can residential recycling work in the u.s.? bill caesar, ceo wca
TRANSCRIPT
CAN RESIDENTIAL RECYCLING WORK IN THE U.S.?
Bill Caesar, CEO WCA
The problems with residential recycling today
· Commodity prices
· Contamination
· Processing costs
· Commercial terms
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The problems with residential recycling today
· Commodity prices
· Contamination· Processing costs· Commercial terms
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2011* 2014* Change
OCC $ 153 $ 101 -34.1%
ONP $ 133 $ 66 -50.8%
MXP $ 110 $ 54 -50.8%
UBC $ 1,602 $ 1,506 -6.0%
Steel $ 276 $ 191 -30.8%
HDPEn $ 678 $ 897 32.4%
HDPEc $ 492 $ 571 16.2%
PET $ 645 $ 343 -46.8%
*Commodity prices are the average price for the year
The problems with residential recycling today
· Commodity prices
· Contamination
· Processing costs· Commercial terms
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Sources of contamination
• Single stream – trade-off between volume, collection efficiencies, and contamination
• “New” recycling areas
• “Monstrous hybrids”
• Glass
The problems with residential recycling today
· Commodity prices· Contamination
· Processing costs
· Commercial terms
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• Poor processing yield (and cost to dispose of residue)
• Shortage of experienced managers
• Hard to find competent (and legal) labor
• Limited equipment innovation
The problems with residential recycling today
· Commodity prices· Contamination· Processing costs
· Commercial terms
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• Haulers use recycling as a “loss leader” on muni contracts
• Munis demand outrageous terms (and we agree . . .)
> Fixed/floor pricing (above zero)
> Unlimited contamination
> No cost for glass in blend value
Residential SS MRF Economics – not so attractive
Processing Economics· Single-stream “on the tip floor
at the MRF”
· Processing cost
· Disposal (10% trash)
· SG&A
Total Costs
· Commodity sale
- Inclusive of “claims”
- Inclusive of glass @ -25/ton
EBITDA
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Investment Economics· Land (lease)· Building (buy)· Processing equipment and balers*· Yellow iron
All-in ~$12 million
$ 0/ton
$60/ton
$ 5/ton
$85/ton
$ 5/ton
$70/ton
$15/ton sold
For a ~10K ton/month MRF, the payback is
~7.5 years with current prices/costs
*30-40 TPH system with two balers$50/ton T&D for disposal; 30% glass by inbound volume2x10 hour shifts, 6 days, 80% uptimeDepreciation of $7M over 10 years = $60K/month
($135K/month)
What has to change to make recycling sustainable?
Recyclers have to earn a reasonable return over a business cycle
How? Manage the things they have control over:- Price inbound material properly- Manage contamination- Improve operating efficiencies
Hope for strong commodity markets . . .
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Prerequisites
• Communities have to want to recycle (and “recycle right”) – regulation?
• Communities have to be willing to pay for it
• Global demand for commodities
• Technical innovation