A warning against “blindly chasing recycling” targets in the face of falling values for commodities has been issued by the UK’s largest waste management company Veolia.
And, strong concerns have also been raised by another waste company, Viridor, which has advised councils and other customers that contracts and service expectations will have to change.
The cautionary notes from the sector come after the closure of the Aylesford Newsprint mill last month and now, while waste management contractors have moved to reassure customers that they are finding markets for material, they are also highlighting the impacts of the market changes.
Local authorities who have contracts directly or indirectly with the two remaining mills in the UK which take in used newspapers – UPM and Palm – will not see their prices change immediately. However, these are expected to be reviewed when they come up for renewal. In the longer term the markets are expected to come into better equilibrium and while experts say it is hard to forecast even for developments in 2015, longer term prices are not expected to be as high as they have been in recent years.
Veolia emphasised a need to take an approach to recycling which also took on the need for commercial realities. Richard Kirkman, Veolia’s technical director said: “The sad closure of Aylesford Newsprint and accompanying loss of UK jobs has affected mixed paper prices and highlights that the market is based on supply and demand. Instability affects investment but also proves that we have to move away from blindly chasing recycling percentages and instead focus on a more sustainable model based on commercial realities as well as quality and demand for recyclates.”
Mr Kirkman added: “This explains why we have executed a strategy of diversifying into higher value products and we will continue to seek best value for our customers by leveraging our European relationships with reprocessors and relying on our premium quality levels.
“As always our commitment is to protect and enhance value for our local authority and commercial customers.”
Mark Burrows-Smith, chief operating officer for recycling and resources at Viridor, said: “Recent market developments, including the Aylesford statement, are further clear indicators of the ‘new economic realism’ that we have recently called for. This means markets, materials prices and quality demands are ever more challenging.
“As a result contracts and service expectations and delivery must adjust accordingly if we are to continue to make positive progress towards a more ‘circular economy’, based on essential and effective recycling and recovery services and on increased resource efficiency in the UK.”
Herman van der Meij, managing director of Viridor Resource Management, added that the company does not rely on any single customer or supply partner: “We regularly engage with our customers to achieve and maintain good quality input of materials and as a business we have made significant investment in recycling infrastructure to produce consistently high quality recyclate. These factors ensure a resilient and continuous service for Viridor’s local authority and private sector customers, despite any planned or unforeseen changes in the secondary commodity markets.”
A spokesman for SITA UK said: “SITA UK, along with many others in the recycling industry, was a supplier to Aylesford Newsprint and, in light of last week’s news, we are in the process of carefully reviewing the immediate market situation to secure short term off-take opportunities to match the output of our facilities in the region. Naturally we will be seeking a more strategic long-term view once we have a clearer picture of the market impact from this closure.”
Biffa noted that the decline in market prices was a reflection of the digital age and changing patterns of paper consumption. Gavin Williams, director for recycling and IRM, said: “We do have good outlets into the Asian and European markets for recovered paper. We are also aware that there may be some short term pressures and we are putting appropriate measures into place.”
A pan-industry and local authority response to the impact of the Aylesford closure is being coordinated by Marcus Gover, director of the Waste & Resources Action Programme. The Environmental Services Association has issued a statement confirming talks are underway over the paper markets. A spokeswoman said: “Yes, we will be meeting with Marcus Gover at WRAP in the near future to discuss current difficulties in the recycling markets prompted by the Aylesford situation.”