Is it the end of exporting Australian recycling?

In July 2017, China announced its ban on importing 24 categories of solid waste to protect the environment and public health. The ban is part of China’s Operation Green Fence policy to prohibit the importation of unwashed and contaminated recyclable materials.

This announcement was implemented in January 2018 and has significant implications for all Australians.  Why? Because until now, Australia exported approximately 55% of recycled goods and China was our largest export market.[i]

For the past 20+ years, Australia, along with many other countries across the globe, has been exporting our recycling to China. As a country, Australia export an average of 619,000 tonnes (worth $523M) each year to our Asian neighbour.[ii]  Australia produces 2.23kg of waste per capita per day and we recycle 41% of this waste. [iii]

The below graph highlights our increased reliance on exporting of waste.

 International Trade in Waste.png

Over the past decade, Australia’s exports of recycling have increased dramatically due to an oversupply of recycling materials being received by local recycling facilities.  The impact of the China policy will therefore impact our local recycling industry. Recycling facilities, the waste industry and the Australian Governments are now building new strategies to continue to incentivise recycling programs.

Whilst there are other countries who ‘take our trash’, China was the industry’s main trading partner[iv], with hubs in Taiwan and Hong Kong also being affected by the ban.

Why do we export our recycling?

Export markets dominate the sector with some companies exporting up to 90% of recycled goods. [v] Australia need to export recycling for two key reasons:

  1. We produce an oversupply of recycled material; meaning we do not have the current domestic market demand for recycled goods to meet the high supply.
  2. Australia further does not (currently) have the technical infrastructure to leverage or compete in recycling manufacturing industries.

The process of recycling is predominately linear in Australia. Container deposit facilities and other recycling facilities collect recyclable waste and undertake the first stage of recycling processing in Australia.  This includes sorting recycling (glass, plastic etc.) and cleaning when required. The prepared recycling is then sold domestically and exported.  It is estimated that 55% of prepared recycling is exported; with the remaining 45% being processed here in Australia.  [vi]

The next stage is processing by which materials are shredded, sterilised and prepared for manufacturing. For example, when it comes to plastics, materials are often prepared into plastic pellets.  From here, it is estimated that 20% of materials are then also exported.[vii]

The final stage is the manufacturing process during which the recycled materials are manufactured into new products.  Visy has highlighted this process with the below flow diagram.

 Waste lifecycle flowchart.png

 What does the China ban mean for households in Australia?

The Business Insider highlights the importance of the situation: “The fallout is enormous and reaches into every home and business in Australia. At risk is a multi billion dollar industry in Australia and the change has triggered crisis talks between waste collection firms and local governments around the country. It also appears likely, at this point, that households may end up having to pay more for their waste collection.”[viii]

The impact of the China ban affects the total amount of waste that recycling facilities can collect and process.  As an oversupply in goods increase, the cost of that good reduces; resulting in a market slump.  Due to these factors, industry experts say the costs of picking up the bins is now such a loss-making exercise that some companies may soon simply default on contracts, leading to a real possibility that some towns and suburbs in Australia may cease to have traditional waste collection services.[ix]

For those councils and contractors that remain, it is highly anticipated prices for collection will increase and be passed onto households.  A Business Insider report indicates that the cost of recycling is set to increase from $40 a tonne to between $80 and $120 a tonne.[x]

And, one article even suggested that households and businesses may have to pay individually for contractors to collect kerbside recycling![xi]

Like many other industry leaders, Container Deposit Systems Australia is therefore highly supportive of working towards a new recycling economy.

“The future for recycling in Australia must be a long term sustainable strategy combined with advanced manufacturing technologies; within a circular based recycling economy.” Says Container Deposit Systems Chairman Brett Duncanson, “Only then will we be able to reengineer the crisis into an opportunity for our communities and economy.”

 The need for a Circular Economy

Industry leaders are calling for a ‘recycling revolution’ arguing that now is the time to create a true circular economy. The Waste Management Association of Australia (WMAA) argues the ban represents an opportunity to work towards a circular economy in Australia[xii] by which we make, use and recycle our goods. 

“The clear long-term solution is the need to develop onshore processing capacity for recycled materials and to encourage their use as part of a circular economy; a move which may require the fast-tracking of approvals and licences for material sorting/reprocessing and remanufacture, granting resource recovery exemptions where possible and within environmental constraints,” Local Government NSW spokesperson.[xiii]

The current linear process of recycled materials creates an exponential waste epidemic; meaning there is always more waste being produced than being recycled.  A circular economy encourages recycling and reuse systems.  Countries such as Sweden have implemented these practices; resulting in the country literally running out of waste![xiv]

Mark Jacobsen, Director of Marketing at recycling firm Replas says “The whole economy has got to change.”.[xv]  However, he highlights that for this to occur, we, the public, also need to change our attitudes towards seeing plastic as just a waste product. 

Need to invest in advanced recycling facilities

Now is the time for Australian government and industry to invest into solutions for recycling manufacturing.  New innovative recycling technologies to undertake manufacturing on our shores can create an entire new industry; bringing with it new jobs, investment in R&D and a decrease in landfill. 

Insider Waste states that “China's new import restrictions show that Australia will need to plan and pay for smarter recycling and recovery if we want to prevent recyclables going to landfill or indefinite stockpiling.”[xvi]

There is much opportunity for companies and industry to invest in technologies to meet the current gap in the market and bring positive change to the economy.  An example of this is South Australia who has long been at the forefront of recycling.  The State’s data shows that an extra 25,000 jobs can be created over five years by recycling and reusing waste rather than dumping or exporting.[xvii]

Container Deposit Systems Australia believe improvements in recycling manufacturing start with the current recycling and container deposit facilities.  Investments into sorting, managing and processing technologies at the beginning of the product cycle will ultimately lead to improved end manufacturing processes. 

“Like many other recycling and waste companies, Container Deposit Systems is looking at the industry wide opportunities this disruption brings.” Says Duncanson. “There will always be a need for recycling in the foreseeable future and we look forward to working with industry and government to shape the new innovative Australian recycling landscape.”

About Container Deposit Systems Australia

Container Deposit Systems Australia was formed with a vision to oversee the implementation of improved operational practices in recycling facilities.  The company offers a range of services to recycling depot facilities to drive productivity improvements and transition traditional recycling facilities into modern technically advanced operators.

The company achieve this through patented technologies which deliver manufacturing automation to auto-sort materials via a highly sensitive multi-sensor integration.  Systems integrations enable facilities to further gain efficiencies through workflows, materials handling, logistic processes, facility layout and design, customer interaction and data acquisition and management. 

Container Deposit Systems Australia technologies are designed and manufactured in Australia with local partners Sage Automation and Macweld Engineering.

For more information, please contact us directly.