Information provided in good faith - October 2013 - Plastics|SA

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Plastics Recycling Survey

—2012 update—

Introduction

Eco-friendly – Environment - Greener options – Reduced Carbon footprint... Companies are

under continuous pressure to improve the triple bottom line. One method of measuring the

environmental impact of the plastics industry, and in particular the plastics packaging

industry is to track the recycling rate of its products. Over the last few decades, Plastics|SA

measured the recycling rate of plastics in South Africa. The last comprehensive and

complete survey was done for 2009. Annual updates are done to measure the trends in

recycling. This report is for the recycling rates of 2012.

Production data for the period has been collected from 59 recyclers representing 54% of the

tonnages recorded in 2011. The recyclers ranged from very large to medium to small with

regards annual tonnages. The 2012 figures in this report were arrived at by:

­ using the actual data from the recyclers who took part in the survey;

­ calculating an average growth rate for these recyclers; and

­ extrapolating the growth for the rest of the recyclers.

The PETCO published figure for 2012 has been used for PET.

It is estimated that there were more than 210 recyclers active in 2012. Nineteen companies

recorded in 2011 were no longer operational. Thirty two recyclers entered the recycling

industry just before, or during 2012, the bulk of which are waste management companies

and collectors that have vertically integrated with granulators and pelletising extruders, with

or without wash lines.

Tonnages recycled and recovered

There was a 9.3% increase in the tonnages recycled to a total of 268 548 tons in 2012. The

consumption of virgin polymer grew 5.4% in the same period to a total of 1370 ktons. It was

noted that the export of waste plastics increased to 14 744 tons during the same period and

2009 2010 2011 2012

Total tons converted 1 280 000 1 312 700 1 300 000 1 370 000

Total tons recycled 228 057 241 853 245 696 268 548

Recycling rate 17.8% 18.4% 18.9% 19.6%

Waste exported 5 575 9 054 9 758 14 744

Total tons diverted from landfill 233 632 250 907 255 454 283 292

Recovery rate 18.3% 19.1% 19.7% 20.7%

Table 1: Plastics Recycling and Recovery rates for 2009 to 2012

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if this is also taken into account, the total tonnages of plastics waste diverted from landfill

equals 20.7% of all plastics manufactured in 2012. The local recycling rate was 19.6%.

Packaging

Plastics packaging is contributing to visible litter and the plastics industry participated with

other packaging role players in submitting the Paper and Packaging Industry Waste

Management Plan to the Department of Environmental Affairs in 2011. In 2012, a total of

204 400 tons of packaging was recycled. This is an increase of 8.5% from 2011. Exports of

plastics packaging waste increased more than 51% from 8 294 tons in 2011 to 12 532 tons

in 2012. Therefore, plastics packaging waste diverted from landfill totalled 216 932 tons in

2012.

The plastics industry is slightly ahead of the estimated tonnages as well as the recovery rate,

as per the Industry Waste Management Plan. The total plastics packaging in the waste

stream for 2012 was 647 244 tons1 and the packaging recovery rate is 33.5% versus the

31.9% in the Waste Plan.

Plastics packaging includes products made from PE-LD, PE-LLD, PE-HD, PP, PET and PS

with small volumes made from rigid and flexible PVC, ABS and E/VAL. Some bottle

closures have inserts of E/VAL which is recycled.

The small growth in PS is very conservative and not a true reflection of the activities in the

industry. Take away food containers, punnets and bread tags are recycled but not through

the conventional recyclers (those who took part in this survey). These packaging materials

are collected and sold directly to the end-users for extruding or injection moulding into end

products. The manufacturing of building panels and the various “re-use” projects recover

1 According to BMI Research

Figure 1: Tonnages recovered and recycled in South Africa from 2009 to 2012

16%

17%

18%

19%

20%

21%

22%

0

50 000

100 000

150 000

200 000

250 000

300 000

2 009 2 010 2011 2 012

Rec

yclin

g &

Rec

over

y r

ate

Ton

nage

s

Waste exported

Total tons recycled

Recycling rate

Recovery rate

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increasing amounts of polystyrene waste from the waste stream. These value chains need

to be surveyed and included in future for more accurate recycling rates of PS and PS-E.

For the first time, there is a negative growth rate in the packaging not recycled: the amount

of packaging sent to landfill in 2012 was 0.6% less than in 2011. With Separation at Source

projects developing in the major metropolitan areas, this reduction in packaging waste to

landfill can be maintained only where domestic solid waste can be accessed.

Material

2010 2011 2012

Packaging Non-

Packaging Packaging

Non-Packaging

Packaging Non-

Packaging

PE-LD/LLD 90 149 11 305 89 493 6 359 93 464 5 507

PET 39 855

46 276

50 280

PE-HD 27 907 11 825 27 108 11 871 36 316 9 633

PP 20 869 17 744 21 549 18 734 21 716 25 365

PVC 798 15 032 587 16 117 631 16 181

PS & PS-E 2 038 1 218 1 636 1 578 1 621 1 774

ABS 376 805 550 605 311 644

Other 40 1 891 1 267 1 967 60 5 045

Waste tonnages exported 7 696 1 358 8 294 1 464 12 532 2 212

Total tons recovered 189 728 61 178 196 760 58 695 216 932 66 360

Total plastics packaging 605 000

629 570

647 244

Packaging recovery rate 30.1%

29.9%

33.5%

Table 2: Packaging and non-packaging tonnages recovered in South Africa from 2010 to 2012

Figure 2: Paper and packaging Industry Waste Management Plan recovery rates

Note: Recovery refers to the total tonnages diverted from landfill and includes exported packaging waste versus

Recycling that only refers to material that is mechanically recycled locally.

2009 2010 2011 2012 2013 2014

Total plastics packaging in waste stream 573 000 605 000 629 570 647 244

Plastics packaging recovered 170 511 189 728 196 760 216 932

IWMP Estimated tonnages 184 000 196 000 208 000 221 000

Recovery rate 29.8% 31.4% 31.3% 33.5%

IWMP Estimated Recycling rate 30.8% 31.9% 32.9% 33.9%

28%

29%

30%

31%

32%

33%

34%

35%

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

Rec

over

y ra

te

Ton

nage

s re

cove

red

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Polymers recycled

Low density polyethylene

Figure 3: Recycling tonnages and recycling rates

for PE-LD

Figure 4: Market applications for PE-LD recyclate

The total tonnage recycled is made up of a number of different materials, i.e. different

polymer groups. The largest group is PE-LD and PE-LLD. They are grouped together for

recycling statistics as only a handful of recyclers separate them prior to recycling and then

only where it is applicable to factory waste. A total of 98 971 tons of PE-LD were recycled in

2012. This is made up of film waste and a much smaller quantity of irrigation pipe waste.

Recycled PE-LD waste is sold back into the film industry, i.e. 66.5%, with 14% into the

irrigation pipe market. The “other” portion is made up of some exports, masterbatch

manufacturing, fencing droppers and rotational moulding powders.

Polyethylene terephthalate

PET beverage bottles make up the bulk

of the 50 280 tons recycled in 2012.

PETCO has major initiatives in place to

grow the tonnage of PET recycled and

this is evident in the growth of the last

four years. Recycled PET is used for

tapes and fibres for the home textile,

apparel- and industrial fibre markets. A

large portion is recycled back into food

contact packaging markets. Other PET

packaging like trays are not currently

recycled. There are collectors and recyclers that bale and export PET trays. They are not

reflected separately in a specific HS code, but are grouped under “Other” in HS 39 15 90 90.

28.0%

28.5%

29.0%

29.5%

30.0%

86 000

88 000

90 000

92 000

94 000

96 000

98 000

100 000

102 000

104 000

2009 2010 2011 2012

Rec

yclin

g ra

te %

Ton

nage

s re

cycl

ed

Packaging films 41%

Building and Construction

Films 18%

Other films, including

Agricultural films 7% Pipes

14%

Other 25%

Figure 5: Recycling tonnages and recycling rates for

PET

20%

25%

30%

35%

0

10 000

20 000

30 000

40 000

50 000

60 000

2009 2010 2011 2012

Rec

yclin

g ra

te %

Ton

nage

s re

cycl

ed

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Polypropylene

Figure 6: Recycling tonnages and recycling rates for PP

Figure 7: Market applications for PP

recyclate

Of all the materials, PP showed the largest growth in the last year. PP recycling grew with

17% to a total of 47 080 tons in 2012. The PP waste is sourced from injection and

thermoformed packaging like closures, yogurt- and margarine tubs. The demand for non-

packaging recyclable waste like garden furniture and automotive bumpers is growing. A few

years ago, woven bags and metallised film were regarded as non-recyclable. Today there

are more than 10 recyclers nationally that recycle these PP film grades with large success.

Recycled PP is mainly (83%) sold into the injection moulding market with chairs being the

most popular single item. Exports make up a large portion of the PP recyclate as well. The

relative small trader market for recyclate PP is popular amongst the very small recyclers as

they pay cash and can blend poor quality material with better material to ensure customer

satisfaction.

The demand for PP is exceeding the supply by magnitudes but the customers and potential

customers do not want to pay more than roughly 50% of virgin prices for recycled PP. There

are various possible reasons for the recyclate price ceiling:

Recyclate markets have been developed that have no relation to virgin material

markets, e.g. black chairs;

Technical expertise amongst the smaller recyclers is limited and the quality of the

recyclate is often very poor which leads to mistrust in recycled PP;

Contamination levels are very high in PP waste due to the container nature of the

waste which catches high levels of dirt and high residual contents levels – all

potential quality challenges; and

Lack of sorting skills to differentiate between PP and other materials in consumer

packaging.

Market related, i.e. demand related, prices will have to be paid for quality PP recyclate to

encourage more PP recycling.

Chairs 37%

Inject: Other 27%

Exports 9%

Domesticware 14%

Traders 7%

Crates 5% Sheet

1% 14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

0

10 000

20 000

30 000

40 000

50 000

2009 2010 2011 2012

Rec

yclin

g ra

te %

Ton

nage

s re

cycl

ed

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High density polyethylene

Figure 8: Recycling tonnages and recycling rates for PE-HD Figure 9: Market applications for PE-HD

PE-HD comes in five distinct classes, film-, pipe-, injection (crate)-, bottle- and chemical

container grade. Recyclers often won’t recycle more than one or two PE-HD grades. For

this report, all PE-HD was grouped together.

A total of 45 950 tons of PE-HD was recycled in 2012. PE-HD crates are a good example of

closed-loop recycling in South Africa where at least 3 of the large crate producers have their

own in-house recycling facilities for damaged and obsolete post-consumer crates.

The environmental drive by brand owners has developed into a strong demand for bottle-

and film grade PE-HD. The small amount of available recycled film waste is supplemented

with bottle grade, specifically white milk bottles, to meet the demand for carrier bags.

This resulted in a shortage of bottle grade and the recyclers have developed collection

systems for chemical containers as a result. The recyclate can only be used for non-human

contact applications and currently agricultural products like fencing droppers, poles and

diamond mesh are made from recycled chemical containers sourced from farms. The

logistics and residual content make this a challenging waste source.

Other materials

The materials in Figure 10 not listed individually include the smaller families, i.e. PVC-U,

PVC-P, PMMA, E/VAL, PA, PC, ABS and multi-layers.

Market applications for “Other” include injection moulded products, blow moulding

applications like toys and multi-layer chemical containers, compression moulding and a

small trader market.

Note: The market applications listed above are only for the 59 recyclers surveyed and not

for the complete 210 recyclers’ markets.

19%

20%

21%

22%

23%

24%

0

10 000

20 000

30 000

40 000

50 000

2009 2010 2011 2012

Rec

yclin

g ra

te %

Ton

nage

s re

cycl

ed

Pipes 27%

Packaging films 13%

Exports 11%

Crates 31% Inject:

Other 6%

Profiles, fencing

droppers, blast

barricades 4%

Other 8%

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Source of waste materials

Recyclers are still of the opinion that the largest growth in recycling would be in post-

consumer recyclables. Smaller quantities of recyclables - 58.5% - were sourced from landfill

and other post-consumer sources in 2012 versus the 70% in 2011. This could have been as

a direct result of the increased electricity spending that impacted on wash plant recycling

processes. The transport strike in June 2012 was also listed as a reason as mainly post-

consumer recyclable waste is sourced from outlying areas. It specifically impacted on

PE-LD. The material obtained from the Separation at Source projects in the larger

metropolitan areas is in high demand because of the lower contamination levels.

Toll and in-house materials are not generally included in the recycling figures. The 6.7%

shown here is where the recyclers cannot differentiate between operating costs of toll

tonnage and normal recycling.

Figure 10: Materials recycled in South Africa from 2000 to 2012

PE-LD/LLD PET PP PE-HD PVC OTHER PS

2000 64 476 5609 13 290 22 197 11 323 3 971 1 450

2005 74 666 18 964 26 543 29 597 13 752 4 631 4 100

2009 92 381 33 870 43 000 36 547 15 490 3 379 3 389

2010 101 454 39 855 38 614 39 733 15 830 3 112 3 256

2011 95 852 46 276 40 282 38 979 16 704 4 388 3 213

2012 98 971 50 280 47 080 45 950 16 812 6 060 3 394

0

20 000

40 000

60 000

80 000

100 000

120 000

Ton

nage

s re

cycl

ed

Figure 11: Source of recyclable waste in South Africa from 2010 to 2012

0% 10% 20% 30% 40% 50% 60% 70% 80%

Post Consumer & Landfill

Ex-factory

Post Industrial

Toll & Inhouse

2010

2011

2012

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Employment

Formal employment in the plastics recycling sector decreased by 0.3%, to 5047 formal jobs

since 2011. Of these, only 8.4% are contract workers who are involved in sorting incoming

materials for the recyclers on a full time basis and usually on site. These workers are paid

for their output rather than for the time spent on the job. It is estimated that 44 100 informal

jobs were created in the same period in the collection industry. These collectors collect all

materials and are not only working with plastics. (The figures are based on 60 kg of plastics

waste handled per person per day and 200 good collection days per annum.)

Processing costs

If a recycling operation is compared with other plastics converting operations that are doing

a similar tonnage per annum, the recycler has higher operating costs with regards:

water and electricity,

wages,

transport, and

repairs and maintenance on plants and equipment.

The actual operating costs of the 36 recyclers surveyed that granulate, wash and pelletise

were taken into account to calculate operating costs for 2012, as illustrated in Figure 12.

When compared to 2011, total

operating costs increased by 36.5%.

Although the cost of electricity

increased dramatically in the last 24

months, the portion of the overall

operation costs stayed more or less

the same. This is due to considerable

measures taken by recyclers to

contain the energy costs in their

factories.

The calculated average cost of repairs

and maintenance doubled since 2011.

This could be due to the huge price

2009 2010 2011 2012

Tonnages recycled 228 057 241 853 245 696 268 548

Total Employees 4 841 4 812 5 062 5 047

Informal employment 34 500 36 600 40 950 44 100

Table 3: Employment figures

Figure 12: Average operating cost in 2012 of recyclers that granulate, wash and pelletise

Wages 34%

Water & Electricity

25% Repairs and maintenance

12%

Rent/Bond 11%

Financing 10%

Transport 7%

Waste 0.6%

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increases of steel in the last 12 months.

Another change to note is the cost of financing which increased by 389%. The reason could

be that it is still challenging to access incentives and grants for recycling and recyclers have

been financing their investments through the usual financial institution channels. It could

also be that not all financing costs were recorded in 2011 and as the trust in the survey

process increased, the figures are more realistically reflected.

The historic buying and selling prices of the most popular grade of the three main plastics

were recorded for May 2013 (when the data was collected). The average historical prices

are recorded here.

PE-LD smokey PE-HD mixed and coloured

bottle grade PP mixed and coloured injection

grade

Buying prince Selling price Buying prince Selling price Buying prince Selling price

2009 R2.99 R7.47 R3.12 R6.87 R2.72 R6.57

2010 R2.87 R6.83 R2.97 R6.35 R2.89 R6.81

2011 R4.33 R7.85

2012 R3.11 R7.69 R2.68 R7.05 R2.75 R7.13

2013 R3.08 R8.13 R2.74 R7.01 R3.23 R7.52

Table 4: Historical buying and selling prices of the three most popular grades, calculated averages only

The selling prices do not reflect the increase in operating costs. The calculated average

margin only increased 2% versus the 36.5% increase in operating costs from 2011 to 2012.

Recyclers are locked in with selling prices and will have to change their tactics and business

models if they would like to continue operations in the near future. There are only three

recyclers that have managed to keep selling prices aligned with operating costs and to keep

track of virgin polymer prices. The bulk of the recyclers are trapped in a decreasing

operating window.

Capital investment

The capital replacement value of plant and equipment is calculated at R5 384 per ton

recycled in 2012 for recyclers that granulate, wash and pelletise. This is 11.5% more than

the recorded figures of 2011 where the capital investment was R4 828 per ton recycled.

(The 2011 published figure of R3 250 invested per ton recycled included recyclers that only

granulate. The figure was subsequently amended to reflect recyclers who granulate, wash

and pelletise.)

The recyclers interviewed invested 6.3% of their capital in 2012 vs. 12.1% in 2011. This

investment can now be seen in the higher capital per tonnage. Recyclers are of the opinion

that it is difficult to invest in operations if the supply of recyclable waste cannot be

guaranteed.

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BBBEE status

Most recyclers are owner businesses and don’t

do any direct business with state-owned

companies. The need for a BEE rating is

therefore not perceived as critical. Recyclers

surveyed in 2013 predominantly don’t know their

BEE status. This however, can be a stumbling

block if government funding is to be accessed.

Discussion

Although only 59 of the recyclers were contacted for detailed information, the author is

familiar with the plastics recycling industry and has regular contact with the larger as well as

the small recyclers.

Retail and brand owners are starting to see the importance of recycled content and are

instructing their suppliers (the plastics product manufacturers) to source recyclate. The

demand for cheap recyclate still exceeds the supply. Plastics recyclers will have to market

themselves and their products totally differently to enable them to sell at market related

prices. Recyclers are accustomed to customers contacting them for material at a specific

price. They are not used to hard selling of neither their products nor its advantages.

The polyolefin recyclers are also looking towards the newly formed PolyCo to assist with

telling the story in aggressive marketing campaigns. Despite all the efforts of the industry as

a whole, the general public, brand owners and even players in the field, still don’t know the

magnitude of the recycling industry in South Africa.

Alternative recycling methods, such as “energy from waste” and liquid fuels will have to be

researched and developed into operational plants to grow the recycling rates to levels where

zero waste to landfill at least looks like a possibility.

The plastics recycling industry is growing and new entrants are joining the industry on a

monthly basis. It is, however, only the long-standing recyclers that have the tenacity and

stamina to continue year in and year out with small increases in efficiencies that grow the

recycling tonnages in small increments.

One standard concern for all recyclers is the availability of incoming recyclable waste.

Truckloads of baled material are bought by agents that ship waste outside the country.

Waste pickers at ground level consider alternative income generating activities such as fruit

picking and fishing – especially in the Western Cape. Larger collectors look for markets

elsewhere.

Figure 13: BBBEE status of the recyclers

surveyed in 2012

Don't know 49%

3 or below

9%

5 or above 10%

default rating of

4 32%

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In Europe, the plastics industry states that the maximum economic recycling rate for plastics

is about 35%. South Africa has a few advantages, for example availability of cheaper

sorters. We are also far ahead of Europe with the recycling of thin film. We are developing

a stronger non-packaging recycling industry for the polyolefins. South Africa will probably be

able to reach a 40% recycling rate with the following factors in place:

Access to the solid waste stream is essential. Separation at Source to be

implemented in all the larger metropolitan areas.

All plastics recyclers to comply with the laws of the country to allow SAPRO to raise

the standard and visibility of all recyclers.

Simple, straightforward and consistent cost of energy to allow for forward planning of

cost-of-sales.

Realistic selling prices of recyclate linked to demand and quality of material.

Recycled content to be specified by brand owners, i.e. green procurement.

Development of the collection of recyclable waste in outlying areas.

Consolidation of all the different but similar organisations.

The plastics industry will have to work together with one voice if it is to convince government,

retail and the public that we mean business with recycling and are professional and credible

in what we recycle.

Issued October 2013

www.plasticsinfo.co.za

Appendix

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Acronyms

Symbols for polymers commonly recycled according to ISO 1043:

ABS Acrylonitrile/butadiene/styrene

PA Polyamide; commonly known as nylon

PC Polycarbonate

PE-HD High density polyethylene

PE-LD Low density polyethylene

PE-LLD Linear low density polyethylene

PET Poly(ethylene terephthalate)

PMMA Poly(methyl methacrylate); commonly known as acrylics

POM Polyoxymethylene; commonly known as acetal

PP Polypropylene

PS Polystyrene; commonly known as GP for general purpose

PS-E Expanded polystyrene

PVC-P Plasticised or flexible Poly(vinyl chloride)

PVC-U Unplasticised or rigid Poly(vinyl chloride)

Other abbreviations used in this report:

IWMP Industry Waste Management Plan

PETCO PET Recycling Company

POLYCO Polyolefin Recycling Company

PSPC Polystyrene Packaging Council

SAVA South African Vinyls Association

Appendix

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List of Tables

1. Plastics Recycling and Recovery rates in South Africa from 2009 to 2012

2. Packaging and non-packaging tonnages recovered in South Africa from 2010 to 2012

3. Employment figures

4. Historical buying and selling prices of the three most popular grades, calculated

averages only

List of Figures

1. Tonnages recovered and recycled in South Africa from 2009 to 2012

2. Paper and packaging Industry Waste Management Plan recovery rates

3. Recycling tonnages and recycling rates for PE-LD

4. Market applications for PE-LD recyclate

5. Recycling tonnages and recycling rates for PET

6. Recycling tonnages and recycling rates for PP

7. Market applications for PP recyclate

8. Recycling tonnages and recycling rates for PE-HD

9. Market applications for PE-HD

10. Materials recycled in South Africa from 2000 to 2012

11. Source of recyclable waste in South Africa from 2010 to 2012

12. Average operating cost in 2012 of recyclers that granulate, wash and pelletise

13. BBBEE status of the recyclers surveyed in 2012