ELV recyclers weigh up benefits of producer contracts

Un-contracted ATFs will be allowed to charge last owners for take back services under the new ELV regulations (see letsrecycle.com story), and this could make it economically favourable to remain outside manufacturers' contract networks, experts are suggesting.

” There could be a scenario where not enough ATFs sign up to contracts with the manufacturers.“
– Duncan Wemyss, MVDA
Under the terms of the new ELV (Producer Responsibility) Regulations, motor manufacturers have to set up networks of authorised treatment facilities sufficient to provide free take back services for ELVs of their own brands.

About 650 vehicle recyclers have now been given ATF status by the Environment Agency. But, experts in the sector are suggesting that if manufacturers are unwilling to make the economics of ELV recycling stack up, ATFs could be unwilling to form part of their contracted networks.

Duncan Wemyss, association secretary at the MVDA, told letsrecycle.com: “Companies are weighing up the pros and cons of signing up to the manufacturers' networks. The general feeling at the moment is that there won't be any monies received from the manufacturers by the ATFs on contracts.

“There could be a scenario where not enough ATFs sign up to contracts with the manufacturers. If nobody looks to sign up to a contract, manufacturers might have to have a rethink – they have to achieve a network.”

Prices
Although dismantlers get some money for the metals and components within vehicles, the costs of de-polluting the vehicles take a sizeable chunk out of the profit margin on each vehicle.

Currently, relatively high metals prices mean it would be commercially viable for manufacturers to avoid paying for contracted ATFs to provide free take back services. But, metals prices can go down as well as up.

Mr Wemyss said: “The metallic value of the material has underwritten our work, and as long as that continues, there shouldn't be a problem. But metal is a global commodity and the market can change – towards the end of last year, it lost a third of its value. There could be some concern in the long-term.”

ATFs that do not sign contracts with manufacturers will still have to meet the recycling targets set out in the new ELV Regulations – but the fact that uncontracted ATFs will be able to charge last owners for the recycling of their vehicles could help them counter any falls in metals prices.