Severnside in new approach to packaging waste compliance

With the current value of the PRN falling near to a low of 1 a tonne, the company considers that for many obligated businesses it may no longer make sense to join a compliance scheme. (The PRN is the packaging waste recovery note used as evidence in the UK’s packaging waste system). Now, Severnside is going to adopt a more direct approach with its customers in offering to sell PRNs direct.

Severnside managing director Peter McGuinness explained: “With 400,000 oversupplied PRNs this year, it is our intention to work more closely with our own customers in making PRNs available.”

Such a move could mean that some companies may decide to move away from compliance schemes who generally charge a premium on top of the price of the PRN.

And, Mr McGuinness has restated his company’s long-held view that the current PRN system is bad for UK manufacturing.

He told letsrecycle.com: “Had the PRN system worked more efficiently and rewarded those who recycle paper – and plastic – in the UK, then some mills would have not had to close. The PRN support for exports means that no-one can invest in new reprocessing capacity because they see the material being exported. In contrast, Germany can build because there is a ready supply of raw material.”

Mr McGuinness continued: “It can be argued that the PRN system is not making sense in terms of the paper industry. Can exporting 50% or more of our recovered paper be a way forward? The UK government must be concerned at what will happen if this market ceases. Many European countries manufacture 90% of what they use and in the UK we manufacture 5 milllion tonnes, less than half of what we use.”

Restructuring
Severnside is the recycling arm of UK papermaker St Regis, owned by DS Smith, which produces paper and board including cardboard containers (boxes). Mr McGuinness said that the closure of some of the mills in the group formed part of a restructure which “is now bearing fruit”.

Investment by St Regis has included 30 million at its Kemsley cardboard mill in Kent and other developments include work at Wansbrough, Hollins and Higher Kings mills.

And, the managing director explained the importance of Severnside’s own work in increasing its collection activities, particularly in the retail sector. It now handles about 1.7 million tonnes a year with some 1.1 million tonnes used by the St Regis mills.

“Our need for high quality fibre remains strong. That is why the parent group has invested and continues to invest in St Regis. We are very big in the supply of cardboard boxes and we also want to make sure that we can offer a recycling route for the cardboard – we count our packaging as returnable as we are delivering cradle to cradle in 14 days.”

The restructuring comes against a background for the company where it has seen margins squeezed in the first half of the year by higher input costs including waste paper. But, the demand side has been more positive and a recent DS Smith financial statement said there was a stronger demand, “combined with substantial reductions in industry capacity for recycled corrugated case material (CCM).” It said this has resulted in an improving supply and demand balance and a firmer pricing environment in both CCM and corrugated boxes.

The statement added: “In August, we successfully implemented another CCM price increase and in September implemented further increases in box prices in both the UK and continental Europe.”