Changing business models for plastic recycling could lead to more profitable businesses, higher grade material on the market and more viable investments in recycling infrastructure, according to UK-based resource recovery specialist and recycler Axion Polymers.
According to Richard McKinlay, Axion’s head of circular economy, a shift away from the ‘traditional’ recycling business model could also potentially open up market opportunities for ‘lower quality’ recyclate, such as that from flexible plastics.
“Business models for recycling are changing, and in a beneficial way,” McKinlay said, noting that the sector was shifting away from the ‘old style’ recycling model of ‘buy waste, process it, sell flake/ commodity compound’.”
The recycling expert can currently see a move towards two distinct operational models.
“Some companies are controlling the waste, using it as infeed and producing recyclate from that,” said McKinlay, adding that Axion employs a similar method at its Manchester-based facilities.
Others, he went on to say, are becoming an ‘end user’ that buy in waste before converting them into a secondary raw material used in their own products.
Welcoming the current trend towards investment in or takeovers of recycling businesses by large petrochemical firms, he continues: “This is positive news as they bring stable financial backing and access to an existing customer base, alongside valuable polymer science knowledge and R&D capabilities.”
According to McKinlay, targeting higher-value markets is another trend that is benefiting the recycling sector.
“Rather than selling HDPE for piping, for example, firms are improving the quality and selling it for more demanding applications, such as packaging,” he said, adding that the gap in supply of lower-grade recyclate could be filled by flexible packaging recycling.
Driver for the growth will be the proposed UK tax on packaging with less than 30% recycled content.
“There will be a significant increase in demand for high quality material, potentially giving recycled compounds a higher market price than virgin,” the expert predicted.
This could shift recyclate from packaging up the quality ladder, moving it away from applications such as pipes and transport and logistic packaging.
The movement of recyclate could then open a gap in the market from “lower grade” recycled polymers, such as that produced from flexible packaging.
“With competition from higher grade HDPE and PP removed, compounds from flexibles could be supplied into these markets, improving the economic argument for recycling flexibles,” the expert added.
Axion Polymers recycles plastics from end-of-life vehicles or electrical waste to produce Axpoly recycled polymers at its two plants in Trafford Park and Salford in the UK.