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Through glass darkly - how recycling businesses have coped with falling glass prices

In the autumn of 2010, glass PRN prices started to fall from about £14 a tonne to around £2.50. As British Glass recycling manager Rebecca Cocking wrote in her December MRW Opinion column, “the glass PRN can represent the entire revenue for glass”. With such a fall of the PRN price, it was inevitable that the price of some grades of glass would suffer too.

Although the price of clear and amber glass grades have held up reasonably well because there is a good market for re-melt of these higher quality grades, green and mixed glass in particular have seen dramatic price falls. Indeed, it is known that a few glass reprocessors are currently charging gate fees of up to £10 a tonne for these grades.

Cocking believes that glass reprocessors will now look to be much more discerning about quality of material coming into their yards.

“Loads come in from local authorities and the reprocessors make a judgement on whether to send the material to re-melt or whether to send it to aggregate,” she says. “They will probably be making more detailed judgements on loads now, and will be attempting to send more to re-melt [where they will get a better price].

“Glass doesn’t hold huge value like other materials. We’ve seen that paper mills are turning poor quality paper away - I don’t know if the glass companies are looking to turn poor-quality glass away yet, but it could happen. However, demand is still there for glass for re-melt from glass manufacturers so reprocessors will still want to honour that demand.”

“We are aiming to add value to our end products by making them more appealing in the marketplace and a more profitable part of the business”

Glass container manufacturer O-I buys colour-sorted recovered glass as part of its raw material stream for making new containers and is an accredited reprocessor in England and Scotland. O-I consultant and cullet purchaser Jim Powell, who has 20-odd years experience in the sector, recalls raising concerns about PRNs becoming a tradable commodity in a working group back when the system was being developed. His belief is that the value of PRNs should not in any way be linked to contracts between glass reprocessors and their cullet suppliers.

“We have tried to minimise this risk by making sure that PRNs are not part of any negotiation, so we keep the PRN element separate to the contract,” he explains. “The policy we have adopted is that these are two different things.” But he says he has been something of a lone voice on this matter, and knows some rivals do include the PRN value in their contracts.

The way O-I operates is to agree fixed prices with cullet suppliers and review these on an annual basis. Powell says what he pays for cullet is generally on a par with the cost of virgin raw materials for glass: sand, soda ash and limestone.

“The reason we have not put PRNs into the equation is because we have no control over them,” he says. As a result of its approach, O-I has been relatively unharmed by the fall in glass PRN value but says it is not immune to the effects.

One company that has been adversely affected by the price fall is GlassCycle. It was set up in Northumberland in 2009 with the help of Government funding by director and bar manager Gary Harland. He saw the potential for a glass recycling service aimed at high-volume glass waste generators such as pubs and clubs.

The business is based around installing glass crushers into pubs and clubs, collecting the volume-reduced glass for a standard monthly fee, and then selling it on to a reprocessor for recycling. The premise is that this saves such businesses money on their general waste collection because glass bottles would typically make up 60% of their waste stream.

Harland says the fall in value of glass PRNs and glass prices has had a massive impact on his business, with earnings decreasing by about £1,000 a month. “It’s really affecting us and I have just had to lay off a driver because of it,” he says. That means the business now consists of just Harland and his business partner, and means he has to do the collection rounds himself. This eats into the time he could be using to find new customers and grow the business.

As a result of the situation, Harland is looking to remortgage his house to raise the funds to buy a machine that cleans off labels and grinds glass so it can be used in the aggregate sector. He is also working with a professor at Newcastle University to see if this material could be used in new underground heating systems.

He has ruled out separating the glass by colour and says, from experience, that bars and clubs simply do not have the time or space to do this. But having invested £35,000 and two years of his time in GlassCycle, Harland is determined to make it work: “I’m going to have to make a bigger investment - I don’t want to give up on it.”

Like GlassCycle, waste management firm William Tracey Group has seen a reduction in revenue and is looking at ways to get more return from glass, as aggregate division sales manager Jim Walker explains.

“William Tracey Group collects around 15,000 tonnes of glass a year,” he says. “Mixed glass is used primarily to produce aggregates and powders for the construction industry. These aggregates are used for hard landscaping, groundworks and the brick industry. The powder that goes into bricks reduces the firing temperature of the bricks, thus saving energy, and also seals in soluble salts that prevents staining and cracks.

“The clear glass is sold on and processed to make glass beads, which are added to thermoplastic paint that is used for white lines on the roads and for ‘peening’ or blasting high-value non-ferrous metals. The fall in PRN value has certainly impacted our business, with a reduction in revenue from PRNs of around 30%. We have reacted to this price change by reducing the credits paid for glass, making more efficient use of resources and looking at other end uses more actively as we seek to gain better value from our glass resources.

“Through industry trials of our glass powder material in the brick and concrete sector, we are aiming to add value to our end products by making them more appealing in the marketplace and a more profitable part of the business as a result.”

This need to change core business direction is confirmed by one of the UK’s main companies that has been buying lower quality glass for aggregate. Lafarge Aggregates & Concrete UK produces recycled aggregates from waste packaging glass at nine facilities across England. Its general manager for waste, recovery and recycling Andrew Bate says: “Aggregates are a low-value commodity and the recycling of poor-quality waste glass involves major costs associated with the removal and disposal of unwanted materials such as paper and plastic.

“Consequently, gate revenues are necessary if the operation is to be financially viable. The stable PRN prices we saw in recent years provided a firm foundation for industry to develop the infrastructure necessary to divert increasing volumes of waste from landfill.

“But the recent fall in PRN prices has served to undermine business models. Difficult discussions are taking place along the entire supply chain, and there is likely to be an adverse effect on recovery rates during 2011. This is a great shame, particularly as the root cause seems to have been the Government’s decision not to increase PRN targets for packaging glass.

“Lafarge Aggregates & Concrete UK will continue working with its suppliers but, undoubtedly, there will need to be a readjustment of commercial terms.”

On the brighter side, there are signs that glass PRN prices have picked up a little recently, with prices in the region of £6 to £8 per tonne. Whether this will continue remains to be seen. But as mentioned above by some of the collection businesses, the collapse in glass prices for poorer quality grades has made companies reassess how they deal with glass, and are looking at new and innovative solutions to ensure it remains an easily recyclable resource.

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