TALKING TRASH - JSE MAGAZINE

TALKING TRASH

Managing waste has become a cornerstone of responsible business practice, yet disposing of it also presents an opportunity for innovative entrepreneurs

TALKING TRASH

We usually only think about it when it’s piled up on the pavement during a municipal strike – mounds of smelly rubbish bags bursting at the seams. But when it’s business as usual, our waste conveniently disappears to some mythical place to which most of us never give a second thought. Well, that’s unless you are one of the rare few who recycle and care about what is being left behind and where it’s going – and that’s before you even start moving on from the business of domestic waste to its many other forms.

The waste economy in SA is estimated at R15.3 billion (0.51% of GDP) – including both the public and private sectors – according to the last major survey by the CSIR in 2012. It’s more than just a numbers game though.

Des Gordon, group chief executive of EnviroServ, one of SA’s largest waste-management companies, sums it up perfectly: ‘Managing waste responsibly is a key environmental, economic and social priority in the 21st century. The world’s leading economies have all recognised that sustainability is a key business issue, and companies that position themselves for a global success recognise this.’

No one would deny that waste is a societal concern and unless handled professionally, can result in pollution and have dire consequences for ecosystems. The waste industry is evolving both in complexity and in the range of services offered.

‘The most anticipated opportunities lie in the recycling and beneficiation of waste streams. Municipal waste, being your typical household waste, provides a myriad of opportunities, particularly for SMMEs,’ says Gordon.

‘Currently, small operators can and do make money from recycling municipal waste on a low-cost basis, and also on a larger scale in some niches like paper recovery and recycling.’

Waste extra

Globally, the disposal of waste to landfill is frowned upon and SA is tightening legislation in this regard, forcing companies and municipalities to pay more attention to their waste streams. At present, participation in the household waste market by the private sector is low, with very little privatisation of waste collection, treatment or disposal.

‘There are some municipalities in South Africa exploring ways to involve the private sector in waste-management solutions, and some cities on the continent where waste-management services are totally outsourced to private companies. In time we may see this sector of the market open up and begin to create opportunities for growth,’ he says.

The private sector is driving innovation in waste in SA, and an increasing number of companies are moving into this space. Private firms are in a much more conscious state when it comes to the environment, where improving their environmental footprint is becoming a priority, says Interwaste group sales and marketing director Jason McNeil.

Of course, it also makes financial sense for companies to adopt innovative methods to tackle waste efficiently and effectively, as it is proven to reduce costs and improve business processes and efficiencies. ‘This is where the real value-add lies for the business,’ says McNeil.

In SA, there is currently a strong move away from landfill, which is presenting key opportunities for waste producers, especially as legislation puts pressure on businesses to comply and become evermore environmentally conscious. Many private waste-management companies are investing in world-class technology to drive innovation that removes the typical waste-to-landfill model and replaces it with innovative waste-management options by improving methodology and decreasing cost of waste for its producers.

According to experts, it is the private business sector that is driving this dynamism by coming up with innovations within their own businesses. This is placing pressure on the waste-management firms to derive further value from their customers’ waste in their own drive to become compliant with SA’s stringent waste legislation. As such, they too are driving innovation alongside the waste-manage-
ment businesses locally.

So it is clear that innovation is happening at a fast pace but just how effective is it? Here’s one of many examples. In 2008, consumer goods company Unilever SA sent 151 000 tons of waste to landfill.

It reduced this figure to 50 000 tons by 2013 and by January this year, the multinational reached its goal of sending no general waste to a landfill site.

There is a wide spectrum of job opportunities in the waste-management industry, from highly skilled graduates to unskilled unemployed entrepreneurs who wish to start a small business for themselves.

‘There are plenty of people who rely on waste to make a living within South Africa,’ says Gordon.

In total, EnviroServ employs some 4 000 people throughout its operations in Africa. It also has an owner-driver scheme where drivers own their own trucks; some now own a number of trucks and run small transport businesses.

‘As our industry grows and develops, the market is becoming more varied and offers opportunities for a wide range of players – from larger corporates who are able to put up complex facilities of over R1 billion, to a single reclaimer on a landfill site who operates on a subsistence level,’ he says.

Recycling has transformed from an environmentally focused activity into a business sector that provides jobs for thousands and contributes significantly to the economy. One of the main opportunities is job creation through co-operatives, where income is generated from recyclables.

Waste extra2
‘Managing waste responsibly is a key environmental, economic and social priority in the 21st century’

DES GORDON, GROUP CHIEF EXECUTIVE, ENVIROSERV

Private firms such as PETCO, PlasticsSA and POLYCO support the informal sector and contribute to job creation by providing support for infrastruc-ture, educational programmes and skills transfer, and creating market opportunities for the recyclable streams. Glass company Consul, Mpact Recycling and the Recycling and Economic Development Initiative of South Africa (Redisa) are also examples of best practice.

Consul states on its website: ‘As a country we consume in excess of 3.1 million tons of glass a year of which two thirds is reusable and can be diverted from landfill; estimates put glass at 4.5% of the waste stream. As South Africans, we should be striving for a resource-efficient economy where pragmatic sustainability measures, such as glass recycling, drive waste reduction.’

Besides the obvious environmental rewards, it is creating revenue streams for the unemployed by linking glass recycling to job creation and income generation; entrepreneurs can collect improperly disposed of glass containers in return for cash.

Meanwhile, SA generates some 10 million waste tyres per annum. Redisa’s government-backed Integrated Industry Waste Management Plan indicates a levy of R2.30/kg to subsidise a sustainable tyre-recycling industry with the bulk of the opportunities being in tyre-derived fuels. Over seven months in 2014, Redisa collected more than 17 000 tons of tyres from landfills.

Mpact Recycling, part of the JSE-listed paper and plastics packaging group Mpact, now collects more than 450 000 tons of waste paper and cardboard a year. This is used by paper mills to manufacture new paper and cardboard packaging.

Mpact MD John Hunt says that paper recycling is a significant business sector that supports about 100 000 jobs and is of considerable value to the economy. Mpact recently commissioned a PET recycling plant in Wadeville, Germiston. The plant will collect and recycle 29 000 tons of PET bottles a year that would otherwise end up in landfills, while also creating about 1 000 jobs.

‘Mpact has been recycling waste paper in South Africa for more than 40 years,’ says Hunt. ‘Our carefully planned entry into PET recycling will allow us to leverage our existing collection capability in paper to collect PET.’

As the waste piles up, many SA companies are also making inroads into the continent. Interwaste has established bases in Mozambique, Tanzania and Kenya. According to McNeil, there is much opportunity from the oil industry as well as multinationals. These countries produce hazardous waste but none have hazardous waste facilities.

‘Africa is growing and there is no doubt that opportunities will open up sooner than expected,’ says Hunt. Currently, it is immature and very much an emerging waste market.

Many African countries are not very highly regulated when it comes to waste management – as is the case with SA – and as such, it leaves little room for the intrinsic business ‘need’ for waste management. This will change as soon as there is a drive from governments to ensure stringent compliance standards, believes Hunt.

EnviroServ currently operates in Southern Africa and has enjoyed great success in more than 10 African countries, including Angola, Botswana, the DRC, Mozambique and Zambia.

According to the Institute of Waste Management of Southern Africa (IWMSA), its Africa chapters such as Zimbabwe, Zambia, Namibia and Swazilandare all keen and have shown great interest in re-establishing links with the IWMSA because of the opportunities available to encourage and stimulate economic growth in the waste sector.

One thing is for certain – as we continue to pump out more rubbish and landfill sites keep filling up, waste is coming up roses.

By Tracy Melass
Image: Fredrik Broden/reneerhyner.com