POLYCO, the Polyolefin Recycling Company (NPC) hosted their fourth Annual General Meeting in Johannesburg recently. Addressing the association’s board members, which represents the leading packaging converters in South Africa, Chief Executive Officer Mandy Naudé presented a detailed report on their business and the state of the local polyolefins recycling industry.
“This past year has undoubtedly been a tough year for the polyolefin recycling industry in South Africa and around the world. Whilst lower virgin resin prices had an impact in South Africa, they were fortunately offset by the weakening Rand. However, local recyclers of polyolefin plastics also had other challenges they needed to contend with during 2015, including load shedding, expensive electricity costs, water shortages and a general downturn in the economy,” Naudé said.
The low market demand, together with rising costs, has made the recycling sector a tough space to operate in. The impact of these difficult trading conditions were severely felt by the POLYCO project partners, who reported lower than expected recycling volumes for their financial year ending 31 December 2015. “We had hoped that the New Year would bring improved market conditions, but the first quarter of 2016 saw the worst ever demand period in the last 10 –15 years in South Africa. The official 2015 recycling statistics have not yet been released, but early indications are that recycled polyolefin volumes have remained static year on year, at approximately 171 000 tonnes,” she said.
However, all is not doom and gloom according to POLYCO, as the 171 000 recycled tonnes positively contributed in excess of R1.7 billion to the country’s GDP. The total plastics recycling industry contributed in excess of R2.85 billion to GDP in 2014 and created over 53 000 employment opportunities.
“This is something of which we can all be immensely proud! We must also bear in mind that recycling is a commodity-based business which is cyclical in nature. Whilst the current conditions might be tough, we have developed a clear-cut plan of action that will help us build a much-needed robustness into the industry, so as to be ready for when the market turns again,” Naudé said.
It is clear that the association is using the tough conditions to take an even closer look at their business model and, where necessary, make changes in response to what the market needs. To this end, they are now working even closer with recyclers in an effort to address and solve some of the biggest stumbling blocks they are facing, such as dirty post-consumer materials (due to a lack of effective separation-at-source initiatives), ageing and inefficient equipment, untested quality and an inconsistent value-chain.
“We truly believe that the challenges we face today, create our opportunities for tomorrow. Take the mechanical recyclers, for example, who are now being forced to look at their business differently. In order for them to secure new and robust end-use markets with a consistent demand, they need to actively invest in their quality testing capabilities. As a result, we are starting to see a growing number of requests for quality testing equipment to be introduced at recycling facilities, indicating the industry’s desire to enter new end-use markets by offering a quality recycled polymer, which in turn will also allow them to close the price differential between virgin polymer and quality recycled polymer. This will have a positive spin off for the plastic packaging converters, who require consistent quality material that is free of contamination, to run through the expensive equipment that has been invested in,” she said.
Similar steps are being taken with the other role players in the recycling value chain in order to help them overcome their challenges and move towards more sustainable supply chain processes.
However, POLYCO is also calling on brand owners to become involved with their current initiatives in order to create a strong, sustainable circular economy which eliminates waste. “The ability to create a sustainable circular economy lies to a large extent in the hands of our brand owners, as they are the ones who ultimately control the products being offered to the consumers. They hold the power to positively influence the design of packaging for recyclability, specify the recycled content of packaging and determine the specification of packaging materials used. To this end, POLYCO is actively working on implementing value-chain projects with key brand owners that will assist them in achieving their sustainability targets of increased recycled content or recycling rates, using quality recycled material. This will positively impact on the recycling sector by creating a robust market demand for quality products,” Naudé revealed, saying that they are aiming to have two such projects in place before the end of the year.
In addition to the above, the association has identified other focus areas that will continue to drive their operations in the coming year. These include:
- Employing a consistent consumer social media education campaign to bring about a change in the public’s perception regarding the value of recyclable material and create a shift towards a conscious effort to reduce, reuse and recycle their plastics
- Building key industry networks and relationships in the recycling sector to grow collection and recycling volumes
- Preparing to launch the Packaging Bank Mobile Swop Shop pilot project in impoverished communities in South Africa in January 2017, which will demonstrate to Government that the packaging industry and the brand owners take their responsibility seriously.
- Continuing to support the efforts of Packaging SA and Plastics|SA in their engagement with decision makers to ensure that the views of the polyolefin packaging and recycling industry are heard in the light of the possibility of new waste management charges and carbon taxes, which will be implemented through the National Pricing Strategy and also the Carbon Tax bill.
- Growing the POLYCO footprint by encouraging more converters to sign up as members
Concluded Naudé: “We are grateful for the tremendous support the industry has shown us this past year. Our members in particular are the true heroes in the story, as they are not simply paying lip service to their sustainability promises, but are actively working to create a sustainable future for our planet and our industry. As an industry and an association, we look forward to what is to come, knowing that we will continue to grow and evolve as long as we continue to embrace the move to circular economy thinking”.