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Metal recyclers worried about new landfill fees

Metal recycle companies are worried planned hikes in landfill fees could mean more abandoned cars on the side of roads. Beware of unintended consequences, they warn.

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The country’s metal recyclers are worried a government proposal to increase landfill waste fees may make it too expensive to extract the metal from tens of thousands of car carcasses.

Over 100,000 cars come to the end of their lives each year in New Zealand. Many are sent to dismantlers before the frame is transported to a recycler where it is shredded to recover the remaining metal. What’s left is generally sent to a landfill.

Associate Environment Minister Eugenie Sage said in October that Cabinet is about to consider a paper that discusses expanding and increasing the waste disposal fees at landfills. She says the charge could increase from the current $10 per tonne to as much as $140 a tonne. The fees could also be introduced to more landfills. At the moment, only the 45 that accept household waste are able to charge the fee – there are another 400 or so landfills in the country.

The $10 per tonne levy has been in place for 10 years and a review has recommended an increase to incentivise waste minimisation.

Fee Impact

Scrap Metal Recycling Association of New Zealand (SMRANZ) President, Richard Harrison says SMRANZ will be pushing for an exemption to the waste levy.

“Our industry has invested close to $100 million to recover resources from whiteware and cars. This has stopped a lot material from going straight to the landfill – more than half of the content is now directed elsewhere. Reducing the amount going to landfills means landfills have a longer useful life.

“If the levy goes up it adds to our total costs and, with recyclers having to manage market conditions for ferrous metals, it just wouldn’t be commercially viable to put car bodies through a shredder to extract the metals.” He says for every tonne of car bodies recycled, around 600 kilos of metal are recovered and the remaining 400 kilos (plastic, carpeting etc) goes to landfill.

But with steel prices going through the floor this year, the margins on ferrous metals are not that great. Higher landfill fees would mean there’s less financial incentive for cars to be scrapped and the metals recycled.

“In practice, this means that recyclers may turn away car bodies and whiteware at their gates if they can’t make any money from the items. Where will these items go?”

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There are only seven metal shredders in the country. Car bodies are purchased by metal recyclers from around the country and transported to these shredders, often from many kilometres away.

"For instance, Northland’s vehicles are brought to the shredder in Auckland.” But, he explains, the ‘buy’ price of a vehicle falls when steel prices drop, and falls even lower if the metal recycler has to pay a higher waste fee. This would mean wreckers would pay owners less for a car and get less from the metal recyclers.

“The end result is there’s less incentive for people to properly dispose of their vehicles, and that’s not what New Zealand wants.”

A likely outcome is more end-of-life cars are simply abandoned and local councils will become responsible for the cost of their disposal, he says.

Asked whether the final cost of disposal could be included in a whole-of-life stewardship scheme for a car, Richard says it would be too complicated and would not result in less waste. “An end-of-life vehicle goes through a couple of industries and the value is extracted. At what point do you say who gets what from such a scheme?

“More importantly, how do you design a product stewardship scheme when commodity markets are changing all the time?” (Products under a compulsory stewardship scheme attract a fee when they are imported and the money is later used for their sustainable disposal.)

Richard says the association is in favour of product stewardship schemes, providing they focus on hard-to-recycle materials and they have made a submission to support this position as part of the government consultation on priority products for stewardship.

Tyres are one of the products being considered for priority, however, the association is encouraging the government to distinguish between the rubber portion of the tyre and the metal rim, as there is already a system to manage the metal rims.

Steel trends

Steel is an international commodity and prices have been falling over the past 18 months as a result of international events such as Brexit, the slow-down in construction and manufacturing in China, and the hike in the US import tariff on steel. In US, locally produced steel prices have risen by over 40 percent as manufacturers take advantage of the cut in competition from China. The past few months have been particularly volatile, with steel prices falling rapidly, which impacts on the New Zealand recyclers and their ‘buy’ price.

Richard says market fluctuations are nothing new in either the ferrous or non-ferrous metal markets. “Metal recyclers have always had to manage through ups and downs in commodity markets and a government the size of New Zealand’s does not have the influence on these markets.”