Sims Metal Management offer integrated services across multiple regions/countries.

The fragmented nature of the market, along with positive underlying dynamics, makes e-cycling an attractive sector for industry consolidators looking to capitalize on strong organic growth.

Growth Drivers
Positive macro trends are fueling strong secular growth as the industry continues to rebound from the economic downturn. Awareness of the potentially hazardous effects of electronic scrap and the need for efficient and cost-effective disposal solutions are increasing.

The following key drivers are expected to contribute to long-term growth in the e-cycling market.

Heightened regulation and legislation. The e-cycling industry is largely dependent on legislation to act as the primary driver of market momentum. A patchwork of e-scrap legislation and mandated product take-back programs across different regions throughout the world has placed markets at varying stages of development. Europe maintains the strictest legislation related to the disposal of sensitive materials, which can largely be attributed to the Waste Electrical and Electronic Equipment (WEEE) Directive and the Restriction of Hazardous Substances (RoHS) Directive. These directives provide for producer responsibility for electronics and impose restrictions on the use of certain hazardous substances in electronic equipment. While this legislation has been well-received, studies indicate continued demand for enhanced regulatory reform that will drive further e-cycling efforts throughout Europe.

Outside of Europe, regulations continue to develop and change quickly in many countries. In most cases, the scope of these regulations varies. For example, the U.S. currently does not have a federal mandate to recycle electronics. However, as of October 2012, 25 states had enacted electronics recycling laws, according to the U.S. Environmental Protection Agency (EPA). Meanwhile, countries such as Japan, South Korea and Taiwan have made fast inroads into this sector.

Regardless of the region, the general global consensus is that the recent increase in the implementation of new and existing legislation for e-scrap will continue. This sentiment is expected to lead to a heightened regulatory environment that will largely determine the pace of market development in this sector. For the time being, the current diversity of legislation across regions will favor larger industry players that have the necessary resources to manage the various regulatory complexities.

Increase in e-scrap volumes. E-scrap volumes are poised for continued growth in light of the proliferation of new electronic devices and the increasing rate of product obsolescence. A strong indicator of this dynamic is the rise in global sales of electronics. According to Stamford, Conn.-based Gartner Inc., a prominent technology research firm, global unit sales of computers, tablets and televisions are up approximately 15 percent, 430 percent and 3 percent, respectively, from 2010 to 2012, while global cell phone sales were up by nearly 40 percent in 2011 alone.

In addition to the increase in volumes, the amount of e-scrap actually recycled remains a limited percentage of the total e-scrap generated, providing additional opportunity for growth. The recycling rate for electronics in the U.S. was only 19 percent in 2010, according to the EPA, up from 13 percent in 2008.

Developing recycling infrastructure. The e-cycling sector is a dynamic market in which services and solutions are constantly evolving. Top e-cycling providers are actively investing in collection and processing techniques that provide additional value to customers.

E-cycling companies also are increasing attention on, and investment in, obtaining industry certifications. Customers have begun demanding these certifications (e.g., e-Stewards Standard, Responsible Recycling Practices [R2], IDC G.R.A.D.E. and ISO 14001, etc.) from their e-cycling providers. Most customers—especially financial institutions and government agencies—want assurances that sensitive information stored on hard drives is not exploited by e-cyclers. In addition, customers want to ensure their electronics are being handled in a socially and environmentally responsible way.

Finally, electronics manufacturers are establishing e-cycling programs that promote the continued development of e-cycling and improved infrastructure. For example, Samsung Electronics promotes take-back systems to comply with global recycling laws and is expanding its voluntary take-back programs to reduce its environmental impact through recycling.

M&A Trends
Recycling M&A volume was relatively robust in Europe and Asia from 2000 to 2008; however, industry consolidation slowed from 2008 to 2010 as a result of weakening demand for e-cycling services and general economic uncertainty. With the recent market recovery, acquisition activity in the sector has increased globally with significant interest coming from strategic acquirers. Transaction volume is expected to be higher still in 2013, driven by expected tax regulation changes, the strengthening balance sheets of recycling service providers and improving debt markets for financial investors.

Transaction multiples measured as a multiple of enterprise value to LTM EBITDA (the rate of change in earnings before interest, taxes and amortization in the last 12 months compared with the prior 12 months) have been somewhat volatile in recent quarters. It is anticipated that transaction multiples will be reinforced during the next several quarters by the need for strategic and financial acquirers to deploy capital. Premium multiples will be paid for attractive assets in high growth segments.

Historically, e-cycling transaction volume has represented a small portion of overall M&A activity in the recycling industry. While recent increases in e-cycling M&A have come from larger industry consolidators and new entrants diversifying existing service offerings, the universe of potential acquirers for e-cycling businesses spans multiple sectors with varying degrees of strategic fit. For example, a competency in electronic product collection is attractive to a firm seeking to expand or acquire capabilities in reverse logistics. However, in instances where the e-cycler is reselling parts or remanufactured products, they also must understand forward logistics capabilities, such as customer service, merchandising and retail elements relating to the target’s customer base.

Several categories of strategic acquirers likely will continue acquisition activity in the e-cycling sector, including diversified waste and recycling service providers, electronic manufacturing service providers, recycling service providers and companies that provide technology life-cycle management and logistics.

Arrow Electronics Inc., headquartered in Englewood, Colo., has been one of the more active buyers in the sector, with the acquisition of four U.S.-based e-cycling companies and one European company in the past three years. As a distributor and reverse logistics provider for IT products, Arrow can leverage these e-cycling assets to provide coordinated, end-to-end services to its clients.

This is one example of an acquisition strategy that is expected to stimulate interest from other companies in the sector hoping to stay competitive.

A lack of e-cycling targets with reasonable scale has limited acquisition activity by private equity firms; however, recent consolidation has created an opportunity for investment in the sector. Further, private equity investors could consider buying or building a diversified services firm with an e-cycling and/or reverse logistics service offering, gaining exposure to the sector while increasing the overall value added to the end customer.

Complementing such building interest in M&A activity from private equity investors, we expect venture capital attention on the e-cycling sector to continue in light of the potential for significant industry growth and the improving visibility for near-term, profitable exits.

E-cycling is a fast-growing sector that should continue to attract healthy interest from domestic and foreign acquirers. Strategic and financial investors have access to capital, and competition for attractive assets will support healthy valuations for willing sellers. It is expected that favorable long-term demand prospects, supported by government regulation, significant increases in e-scrap volumes and further investment in the recycling ecosystem, will continue to drive substantial M&A activity in 2013 and beyond.

The author is a senior member of Chicago-based Lincoln International’s Business Services Group. He leads or assists in leading deal teams and is active in marketing the firm’s services. He also leads Lincoln International’s analyst recruiting activities. He can be contacted at smehta@lincolninternational.com.

High above the confluence of the Little Sioux and Ocheyedan Rivers, Thunder Bridge leads to the rural hub of Spencer, Iowa, and its historic streetscape. A beloved and essential natural resource for Clay County residents, the Little Sioux meanders through Spencer and, downstream, cuts across vast grain fields and rolling countryside as part of the Missouri River watershed.

Spencer’s City Manager Bob Fagen is busy working on plans to clean up the Little Sioux, a project that will become part of Spencer’s new EMS, or environmental management system.

“Part of our EMS plan will include an objective to clean up our rivers. It’s something we’ve always wanted to do. Even though they don’t run through our landfill, I believe it’s a priority and creates a positive environmental impact, not just in our city, but [in] the entire region,” Fagen says.

By embracing Iowa’s voluntary EMS law, Spencer joins more than two hundred communities in the state already operating under EMS with the added benefit of unhooking from the state’s waste diversion program with its limitations, regulations and penalties.

“EMS is a phenomenal tool for the city of Spencer that supports best environmental practices and also increases operational efficiencies,” Fagen adds.

The Problem
Cass County’s Environmental Control Director Wendy Wittrock experienced the limitations of waste diversion before making the switch to EMS.

“We knew back in the ’90s that the state’s diversion system requiring an annual 25 percent waste-reduction goal didn’t make sense, especially for smaller communities,” Wittrock says. “It wasn’t fair because we have limited control over what goes in our landfills. It also didn’t allow us to get credit for all the other good environmental programs and landfill management improvements that we were making.”

From the smallest agencies in rural towns like Atlantic and Pella to the sprawling suburbs and cities of Des Moines and Cedar Rapids, waste diversion requirements were dismissed as the sole measurement of a solid waste agency’s performance for a variety of reasons from those who have their boots on the ground. While waste reduction regulations had been good back in the ’90s, the system was showing its age.

Tom Hadden, executive director of Des Moines’ Metro Waste Authority, the largest solid waste agency in the state, is another EMS booster. “Diversion was starting to go stale because most of the low-hanging fruit of waste reduction had long ago been picked. It wasn’t unusual for landfill managers who couldn’t make the goal to just drop out and pay the penalties. Besides, it’s a kind of goofy system, because waste diversion is based on the landfill meeting goals that we [landfill managers] can’t control.”

Marie Devries, administrator for Cedar Rapids/Linn County Solid Waste Authority, an EMS designated agency, says, “Waste diversion alone was always something of a hit or miss. It didn’t take into account the entire waste-stream cycle and all its environmental impacts.”

Sara Bixby directs the rural South Central Solid Waste Agency. She participated in the early EMS committee work with state regulators. “EMS is a chance for us to take the next step,” Bixby says.

When state regulators took a good long look into the future, they came to the same conclusions as industry leaders in Iowa. “Instead of only looking at the waste diversion metric—disposal management—as the primary driver, we needed to start looking at resource management, because solid waste agencies and their interaction with the environment extend way beyond just putting trash in a landfill,” says Brian Tormey, chief of the Land Quality Bureau, Iowa Department of Natural Resources (DNR).

The Solution
The move to EMS began after Tormey vetted a white paper with industry members. Both regulators and solid waste managers agreed with the general premise that waste diversion wasn’t sustainable and committed to work together to find a solution.

Eventually, they discovered that an entirely new wheel didn’t have to be created because ISO 14000 was already in use by other industries and businesses. ISO-14000 is the foundation for an environmental management system.

The committee outlined the basic elements of EMS following the general ISO 14000 guidelines, focusing on six environmental areas from recycling and water quality improvements to greenhouse gases. It is intended to be a “holistic” approach to reducing waste based on continuous, small improvements in those environmental areas identified as controllable and measurable.

An alternative to waste diversion, EMS required changes in some Iowa regulations and laws. Therefore, the working committee reached out to State Rep. Donovan Olson, who was familiar with solid waste issues.

EMS Innovators
As a member of the Boone County Board of Supervisors, Olson experienced firsthand how easy it was for that county’s solid waste agency to meet diversion goals simply by taking credit for reductions at the Ames Recovery plant that burns solid waste. Even though the Boone agency was very involved in recycling, they could have stopped recycling and their other good environmental programs and still met their reduction goals.

“Conversely, I learned that other landfills were doing everything they could to recycle, reduce and divert waste, but couldn’t meet their reduction goals for a variety of reasons beyond their control,” Olson says.

After meeting with Tormey and the solid waste industry representatives on the committee, Olson says he recognized that EMS had the potential to drive innovation and creativity. “That’s when I decided to make EMS the focus of my energies. We began drafting a new EMS law together,” says Olson, who sponsored the EMS legislation.

Beyond Diversion
Iowa’s EMS law was designed to encourage responsible environmental management and solid waste disposal. It is a voluntary, nonregulatory approach. Designated EMS participants are allowed to set aside the waste reduction regulations and design activities and programs based on their specific community needs and goals. They also may qualify for financial assistance to implement their plans.

In 2008, the Iowa legislature unanimously passed HF 2570, also known as the EMS Law, that uses a radically different metric for environmental performance. Instead of continuing to strive only to meet the state-set landfill diversion goals, agencies designated as environmental management systems (EMS) set their own local environmental goals and measured performance in six areas.

Using a set of EMS management practices, solid waste agencies demonstrate regulatory compliance while identifying and engaging in activities that reduce environmental impacts and improve operational efficiencies through continuous and measurable improvement.

The DNR director also named a nine-member advisory council to develop the processes to implement the new EMS program and a two-year pilot phase with six participating agencies ranging from the smallest (less than 10,000 tons per year managed) to the largest (more than 550,000 tons per year managed). It also provided funding to pilot communities to implement their EMS programs.

Friends with Benefits
EMS benefits extend well beyond improved environmental compliance. DNR and the six EMS pilot solid waste agencies documented reduced environmental risks and employee accidents, increased operational efficiencies and conservation of natural resources as well as improved employee morale. By opting into EMS, solid waste agencies also can opt out of some regulations and penalties.

DNR also helps solid waste agencies start an EMS program by providing fast-start grants ($20,000), free training and software, webinars and on-site consultants. Of the state support given to EMS designated agencies, “the most important is providing them with an experienced EMS outside consultant,” Tormey says.

The language, metrics, planning and implementation of an EMS program can be daunting. “The advisory committee hired an EMS consultant firm, Gresham Smith and Partners (GS&P), to educate us,” Tormey adds.

A Kick Start
Starting an EMS program includes the plan, do, check and act cycle. EMS pilot consultant Laura Fiffick recommends starting small because the metrics can be challenging. “Small is really the way to go in the beginning,” she says. “However, you can’t shortchange the metrics, which are probably the biggest pains of the system, but that’s how you know you are doing better,” Fiffick adds.

“The first year can be overwhelming,” Wittrock says, “but now that we’re in our third year, EMS has proven to be a far better environmental management system for our community, where we are now getting credit for all the good environmental improvements that we are making. We now know what works based on the numbers.”

After a successful pilot project, EMS is now being offered to all solid waste agencies and permitted landfills. Iowa has chosen to take the more cautious approach, growing slowly so that each EMS designated agency is given the time and attention it requires before adding another to the new system.

Iowa’s solid waste management agencies’ creative and effective EMS programs ranged from “no-idle” policies that improved air quality in Cedar Rapids to attaining a near zero-waste household hazardous waste facility in Des Moines.

The author is a freelance writer based in Iowa and can be contacted at davisbeverly42@gmail.com.

Elemental Success
Laura Fiffick, an EMS consultant, provides advice for communities considering such an approach at www.RecyclingToday.com/rt0113-municipal-recycling-focus.aspx.

The use of plastic packaging is popular with many industries, including produce, dairy, pet care and fast food, making it prevalent in the waste stream. However, up until recently, only the low-hanging fruit, such as PET (polyethylene terephthalate) beverage containers, HDPE (high-density polyethylene) natural milk jugs and colored detergent and shampoo bottles, has been collected for processing.

Having ignored all other plastics for so long, recycling programs and residents are struggling to find ways to divert “other” plastics from landfills. While significant progress has made, much remains to be done, most importantly establishing an industry-accepted set of specifications.

Looking back on the last decade, we can see the evolution of the waste handling infrastructure in the United States. Maximizing diversion rates for recyclables from the postconsumer waste stream has yielded attractive dividends to companies that own or operate material recovery facilities (MRFs). The introduction of single-stream recycling has helped to increase participation among consumers.

Residents have become more interested in recycling nonbottle plastics, and these containers are showing up at MRFs and drop-off locations around the country. It is a logical progression, and these items are sometimes included in curbside programs, but there has yet to be an industry-wide change. While many MRFs can remove nonbottle plastics from PET and HDPE bottles, which have clearly defined industry accepted specifications, many MRFs vary widely in how they deal with “other” plastics.

The trend in handling these other plastics, commonly referred to as “bulky rigids” and “3 through 7,” has been to commingle them, selling the mixed plastic bale to the highest bidder. This resulted in bales that lacked consistency from one MRF to another, leading to confusion among buyers and processors. Most MRF operators have learned through trial and error to determine the mixture that yields the best return and keeps buyers interested in their baled mixed plastics every month.

Brokers often serve as the conduit between processor and producer, sharing information they obtain from consuming mills about what they consider valuable and what is undesirable. Companies like Universal Commodity Services Inc. (UCS) of Brooklyn, N.Y., are doing just that. With two specification sheets published online at www.ucsincny.com/ucs/specification-sheets, UCS has successfully set up pilot programs and guided MRFs on ways to improve their quality, facilitating year-round movement of these mixed plastics bales.

Many communities have MRFs equipped to process nonbottle plastics. However, without a standardized specification, communities are hesitant to encourage residents to recycle bulky rigids.

Grade Standardization
Efforts are finally converging between industry leaders and trade associations to channel resources toward defining a set of industry-accepted specifications for nonbottle mixed plastics. The Institute of Scrap Recycling Industries Inc.’s (ISRI’s) Plastic Council has teamed up with the Association of Postconsumer Plastic Recyclers (APR) to study bale composition in an effort to standardize the grade and publish it in ISRI’s “Scrap Specifications Circular.” This can only occur after an in-depth analysis, debate and ISRI board approval. By having industry veterans such as ReCommunity, a MRF operator, and buyers of mixed plastics, such as UCS, provide input on the specs, real industry knowledge and experience is sure to be incorporated.

Varying equipment configurations at MRFs and the many different plastic items being recycled at the curb can make specifications for mixed plastics confusing. To simplify grading, many veteran operators in the industry have successfully adopted the following approach. First, they draw a distinction between flexible packaging, such as grocery film, and rigid packaging containers. Once a system for removing film is in place, the MRF distinguishes between bulky rigid plastics (like toys, buckets, totes, crates, lawn furniture) and small plastic containers (such as tubs, lids and clam shells). The former, MRP (mixed rigid plastics), are commonly removed during the presort process. The latter, SPC (small plastic containers), travel along the conveyor system and down the sort line at the MRF.

A, B and C grades distinguish bale quality and value of MRP and SPC. Bales with glass have no value in light of their low yield and lack of demand. MRP and SPC with excessive levels (10 to 15 percent) of flexible packaging (grocery bags) and fiber are considered Grade C. Grade C has limited demand, and anyone producing MRP/SPC is encouraged to strive to produce better quality.

Grade B contains no fiber and 5 to 10 percent undesirable components, which include film and some low-value plastic components (VHS tapes, audio cassettes, PVC (polyvinyl chloride, PET thin trays, PET microwave trays, agricultural pots/trays). This grade has moderate demand, though prices are more sensitive to market conditions.

MRP and SPC Grade A contain no noticeable glass/metal/fiber contamination and less than 5 percent undesirable plastic components. The only way to produce A quality material is through a positive sort. It’s composed of predominantly HDPE and PP (polypropylene) with some PS (polystyrene) and PET. White HDPE containers with heat shrunk film sleeves are a common item that adds value to SPC. Optical sorting machines are unable to sort these sleeved HDPE bottles as HDPE mixed color, and the material ends up in the MRF’s residual stream or in SPC.

Determining Value
Value is based on yield and labor. A bale with bigger pieces, less residue and no noticeable contaminants always will command a higher price, as a processor can produce a higher yield and use less labor. Processors compete more aggressively on clean MRP because it is less of a quality risk. As well, clean MRP can be converted more quickly, resulting in quicker cash turnover than lower grades.

Color also plays a role. Bales with more black are considered lower value, even if they’re clean and uniform. The regrind they yield is of lower value to end users in light of the limited applications for black plastics.

Facilities capable of producing separate MRP and SPC grades typically benefit in the form of higher prices and steady movement, regardless of the market.

Plants that commingle their MRP and SPC into a single bale are limited to an MRP-B grade price. Prices are at least 2 cents to 4 cents per pound higher for Grade A than Grade B and are less affected by the market, which can be described as seasonal. Historically, as the winter approaches, demand declines and supply stays constant, leading to a softening of prices between November and March.

MRP and SPC contain plastics well suited for consumption by domestic and foreign mills. These factories demand a feedstock of consistent quality to facilitate smooth operation. Plants that sort, wash and grind mixed plastics value consistency as it enables them to maintain high throughput to efficiently produce high-quality, clean regrind. Compounders demand clean, uniform regrind to make high-quality reprocessed pellets. End users such as injection molders must have good repro pellets to blend with virgin to produce an end product that meets their high-quality standards. All parties in the supply chain benefit from a uniform feedstock (MRP/SPC), enabling production of a sustainable, high-quality end product from postconsumer resin.

The concept of recycling has existed as long as waste itself, going back to ancient times. While we have come a long way over the years, too many components of our waste stream still are bound for the landfill. Despite our progress, we still have a long way to go before claiming to have maximized diversion. It takes the ingenuity and commitment of industry, commerce and the general public to achieve a sustainable existence. The efforts of many in the recycling industry to keep rigid plastics and small plastic containers out of landfills is the only way zero-waste can one day become reality.

The author is president of Universal Commodity Services Inc., with locations in Charlotte, N.C., and Brooklyn, N.Y. He can be reached at ibeylin@ucsincny.com.
 

Igor Beylin of Universal Commodity Services discusses sorting 3 through 7 plastics and small plastic containers (SPC) in an interview with Recycling Today’s Kristin Smith at www.RecyclingToday.com/paper-recycling-conference-interview-igor-beylin.aspx.