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No quick fix to impact of China's waste ban that has sucked the profits out of recycling, operators say

Friday 1st June 2018

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Waste Management NZ, the nation's biggest such company, says there isn't a quick fix for the impact of Chinese restrictions on waste imports after the government announced a task force to respond to a move that operators say has sucked the profits out of recycling.

"Yes there is a range of options for mid to longer term and we are working on some of these. In the immediate term it will remain a very challenging situation where supply exceeds demand for recyclable commodities," said Tom Nickels, Waste Management managing director. "Everyone is a fan of recycling, however, many are not aware of the costs involved or are prepared to pay for it."

Waste Management, which has been owned by Beijing Capital since 2014, competes with EnviroNZ, the No. 2 sized company in New Zealand's waste market. Both have recycling operations. 

Associate Environment Minister Eugenie Sage yesterday announced a taskforce in the Ministry for the Environment to respond to China's move, which has seen a plunge in the value of recyclable waste. New Zealand had been sending 15 million kilograms of waste a year to China, mainly of mixed paper and plastics, and the waste has now been diverted to processors in Indonesia, Malaysia and Thailand.

NZ Customs Service figures show the value of plastic waste sent to China in the first quarter of 2018 fell to $103,177 from $1.7 million a year earlier. The volume fell to 125,904 kilograms from 2.7 million kgs. 

Nickels said Waste Management has been in talks with the ministry and "we support the associate minister’s proposal to set up the task force, so that we can input into determining the viable options for the future and assist in planning the best possible outcomes for New Zealand," he said. 

EnviroNZ, which is owned by billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings, posted its 2017 accounts with the Companies Office yesterday. They show profit before items fell to $9.9 million from $11.2 million but sales climbed to $262 million from $246 million. A spokeswoman said the company doesn't comment on its financial results.

"In regard to China’s ban on foreign waste, we are in consultation with MfE regarding providing a response to this situation," the company said. 

China's restrictions on imports of recyclable waste has seen mixed plastic and paper materials stockpiled in New Zealand that aren't economic to process. Sage said that has affected smaller operators who don't have access to alternative markets.

"The recycling sector is facing rising pressure from mounting processing costs and the significant drop in global commodity prices," Sage said. "It is clear that this situation is not sustainable. The task force will be asked to discuss the issue and provide some options for consideration. The government intends to work with industry and councils on short and long-term solutions."

“The ban has had deeper impacts than anticipated," Sage said. Among options were to extend the waste levy to more landfills, a move that would win support from Nickels.

The waste disposal levy that was imposed on waste sent to landfills at a rate of $10 a tonne under the Waste Minimisation Act 2008 to encourage Kiwis to take responsibility for their waste and find ways to reduce, reuse, recycle or reprocess it. Half the revenue from the levy goes to territorial authorities to use on waste minimisation projects and the rest goes into the government's Waste Minimisation Fund.

Currently, the levy is only imposed on waste disposed of in municipal facilities, although a Ministry for the Environment review last year recommended extending it to other types of landfills.

Last month Nickels said he wanted the government to apply the levy across all disposal points, "and then, as a second step, progressively increase it (the levy) and clearly signal the change so industry can invest in alternative processing such as additional recycling".

(BusinessDesk)

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