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China's 'Green Fence' policy sparks renewed fears over PRN fraud

PRN frauds could soon be rife if prices rocket as a result of China’s ‘green fence’ policy.

That warning has come from Roger Baynham, chairman of the British Plastics Federation’s Recycling Group, as China’s crackdown on poor quality recyclables continued to jangle nerves across the industry with warnings of ‘panic’ among recyclers of all kinds.

Fears are growing that the blocking of exports to China will trigger a sharp rise in PRNs as the domestic reprocessing industry cannot easily handle increased volumes, except for plastic bottles.

Richard Baynham

Baynham (left) said: “If prices do go very high there is increased opportunity for PRN fraud. There is a real risk that unscrupulous people will find ways to do that.

“In the mid-1990s when PRN prices hit £100 there was strong evidence of fraud taking place and export PRNs were invented to solve the problem. But if exports are gone there is the risk this will happen again.”

One plastics industry figure said he had already seen “a tightening in the market and it’s harder to export plastics.

“People buying lower grades of plastics are very nervous about how they will have stuff mounting up in their yard”.

Baynham said there was capacity to recycle significantly more plastic bottles in the UK, but targets demanded an extra 500,000 tonnes of plastics collected by 2017, the bulk of it household film and pots, tubs and tray.

“Those are the very materials which we have exported - hence need for leadership from the government,” he said. “We’ve not had the volume in the UK to reprocess this.”

“We can store it but the question is for how long and against what plan, you can just assume that after a while the Chinese market will come back but that seems very risky”

Lack of a domestic market had historically made it hard to attract investment for reprocessing capacity and a “clear route” from Defra was needed to give investors the necessary confidence, he said.

A Defra spokesperson said: “We are aware that China has launched initiatives to improve its environmental operations, and that its authorities are taking a closer look at the materials they import. But we are not aware of any recent UK imports having been turned away.

“Under the Waste Shipment Regulations, the Chinese authorities can specify the types of waste they wish to receive from Europe.”

Quality may improve

Bernard Chase, purchasing director of Regain Polymers, said the Chinese restrictions were “likely in the longer term to drive UK recyclers to seek better quality”.

He said the UK industry had “pleaded” for years with the government for measures to improve quality “and it fallen on deaf ears, and they are now about to fall flat on their faces.

“What is Defra doing? It wants a 5% increase per annum for five years for plastics recycling, but obligated businesses will definitely not be willing to pay an astronomical price for PRNs.”

Chase said MRFs here “are not in general set up to do a decent enough sorting job for the quality needed.

“It is an indictment of the regulatory system in this country that we have to rely on the government of a customer country to demand the improvement in quality that we know is needed here.

“That has been the environmental crime perpetrated on this country, that quality has been low because it can all be exports. We have to be more self-reliant.”

Environmental Services Association policy director Matthew Farrow disagreed: “MRFs vary in their configurations and capabilities, and in the grades of different materials they produce for different customers.  There is no reason in principle why many UK MRFs would not be able to meet tighter Chinese quality specs, though plastic recyclate may be sold to other customers as well.

“At present much more plastic for recycling is being collected than UK plastics reprocessors have capacity to deal with.  We hope that this will change over time and that we will see the UK reprocessing sector growing with more material reprocessed in the UK.”

Chris Dow, chief executive of Closed Loop Recycling, said: “We buy mixed grades and have had got lower prices and better quality so in a way we are a beneficiary of all this as the material should be of a quality that can be utilised by domestic reprocessors”.

Seeking the ‘back door’

Chase predicted some suppliers would “seek the back door into China” by exporting materials to Malaysia, Indonesia and Vietnam and other parts of the Asia Pacific rim in the expectation that it could be cleaned there to the standards required by China.

“But if those countries are suddenly offered a deluge of materials they are bound to lower the prices they pay. I also don’t see them being able to suddenly switch on capacity for the sort of tonnages that have been going through China,” he said.

Eco Plastics managing director Jonathan Short foresaw difficulties for any exporter who tried this route.

“As for trying to send materials to other locations, there are strict rules on that. Hong Kong has been very free, but Indonesia requires inspection by [international independent inspection service] SGS, and has no requirement for mixed plastic bottles.

“It’s the same story in Malaysia, and Vietnam is very much a single polymer regime.”

Even material acceptable to China is being affected as the country’s ports are becoming jammed with containers of rejected recyclables, sources say.

One industry manager noted a problem of “port congestion over there in China as customs refuse to let materials though and so everything is held up”.

Readers' comments (1)

  • From John Glover, MD, Bywaters. The real panic may come from those worldwide who have previously got away with sending low quality materials with much contamination. Import investigation for these materials appears to be slowing the whole market down but for quality materials suppliers should ultimately have little to fear - although the lowest grades will always be problematical in difficult times. In the UK there is much too much talk about the lack of infrastructure but what is missing is financial confidence at all levels and the government talks but does not deliver. To quote a speaker I heard this week "The Government's feet need to be held close to a the fire!" That should be "into the fire".

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