Is Plastic Recycling Profitable? ♻️ Podcast Ep. 38 Don’t Be A Waster



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Transcript: Is Plastic Recycling Profitable?


Hello and welcome to another edition of Recycle: Don’t be a Waster! In today’s episode, we are going to cover what might be a misconception, but it’s a commonly asked question – as to how much money do waste companies make? Or even recycling companies make from plastic recycling or how profitable is plastic recycling. And I be… where would this be debunking is… that the term? Maybe we’re debunking a common misconception.


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The sad reality is, in the vast majority of cases, plastic recycling is not really commercially viable. And what I mean by that – when I say that, basically, what I mean is it isn’t profitable. And without significant subsidies, and you might… you might ask why you probably see garbage trucks and recycling trucks driving past your house with signs up saying resource recovery, and we recycle this and we recycle that and, of course, that is very very true when we’re in the context of metals, you know.


Of course, aluminium copper and even precious metals: it’s even true in the case of cardboard. It’s probably breakeven in the case of glass. It’s certainly an aluminium, but it certainly is true. But when we get the word of plastic as we know, it is not really true, as I suppose, we’ll ask, you know, we’ll go through the reason… the fundamental reason, you know, any business you have. If your costs are more than your revenues, you are in big trouble.


Act 2: Is Plastic Recycling Profitable?


And I suppose, when you dig into the plastic recycling industry, the costs are numerous and the revenues are basically zero. So and again, this is assuming that we’re not incinerating, we’re not burning that plastic, which would at least release… it would release energy which could be used to create electricity and heat homes. But if you even look at the stats as to how much waste, how much plastic waste is actually recycled… so I’ve got some stats here.


This is from the United States over… this is even in 2018, and if we’re looking at plastics in weight, in U.S, tonnes, which I believe is, I think, that’s an all U.S, tonnes of different metric tonnes. But you know, the… we’re looking more at the ratios than anything else. Even of the 2015 recycling of municipal solid Waste. plastics was peaked at 8.6 per cent of the of the plastic collected. Another circuit, ten percent is  incinerated for energy and the rest is landfilled.


And the reason is because it’s fundamentally cheaper to to dump it at landfill, you know. So what are the reasons… why is that so, I suppose? We’ll be… we put on our accountant’s hat, and we will look at… we look at the costs and we look at the revenues. The revenues from plastic are fundamentally zero and no one really is going to pair you to get junk plastic – bad plastic. Because fundamentally, it’s more expensive to make plastic from recycling than it is to make a virgin plastic from new oil, etc. And also, the recycling plastic will be of lower quality, so it’s more expensive and lower quality.


Act 3: Is Plastic Recycling Profitable?


And so you know, from a clear business perspective without government or charitable, you know, input, without subsidies or tariffs etc., fundamentally, nobody would recycle plastic. In many instances, we look at the cost of plastic to actually recycle plastic, and we have to actually collect it. So we have to provide bins to people and bins at homes and businesses and which obviously, are capital investment. We then need to collect those bins.


So we need trucks; we need routing; we need drivers; we need systems that can collect that plastic and bring it to where we needed to go to. We then need to separate that plastic. And one thing about plastic is it comes in infinite varieties of shapes, colours, sizes and textures, which is a major selling point. But the problem is you need to separate it into the different types of plastic so that it can be recycled in single stream recycling.


You then need to build a processing and recycling facility, which obviously is extremely expensive. And clearly, recycling these… recycling these materials require huge facilities to do it at scale. There must be reasonably well-located in the center of cities or some are not too far away, and you need to have… making sure there is environmentally safe firstly so there’s no noxious fumes and secondly, clean so that it doesn’t put the neighbours off the nimbies in the area and thirdly, you still need to add virgin plastic to it so you need to buy additional, you know, fresh plastic that needs to go into the mix.


And then obviously, you need to apply electricity to heat – to create the heating that will allow you to crack the plastic and, you know, break it down into granular system so that it can be melted and turned into new virgin fresh plastic. Or sorry, new recycled plastic.


Act 4: Is Plastic Recycling Profitable?


All of these are costs. And obviously, with energy prices through the roof. In this… is being recorded in late 2022, you can understand that the cost base is high. The revenues from it fundamentally are very low. No one really will pay you for this plastic. Potentially, if it was being incinerated, potentially, there would be people… may pay for that. And you know, that’s or probably more like… likely take it for free and so it’s a cheaper option than dumping a landfill, keeping in mind that dumping a landfill costs in Sydney which is more expensive than other cities and states in Australia, dumping at landfills roughly on the back of an envelope 300 per tonne.


So there is a… if you could find a cheaper way of doing it, that would be significant. Suppose this is where government funding, you know, whether federal or state funding comes in and where a subsidization is important to date, what they’ve done is not so much pay for plastic but which is something that could be explored. But fundamentally, subsidize and by making the topic of landfill relatively more expensive by applying landfill levies so you pay, you know, 150 dollars per tonne that you dump at landfill. And obviously, if you avoid that by recycling or some other usage, you don’t have to pay that number.


But it still isn’t having that big an impact, so you know the… on a simple business model, you know, you have to produce a revenue. You have to, well I suppose, you have to either reduce the costs or you have to increase the revenues. You could decrease the cost by improving technologies by making it easier, by increasing scale, by having better separation systems, by subsidizing collection and you know, subsidizing collection has been done. But I suppose from a revenue perspective, you know, how can you make… and this again will come down to technology improvements.


Act 5: Is Plastic Recycling Profitable?


If you improve the technology of recycling, potentially, people will pay for that plastic rubbish, you know. In recent years, before China stopped importing plastic, and we were basically excellent. When I say we, I mean Australia – countries, Western countries such as the United States, western Europe, were fundamentally exporting their plastic junk to China and other predominantly Asian countries. And at low rates, too, there to recycle it.


That obviously was not sustainable, and those countries fundamentally pushed back and said they would not accept this mixed junk anymore. So that that, I suppose, fake opportunity valve has closed, and now we, I suppose, we have to face the reality, you know, our plastic recycling companies making lots of money will know. And what you’re saying is like even, I suppose, the opportunities to recycle lots of plastic have decreased, you know. Even the plastic wrap and, you know, soft plastics can be collected from businesses, generally free of charge.


But when, you know, the advice at the moment for dark or stained plastic wrap is that it can’t be recycled commercially, and it needs to go in general waste, which is obviously a very negative outcome, so you know, that’s the situation at the moment. It, I suppose, it puts pale to anybody out there thinking of opening, making a million dollars from or making their fortune from opening a plastic recycling business.


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There are many other ways to make money in recycling from E-Waste to metals of course and obviously cardboard but the plastic is um it’s more of an environmental thing I suppose for the vast majority of participants then uh than a money making gold mine so I suppose we’ll leave it there today obviously as always very interested in your feedback and what you thought of this podcast and as you always you know like subscribe and share and hopefully we’ll grow this recycling community. Thanks again!


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