President's Blog

25 Feb 2019 10:47 Age: 1 year

Guest Blog | Saving Kerbside Recycling

Category: ISWA BLOG


Mike Ritchie, Managing Director of the MRA Consulting Group, Australia, has over 20 years of experience in the waste management industry working with clients as diverse as ASX200 listed companies right through to local small businesses and most state and local governments in Australia. In this guest blog he discusses kerbside recycling in Australia in wake of China ban on waste imports.

It has now been over a year since China introduced its National Sword policy to restrict the importation of kerbside recyclable materials from the rest of the world. The purpose of the policy was to increase the recovery of domestically generated recyclables within China and further boost its own manufacturing. The new rule allows for a 0.5% contamination rate. Few Materials Recovery Facilities (MRF) were built for that level of purity.



Of course, the effect was a crash in the prices paid for baled recyclable product such as that produced by waste systems collecting commingled recyclables via a single recycling bin.



Around the world commodities piled up at MRFs, some jurisdictions lifted long standing bans on recyclables at landfill while some cities went as far as suspending their kerbside recycling and others, including in Australia, seriously contemplated it. That led to calls for improvements to recycling, reductions in contamination and a move away from international markets for recyclables towards domestic reprocessing of materials. All this implies an increase in costs to waste generators, including households.


Before I go further I would like to counter the commonly repeated myth that we are “dumping our garbage onto the developing world”. Kerbside recyclables (bales of cardboard, mixed or sorted plastic bottles, bales aluminium cans etc) are traded commodities just like iron ore and wheat. There is a buyer and a seller. Recyclables are purchased by overseas firms as inputs to manufacturing processes. The reason Chinese firms pay more is that they do more manufacturing for the globe. It is disingenuous to suggest that these materials are being “dumped”. They are being bought. And in so doing this lowers the costs of recycling for households and reduces the consumption of raw materials globally. Having said that, we have to acknowledge that there are cases of mismanagement of this material by both producers and users. Too much contamination in the producer bales and not enough environmental controls at the user site. Where this happens, both the exporting and importing country regulators need to intervene swiftly and decisively. Imposing fines and revoking importation licenses. It is to everyone’s interest that recycling is done and done right.


So, 12 months on, what has changed in Australia, my home country?


Firstly, local governments stepped up to the plate to support the continuation of kerbside recycling. With the fall in commodity prices MRF operators were at risk of going broke. Many councils are now paying higher fees to their MRF operators to cover the loss of revenue from product sales.


By and large that has staved off a crash in recycling and so far we have not seen any MRF operators going into liquidation. Anecdotally a couple went very close. Internationally, there were a few that did close.


We have seen a number of Australian MRF sales as operators exit the sector to be replaced by new entrants who view a brighter future involving more reprocessing (more later).


Secondly, there has been an increased push by some councils to educate the community on the economic and environmental costs of contamination in the recycling bin. In my view not enough, but some. While any reduction in contamination is beneficial to the MRF operator, it does not necessarily translate into a reduction in export contamination levels. That depends more on the design of the MRF.


So thirdly, we have seen MRF operators invested in additional sorting technology such as optical sorters for plastic, “bounce conveyors” and disc screens to separate cardboard and mixed paper, additional magnets for steel, and also additional workers to manually separate the contaminants. This comes at a cost. The MRF operators need to be congratulated for the speed with which they have tweaked their operations to reduce export contamination rates.


Which brings me (fourth) to a couple of State governments which have put up capital to support short term MRF improvements. These are Victoria, South Australia and NSW (albeit much of the NSW monies were not new and had already been allocated to local councils. This has left many MRFs short). Other States have done little.


Fifth, MRFs have swapped the export destination from China to Indonesia and a number of other Asian manufacturing countries (unfortunately often creating huge problems there so more due diligence is needed on the part of exporters and regulators in regard to the preparedness of those facilities to accept this material). But Indonesia has become Australia’s main market.


And that is the summary for one year on. Lots of short term adjustments to keep the lights on. The China contamination limit mostly affects mixed streams such as mixed fibre (paper and cardboard) and mixed plastic. MRFs that produce separated streams for example cardboard, grade 6 newsprint, HDPE plastic bottles, PET plastic bottles, tend to have been less affected because the prices of these segregated streams have held up. The big price fall has been for the mixed streams. Small “mini MRF’s” that mainly produce mixed product streams have suffered the most.


So in short most recyclable product is still being exported, albeit at lower prices. And that applies for most countries around the world. In contrast to some other jurisdictions, particularly in the USA, Australia also achieved to largely avoid landfilling of product. Very few Australian councils have stopped collecting (though a couple threatened to stop). There has been little stockpiling of product - it is costly to stockpile materials and sites would fill up very quickly. Elsewhere kerbside collections were halted and, for a time, stockpiling became a significant issue.


Nevertheless, kerbside recycling around the world managed to largely survive the year unscathed. But that is short term. The risk is that the other Asian economies will also begin restricting imports to grow their own domestic waste management systems and safeguard their environment. Vietnam for example has introduced similar controls.


In the medium term developed countries must “on-shore” the secondary reprocessing of fibre and plastic. For Australia though, I hold to the view that secondary reprocessing (such as the sorting and extrusion of plastic into pellets) will still rely on export markets for the product. Australia simply does not have sufficient tertiary manufacturing capacity to consume all of our recovered materials. That is not to say we should not support both the secondary reprocessing and the tertiary reuse of these materials locally. We should. But to expect a complete closing of the loop domestically is asking a lot (and will be more expensive). Of course, countries with a larger manufacturing sector should definitely push ahead towards a fully circular economy.


So the next phase for any country wanting to safeguard the environment and de-risk and decouple its recycling system from fluctuating international commodity prices must be the establishment of plastic reprocessing plants (about $AUD10m each in Australia) and fibre reprocessing (upwards of $AUD50m). My view is every domestic plant built takes some risk away from the system. The more the better.


The Australian Council of Recyclers (ACOR) produced a report that said $150m would largely de-risk Australia’s recycling system ($AUD30m MRF improvements, $AUD60m plastic, glass and fibre reprocessing, $AUD30m community education and $AUD30m positive procurement to create the local markets (Declaration: with MRA advice)). The Federal Government is reviewing its ongoing role in supporting these initiatives as part of a push towards the “Circular Economy”. I have not done the math but I imagine that in the scheme of things, the financials would not be that different for other developed countries.


The walk away messages – Governments need to lead. Industry will invest. Councils and communities will support. Recycling is too important to fail. From a resources, climate change, energy, economic, community or employment, point of view, it is too important to fail. Saving means de-risking. There are simple and cost effective solutions. The west’s Environment Ministers must lead.


Update to this article, originally written on 6th of February 2019:

Since my article on Saving Kerbside Recycling was written, the EPA of the Australian State of Victoria has temporarily closed down the three MRFs in Melbourne, the State's capital, due to fire risk associated with stockpiles. In all likelihood, these stockpiles would not exist if it wasn’t for China’s National Sword “ban” on recyclables import. Or if we had developed an effective recycling management plan in the year since the ban came on force. 

Whatever the case, the end result has been that at least 20 councils have either suspended their kerbside recycling services or they are sending their recyclables to landfill. Only a few have managed to find alternatives allowing them to continue recycling.

It remains to be seen if the MRF operator can overcome the short-term stockpiling issue quickly.

This is testimony to the need to risk proof kerbside recycling by on-shoring secondary reprocessing.


About Mike Ritchie


Mike combines complex technical expertise and sound business acumen. With over 20 years’ experience in the waste management industry, he has a long history working with clients as diverse as ASX200 listed companies right through to local small businesses and most state and local governments in Australia. Since 1990, Mike has held senior management positions in Suez, Visy, WSN, Liverpool and Brisbane Councils and was national Vice President of the Waste Management Association of Australia. He has served as Sessional Commissioner NSW Land and Environment Court and was a member of the Ministerial Advisory Council on Governance for Waste and Recycling in Victoria. Mike is known for his innovative approach to all areas of waste management. His expertise includes strategic planning, cost/benefit analysis, waste policy, economic evaluation and engagement.


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