Chinese Firms Snap Up U.S. Sites To Process Scrap (#GotBitcoin?)
Pellet, box makers buy and build plants to reconfigure waste too dirty for export to China. Chinese Firms Snap Up U.S. Sites To Process Scrap (#GotBitcoin?)
Chinese companies are setting up shop in the U.S. to obtain the scrap paper and plastic their government has deemed too dirty to import.
U.S. shipments to China of old cardboard, newspaper and discarded plastic slowed after China this year implemented more-stringent standards on the purity of imported scrap. That change has left Chinese packaging companies and plastics manufacturers short on materials.
Some of them are buying or building plants in the U.S. to manufacture the paper for corrugated boxes, pulp and plastic pellets for which they can’t find enough raw material in China. Companies including some of China’s biggest paper makers are discovering a glut of cheap recycled material in the U.S.
“Right now, plastic waste is everywhere after China stopped taking it,” said Song Lin, a longtime broker of plastic scrap in the U.S. who is preparing to open a factory in Georgia that will turn discarded plastic into pellets for export to China.
The moves are a boost to the U.S. scrap industry, which collapsed in recent months amid sharply lower exports to China. For now, investors are mostly subsidiaries of Chinese plastic and paper producers, or firms supplying large clients in China, and have experience navigating the logistical and regulatory challenges of exporting to the country.
ND Paper LLC, a unit of China’s Nine Dragons Paper (Holdings) Ltd. , in recent months acquired paper mills in Biron, Wis., and Rumford, Maine, for $175 million from British Columbia-based Catalyst Paper Corp. The firm also bought a pulp mill in Fairmont, W.Va., for $55 million and a pulp mill in Old Town, Maine, this month from OTM Holdings. That mill had been idle since 2015, and ND Paper expects to restart operations early next year.
“All four of our mills will have a heavy focus on exports,” said Ken Liu, chief executive of ND Paper. Shanying International Holdings Co. , a rival, has also jumped into the U.S. market. Its subsidiary, Global Win Wickliffe LLC, acquired an idle paper mill in Wickliffe, Ky., in August for $16 million and plans to invest $150 million to restart the mill, which closed two years ago, and eventually employ about 500 people. Global Win declined to comment on the purchase.
Restarting idle plants could revive demand for U.S. recycled paper. China is already buying more finished paper from U.S. mills, particularly a variety known as kraftliner that is usually made from wood pulp and used in corrugated boxes.
U.S. exports of kraftliner rose 36% between January and August from the same period a year earlier, according to forest-products markets researcher RISI Inc.
China is the world’s biggest consumer of scrap waste, and over the past 20 years became a significant outlet for material collected by residential recycling programs in the U.S. As those programs grew, the quality often deteriorated as discarded food, liquids and other trash infiltrated the huge bundles of paper and plastic shipped to China.
Recyclers in the U.S. complain the stringent standard set this year, for no more than 0.5% contaminants per load of scrap, is impossible to meet under current sorting practices. Some are investing in new equipment or changing the way material is collected to more meticulously sift out contaminants.
Exports of recovered paper to China through the first eight months of this year are still down 40% from the same period last year at 4.9 million metric tons. Exports of scrap plastic have fallen 93% to 35,000 metric tons, according to the Institute of Scrap Recycling Industries Inc.
With plastic exports plunging, Mr. Song converted his export brokerage business to a plastic-pellet manufacturing company known as UPT Group Inc. At least two of his former customers are also setting up plants in Alabama and Georgia to process scrap plastic, he said.
Mr. Song this year bought a 300,000-square-foot, former frozen-foods warehouse in Montezuma, Ga. He is preparing to fire up equipment next month that will wash old plastic and manufacture as much as 20,000 tons of plastic pellets annually.
He expects most of the scrap he melts to come from auto factories, retailers and farms within 200 miles of the plant. Mr. Song plans to export the pellets from the Port of Savannah, Ga., to a company in China that manufactures plastic pipe.
“They’ll buy every pound we make,” he said.
Recycling Rethink: What to Do With Trash Now That China Won’t Take It
The trash industry and governments are investing in domestic processing, ramping up alternative strategies such as incineration and rolling out education campaigns. Some are dropping programs altogether.
For decades, America and much of the developed world threw their used plastic bottles, soda cans and junk mail in one bin. The trash industry then shipped much of that thousands of miles to China, the world’s biggest consumer of scrap material, to be sorted and turned into new products.
That changed last year when China banned imports of mixed paper and plastic and heavily restricted other scrap. Beijing said it wants to stimulate domestic garbage collection and end the flow of foreign trash it sees as an environmental and health hazard. Since then, India, Malaysia, Vietnam, Thailand and Indonesia—other popular markets for the West’s trash—have implemented their own restrictions.
The moves have caused a seismic shift in how the world deals with its waste. Long used to shipping off trash to poorer countries to sort and process, nations are now faced with the question of what recycling is worth to them. They are undertaking new investments in domestic processing, ramping up alternative strategies such as incineration and rolling out education campaigns to teach homeowners to sort trash. Others are dropping programs altogether.
Recycling is “something that’s ingrained in you, and one day it suddenly all goes away,” said Kyle O’Brien, the town manager of Broadway, Va. The town had offered curbside recycling for two decades but canceled the service last year after Beijing started turning away the world’s recyclables. The company that processed the materials, van der Linde Recycling, closed its household waste processing facility, blaming the severe drop in prices.
China’s 2018 restrictions on a variety of waste imports radically changed global flows of plastics, including polyethylene, a popular type used in shopping bags and shampoo bottles.
For years, the world’s bottles and boxes made their way to China on ships that offered deep discounts to avoid returning empty after dropping off cargo in the U.S. and other countries. Since 1992, China has imported 45% of the world’s plastic waste, according to data published last year in the journal Science Advances.
“It was a great relationship, where we bought their goods and sent them back the empty boxes,” says Brent Bell, vice president of recycling for Houston-based Waste Management, the largest waste management company in the U.S.
Last year, China instituted a ban on 24 categories of waste—including, for example, plastic clamshell containers, soda and shampoo bottles, and junk mail. It said foreign garbage was “provoking a public outcry.”
As of October, U.S. scrap exports of plastic to mainland China were down 89% since early 2017, when China began to make clear it would ban many categories, while mixed paper exports were down 96%, according to the Institute of Scrap Recycling Industries.
Total U.S. plastic scrap exports to all countries were down 64% in that time period, while mixed paper exports were down 42% according to ISRI.
Cities and towns have been scrambling to find new buyers for their waste ever since. One big problem is that many locations outside cities such as New York are used to putting recycling in a single bin. Different materials must be painstakingly separated before they can be processed. Much paper is too damp and plastic too soiled with food or grease to be recycled at all.
China accepted dirty and mixed recyclables because it had low-wage workers to sort out unwanted material, often by hand. That gave American contractors little incentive to weed out food scraps, plastic bags and nonrecyclable junk stateside.
After China rejected imports, a flood of trash was rerouted to countries such as India, Indonesia and Malaysia. Many of those places now say they are overwhelmed and have imposed their own restrictions on paper or plastic imports. The countries also want to focus on developing their own waste collection industries.
Malaysia in May began sending back 60 containers of imported trash to the U.S. and other countries, complaining it had become a dumping ground for rich countries. The containers were meant to contain plastic scrap but were contaminated with other items such as cables and electronic waste. A government spokeswoman said more containers will be returned as Malaysia ramps up inspections.
Japan, which historically sent most of its plastic exports to China, had been redirecting trash to Malaysia, Thailand and Vietnam after China’s ban. But when those countries began turning dirty recycling away, Japanese collectors started stockpiling, in hopes a new market would arise. Over the past year, Japan has amassed 500,000 tons of plastic waste, according to Hiroaki Kaneko, deputy director of recycling at the environment ministry.
Japan, the second-biggest exporter of plastic waste behind the U.S., is trying to stimulate domestic processing by earmarking billions of yen to subsidize plastic recycling machinery for private companies.
Daiei Kankyo Holdings, a recycling company based in Kobe, recently applied for the government subsidies, which are estimated to cover up to half the cost of recycling equipment for a new plant slated to open next year in Osaka. The opening of the plant, where plastic waste will be recycled into cases for transportation of food and other items, has been pushed forward by a couple of years due to China’s ban, said Kunihiko Idei, manager of the business strategy division of the company. The plant will double the company’s current capacity to around 30,000 tons a year.
Asei Co., a Japanese plastic waste exporter, moved the production of plastic pellets, which are created during the recycling process and used to produce new products, home from its factory in Shanghai. It spent 500 million yen, or close to $5 million, on two new facilities northeast of Tokyo.
The U.K. is burning more of its trash, including dirty or low-value recycling. Attitudes toward incineration vary greatly by country. In the U.S., where space is plentiful, it has long been cheaper to send materials to landfills, and incineration has remained unpopular. Across much of Europe, by contrast, trash burned for energy has been popular for years.
For decades, much of America’s recycling has ended up on the other side of the world.
Incineration and recycling rates in England are now on par at roughly 42%, according to government data. Waste collected by local authorities sent for incineration climbed to 10.8 million metric tons last year from 10.2 million tons a year earlier, while recycling dropped to 10.9 million tons from 11.3 million tons.
“We are fast moving into a crisis where we don’t have market capacity for the materials collected, and already prices have plummeted,” said Simon Ellin, CEO of the Recycling Association, a U.K. trade body.
London-based waste contractor Paper Round has begun asking customers to stop putting plastic film, which isn’t easily recyclable, into recycling bins dotted around the office buildings, hotels and restaurants it collects from, because buyers don’t want it.
It is holding breakfast seminars for office workers and sending educational emails to staff at the buildings it serves explaining what can and can’t be recycled. It has also warned customers that unless prices for cardboard rise it will start charging for some collections.
“The China ban has highlighted that we can no longer export our problem,” said managing director Bill Swan. Paper Round’s buyers have much higher standards now, he said, such as checking moisture levels, which can decrease the quality of paper.
In Memphis, Tenn., Republic Services Inc., one of America’s largest waste haulers, last year stopped accepting mixed recycling put in a single bin from some businesses, saying it was too contaminated.
“When you’re in a buyer’s market—and we are certainly in a buyers market—you can demand higher quality,” said Pete Keller, head of recycling at Phoenix-based Republic.
The move in Memphis prompted the city’s airport to send all its bottles, cans and paper to landfills. For months it left in place recycling bins in case the service returned but recently gave up and removed them.
To improve the quality of what it does still collect, Republic has hired more staff to sort materials and acquired new optical scanners to distinguish between metals, colored paper and different types of plastic. It opened a new facility in Texas earlier this year that uses a variety of technologies to sort material in milliseconds.
Other waste collectors have also made investments, which have driven up costs for customers. Philadelphia is paying $92 a ton for its recyclables to be collected, up from $44 a ton before the China ban. Higher costs initially prompted the city to start burning half its recyclables before backtracking after public criticism.
The city is now spending $500,000 on an advertising campaign it hopes will reduce contamination rates—down to 10% from the current 25%—to secure it a discount on collection costs. “Often the material people put in bins, they don’t know whether it’s recyclable,” said Department of Streets Commissioner Carlton Williams, who counts bowling balls, garden hoses and old toys among examples of contaminants he has seen.
This summer, Philadelphia put ads on bus shelters and the radio telling people to “take a minute before you bin it” and “if in doubt throw it out.” The campaign asks residents to stop putting plastic bags in recycling bins and to rinse food containers. It has also sent staff door-to-door to tell residents what should go in the recycling bin, and has put lids on bins to protect paper from the rain.
The waste contractor in Flagstaff, Ariz., stopped taking five types of plastic, including yogurt tubs and clamshell food containers, because it couldn’t sell those types on to processors. Much of that material now goes to landfills.
The city is running appeals on its social-media pages to encourage its roughly 70,000 residents to put only bottles, jugs and jars in recycling bins to comply with the change. “Do you experience confusion when recycling plastic?” asks a video, styled like a commercial for prescription drugs. “If you live in Flagstaff, talk to your doctor about recycling plastic by shape.”
“People love recycling—it’s a very tangible way of living your environmental values—but I don’t think people realize the impact of putting the wrong things in the bin,” said Dylan Lenzen, who works on waste prevention for Flagstaff.
For some towns, the finances don’t work. Waste collectors in Deltona, Fla., got just $5 a ton for mixed paper last year, compared with $120 a ton in 2017, while processing costs stayed flat at $80 a ton. “With the current state of the recycling market, there is little if any market for the processed collected recyclable materials,” City Manager Jane Shang said in January. The next month, Deltona suspended its recycling program.
Kristie Ramirez didn’t believe her 12-year-old daughter when she came home from school one afternoon and said Deltona was sending their recycling to a landfill—residents were still filling and setting out recycling containers, but collectors were dumping it all into the regular trash. The 35-year-old, who called her waste company to check, still puts out her blue recycling bin on collection days, saying she doesn’t know what else to do. “I have always practiced recycling as long as there’s a recycling bin that comes with my trash bin,” she says.
China Re-opens Its Doors To Foreign Junk
A resumption in recycling imports may not sound like much. But foreign mining companies should be worried.
Australia’s iron-ore miners could be excused for casting a nervous eye north on Friday. With little fanfare, China, the world’s biggest consumer of iron ore, opened its doors to 3,000 tons of Japanese scrap metal. It was the country’s first such import since it imposed a near-total ban on “foreign garbage” in 2019. It won’t be the last.
In the short-term, that load of scrap (and others due to arrive in coming months, including from the U.S.) is more symbol than market-mover. But it’s a symbol worth paying attention to. Longer-term, such imports spell trouble for exporters who have long assumed that China will simply continue buying whatever they dig up. China’s government is newly determined to reduce its reliance on Australia — or any other country — for raw materials.
China began importing scrap metal in the early 1980s. It was cheap (compared to virgin metals that need to be mined) and in high demand among the small manufacturers that would power China’s economic surge over the next few decades.
The port cities of Ningbo and Taizhou built huge car- and motorcycle-part manufacturers largely on aluminum and copper scrap imports. As of the mid-2010s, more than 50% of the paper manufactured in China was produced from imported recycled material.
During the frothiest days of this trade, officials would occasionally voice concerns over how dependent China had become on foreign recyclables. They’d warn that a disruption in the trade could seriously handicap the country’s exporters, and complain that China — the world’s biggest buyer of scrap — didn’t have much control over prices set abroad. Such concerns contributed to the decision to restrict imports in 2019.
China’s steelmakers, meanwhile, were making their own case for self-sufficiency. In 2010, the industry placed stories in state media arguing that the solution to China’s dependence on expensive iron-ore imports was a transition to using scrap.
Yet a decade later, China was still importing 1.2 billion tons of iron ore a year, roughly 60% of it sourced in Australia. That placed Chinese steelmakers at the mercy of Australian mining giants and complicated escalating disputes between the two countries’ governments.
While the desire to boost China’s scrap use has only intensified, doing so has proved challenging. Among the biggest obstacles was the government’s ban on imported recyclables, which made it harder to transition to a more sustainable economy while raising raw material costs.
The good news is that, after an aggressive lobbying campaign by the steel industry, those restrictions were lifted on Jan. 1. Still, it takes time to restart severed trading relationships, and in the short run China’s mills won’t be able to import more than a small fraction of global steel recyclables.
Australia’s miners should worry anyway. China’s latest Five Year Plan envisions boosting domestic scrap supplies from 240 million metric tons in 2019 to 300 million in 2025. That’s already pushing up demand, and Chinese junkyards are scrambling to supply it. If China simply goes the way of other East Asian countries, the proportion of scrap in its steel will surely grow.
In the mid-20th century, Taiwan and Japan built manufacturing economies on vast volumes of imported junk. As they became more affluent, they generated more scrap metal of their own — from cars to appliances to cashed-out motorcycle parts — and needed to import less. Both countries eventually became net exporters.
It wouldn’t be surprising if China followed a similar trajectory, especially since the government is making it a priority. If it expands the proportion of scrap used in its steelmaking by 50% — a level that would bring it close to Japan’s — it would displace more than 100 million tons of iron ore demand (at current levels), and go a long way toward rebalancing its relationship with mining companies in Australia and elsewhere.
The resumption of junk imports this week may not sound like much. But it amounts to China’s first big step in scrapping its reliance on other country’s mines.
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