1 July 2014

Sell direct emphasised in WRAP guidance

By Michael Holder

Local authorities should consider selling recyclable materials directly to reprocessors as this is what many want, WRAP has emphasised in a report on recycling markets and councils.

And, according to WRAPs newly-published guidance for councils on recyclable material sales, just because a councils collection service might be contracted out, this does not mean that materials have to be traded through the waste management company.

WRAP has published guidance for local authorities on maximising income from the sale of recyclable materials

WRAP has published guidance for local authorities on maximising income from the sale of recyclable materials

The guidance states that a well organised authority committing suitably experienced and capable resources to materials trading could certainly carry out this activity in-house and that Indeed, many reprocessors would argue that local authorities should deal with them directly, to reduce the loss of potential value through additional supply chain interactions.

Entitled Approaches to Material Sales: a guide for local authorities, the document is intended to assist councils in maximising their income from the sale of dry recyclables collected from households and to evaluate their materials sales strategy.

While primarily focused on the sale of separate recyclables from kerbside collections, HWRCs and bring sites, WRAP explains that many of the principles in the guidance also apply to mixed materials. It also has a section with specific guidance for selling commingled materials.

According to WRAP: Few local authorities can afford not to consider the scope to increase their income streams from the sale of recyclable materials. This guide has set out some key considerations that will help you to do so effectively, equipping you to evaluate the potential to set your materials sales arrangements on a more productive and ultimately more profitable footing.

‘Indeed, many reprocessors would argue that local authorities should deal with them directly, to reduce the loss of potential value through additional supply chain interactions.’

WRAP guidance

Materials trading

Where councils choose to trade recyclable materials through a waste management company, WRAP highlights the importance of establishing the ownership of material at all times, which it explains can be complicated as liability issues need to be clearly dealt with where the waste collected remains in the ownership of the authority but in possession of the WMC.

And, in these circumstances, WRAP suggests that councils and contractors share the burden of risk, rather than placing the majority of risk on the waste management companies, which can lead to higher contract prices or a lack of bidders during procurement.

The guidance explains that sharing the risk could involve splitting the material income equally between council and contractor; mechanisms that share the risk within clearly defined boundaries; or mechanisms which see only excess profit above an agreed threshold shared between parties.

WRAP material sales guidance

WRAP material sales guidance

MRFs

In order to minimise costs and maximise recyclables value, WRAP recommends that councils ensure all loads of material dispatched to reprocessors are full and also appropriately baled.

It also advises councils to undertake robust sampling in order to make sure they are being paid on the basis of the actual composition of the material being sold.

Furthermore, the guidance points out that MRF contract duration is a vital issue as it determines the length of time that the facility operator has to absorb risks associated with material quality, composition, quantity and price fluctuation.

WRAP states: A local authority looking for a long contract (e.g. 5-10 years) may have to take on a larger share of risk if the MRF is unwilling to do so.

Procurement

Regarding procurement, WRAP suggests that councils encourage direct bids from reprocessors for contracts, as this should generally deliver the best value because the supply chain will be streamlined.

In addition, the guidance states that while contracting with a broker or merchant may enable materials to be sold through a single, easily managed agreement rather than multiple contracts, this could see a middleman making an unacceptable profit from the arrangement.

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