Business Economic Notes

Waste Materials

These notes are issued to Inspectors of Taxes to assist them in examining accounts. They are intended to provide a general background to the trade, with some explanation of its most important features. Business Economic Notes are not intended to provide an exhaustive or definitive picture of any particular trade or profession.

Waste materials reclamation and disposal

Contents

1. Introduction

Reclamation

2. General

3. Scrap metal

4. Vehicle breakers and dismantlers

5. Waste paper

6. Oil, chemicals and solvents recovery

7. Waste plastics

8. Waste textiles

Disposal

9. Landfill sites

1 Introduction

Each year, over 450 million tonnes of waste is generated in the United Kingdom. About three quarters is mining spoil and agricultural waste which is generally disposed of on or near the point where it was created, i.e. dealt with `in house' by its producer.

This note is concerned with the remainder, commercial and domestic waste, known as `controlled' waste as its method of disposal is regulated by the Control of Pollution Acts.

Commercial waste

About a tenth of all commercial waste is disposed of `in house', mostly by disposal on landfill sites owned by the producer, although some is burnt to provide heat or power. A further third or so is collected by private reclamation firms and processed to obtain materials for re-use; deposited on landfill sites. A further (very small) proportion is collected, converted into `pellatised fuel' and sold; a relatively little is judged to be so toxic as to require disposal by specialist firms. The remainder is collected, mainly by private contractors, and disposed of on landfill sites. Local authorities collected relatively little commercial waste and may charge for doing so. Overall, about five-sixths of all commercial waste is landfilled and about one-sixth reclaimed.

Domestic waste

Most domestic waste is collected by local authorities. A small amount of what is collected is either burnt to provide power or converted into `pelletised fuel' for sale, or reclaimed by the authorities. Some glass is recovered via `bottle banks'. The overwhelming bulk is deposited on landfill sites.

Landfill sites

Overall, more than none-tenths of domestic and commercial waste is deposited on landfill sites, most of which are owned either by local authorities or by the large private waste removal companies which dominate commercial waste disposal. Many of the private companies are part of groups which came to own the large quarries or clay pits used for the bulk of landfill through their cement or brick making activities.

The few small waste sites operated by farmers or small waste removal contractors are in general licensed to accept only `cleanfill' (inert non-hazardous waste such as hardcore, etc).

Most waste which is not dealt with `in house', or reclaimed, travels a considerable distance - usually tens of miles - from collection to landfill sites. The cost of transportation plus site charges can be substantial, according to the type of waste and the distance involved. The relatively small volume of especially hazardous waste arising each year is either disposed of at those few sites licensed to receive it, or is treated by specialist companies.

Reclamation

2 General

Despite the continuing and rising charges for landfill most local authorities and businesses consider that processing their waste the4mselves so as to extract and make use of a more valuable constituents would be non cost effective on the grounds that the costs of extraction would not justify the return.

Domestic waste is generally regarded as too great a jumble of individually worthless and contaminated items to justify sorting out the potentially reclaimable elements.

Commercial waste is often regarded by the business producing it as not sufficient in volume, or as too intermixed contaminated, to warrant `in house' reclamation. The producer will know from past experience what can be sold to, or collected free by, reclamation firms and what will incur a charge for removal.

Reclamation firms operate by collecting sufficient volumes of commercial waste to make extraction of the more valuable constituents worthwhile. Firms dealing in the common, less valuable, materials consequently need to process a higher `tonnage' (throughput) than firms dealing in the less common, more valuable materials. Some materials (plastics, tins for aluminium cans) are so light that large volumes are required to make up the tonnages needed for economic processing.

Whether or not a particular lot of waste is worth processing depends on the merchant's estimate of the cost of extracting the resaleable material (including the cost of acquisition and transport) and its resale value. Much waste which could be reclaimed is sent for landfill because the likely cost of recovery is too great compared with the estimated return.

In the descending order of volume (`tonnage') traded, the main sectors of the reclamation industry are

• Scrap metal
• Waste paper
• Oil
• Chemicals and solvent recovery
• Plastics
• Waste textiles

Glass has been excluded since there is no recovery industry in it as such. Waste glass (`Cullet') is either collected by local authorities and sold back to the glass manufacturers, or is collected by firms acting on the manufacturers' behalf.

Trading pattern

Apart from vehicle breakers, the pattern of trade in each sector is in general the same.

Waste material arises from sources such as factory production lines and engineering shops (`process' or `new' scrap), industrial processes such as smelting (`circulating' scrap) and items scrapped because they have ceased to be of use (`capital' scrap).

The material is collected by a hierarchy of traders (`merchants') ranging from the `rag and bone man' up to the `Mill' merchant dealing with the ultimate consumer - a steel, paper or textile mill or other refiner, situated in the UK or abroad. Merchants in the smaller sectors such as oil recovery, plastic or high value metals may combine initial collection, processing, and sale to the end consumer. Some merchants act as middlemen as well as handing their own `tonnage'.

The mills, etc. require a steady flow of material, prepared to their specifications and delivered in lots of relatively large weight immediately on demand. Only the largest merchants in each sector have the resources to meet the mills' requirements. Many mills will only buy from a nominated `top' merchant or merchants, both for convenience and for easier quality control, and other merchants have perforce to channel sales through such `Mill Merchants'. Some mills own their own merchanting firms.

Waste material obtained by a merchant is sorted and processed according to the merchant's resources and sold on. The material progresses up a chain of merchants dealing in successively larger volumes of material (`tonnage') until it reaches a `Mill' merchant. A merchant may employ a processing firm to prepare the material for resale on his behalf. A processor may buy in and sell material on its own account.

The basic differences between merchants lie in the `tonnage' dealt in and the extent to which it is processed. The larger the merchant the bigger the sources of supply and/or other merchants deal with and the more exactly the material sold will confirm to the requirements of the end consumer. Economies of scale make it worthwhile to extract. Constituents present in small quantities where there is a large tonnage available to be processed, consequently material tends to become `purer' the further it progresses up the chain. The larger the `tonnage' handled the larger will be the transport fleet and stocking area needed to cope with it and the more sophisticated and expensive the machinery employed to process it.

Totters

The smallest merchants (`totters' or `rag and bone dealers') collect all sorts of reclaimable material from those sources which the larger merchant finds uneconomic to pursue- small businesses, private households, jumble sales etc. They may have another business running alongside the `totting' such as house clearances, bric-a-brac sales, light haulage etc. The larger totter often has a specific round and a small storage yard. The material collected is sorted roughly and the reclaimable scrap is sold on to a large merchant, the rubbish being disposed of on the Council tip.

Yard merchants

The next tier of merchants (`Yard' or `Collector' merchants) obtain the bulk of their supplies from commercial and industrial sources. The smallest `Yard' merchant will obtain a good part of the incomings from totters. The biggest will obtain supplies from the largest commercial sources and smaller merchants. Most Yard merchants operate within one sector of the trade (scrap metal, or waste paper, etc).

Merchants will often leave skips at their suppliers, exchanging them when full. Some have several hundred skips out at any one time. Any processing required is performed by the Yard merchants or the processing firms they employ. The material produced is either sold on to a larger Yard merchants or sold via a merchant from the top tier of the trade, a `Brass Plate' merchant.

Brass Plate merchants

`Brass Plate' merchants do not stock any material but act as middlemen between Yard merchants, processing firms selling material, and the end consumers (the mills, etc). They bring together the relatively small parcels of material offered by smaller merchants and processors to create the larger lots required by the largest merchants and end consumers, and otherwise exploit opportunities to match buyers and sellers. They seldom see the parcels bought or sold, delivery taking place between the other parties one or both of whom will pay a commission for their services. Alternatively the middleman will buy lots and direct the seller to deliver to the middleman's purchaser. Some merchants act as middlemen as well as handling their own `tonnage'.

Economics

Prices vary constantly. They are set from the top of the industry downwards. The end consumers' buying in prices are influenced by the trends in the market for their own products and by the availability of their raw materials, both in reclaimed form and in `virgin' form. They may not purchase lower grade of material when supplies of higher grade material are readily available.

The UK and consumers have a strong influence on prices but it is not absolute as there is an export trade in most reclaimed materials. The UK reclamation industry is part of a worldwide trade, sensitive to overseas markets in both reclaimed and virgin raw materials. Non ferrous scrap metal values follow the prices set on the London Metal Exchange, which trades in refined non ferrous metals worldwide.

Many reclamation businesses are familiar with a trading cycle in which a rising price for a particular material encourages them to obtain and process more of the appropriate waste, leading to oversupply and a down-swing in price making the material uneconomic to collect, which causes a shortfall in supply and a consequent upswing in price, et cetera.

A Mill merchant arrives at its target price for purchasing supplies from Yard merchants, by deducting its operating margin from the price the Mill has offered. In turn the Yard merchant sets his/her target buying in price by reference to what the Mill merchant has offered. Prices are set all the way down the buying chain in similar fashion.

Changes in the outlook of a market are quickly reflected in price changes all the way down the chain and merchants will try so far as they can to buy, stock, and sell so as to anticipate market changes. The London Metal Exchange provides, for larger merchants dealing in non ferrous metals, the ability to establish `hedging' contracts to safeguard the position on their firm commitments.

The Industry is very competitive. To ensure steady flow of material into his/her yard a merchant has to match rivals' buying in prices and will offer more if possible to persuade suppliers to switch to him/her. Buyers will purchase from the merchant offering the cheapest material of the quality and type required. Smaller merchants are unlikely to have contracts with either their sources or regular buyers. Larger merchants may well have short lived contracts with their suppliers and their buyers, and the largest firms will have longer term contracts to supply their buyers.

Prices fluctuate constantly so both buyers and sellers are wary of entering into long term commitments at fixed prices although this may be unavoidable for large merchants. Smaller firms generally bargain over each lot offered by, or to, them.

Transactions are often made in cash, particularly when small amounts of scrap are involved; the employees rather than the proprietor of a business may receive the cash as a traditional perk of their trade.

Many Yard merchants have invested in more sophisticated sorting, processing and handling equipment with the intention of reducing production costs thus enabling them to offer more competitive buying and selling prices. Another reason is that skilled sorters are becoming fewer, and the equipment can be operated by semi skilled workers. The equipment reduces unit production costs by its capacity to process a large volume, consequently the merchant needs to chase tonnage to reduce his unit costs. This can create problems when supplies are scarce.

The bulk of Yard merchants' supplies come from commercial and industrial sources. When industrial production is rising, supplies are more plentiful and the end users require more stocks of raw material. Conversely when production is at a low level supplies are reduced and the Mills needless.

All material sold by weight, either by the metric tonne or the imperial `longton', the main exception being the high value metals such as gold, platinum, mercury, cobalt etc which according to their value and traded in kilograms, pounds or troy ounces. Most merchants have weighbridges and/or balances.

Price negotiations

Merchants can spend a great deal of their time in negotiation. Apart from the bargaining abilities and strengths of the parties involved, the price a merchant will pay for a particular lot of material depends amongst other things on

• Market trends and the current prices being offered by the merchant's rivals, and by potential buyers. Prices may change between purchase and resale. The margin on competitive grades of materials will be small and a profit may depend on choosing the right date to sell.
• The form in which the material is offered and its freedom from `contraries' (dirt, rust, foreign materials and other impurities). A Yard merchant buying from a factory, etc. or a totter usually has to acquire the material `as seen' or `as is'. Unless it is delivered to the yard it will be necessary to estimate the overall weight of the lot offered (which affects collection and processing costs) and the weight of the resaleable material contained in it.

  The less it will cost the merchants to process the material to a potential buyers requirements the more he/she will be able to offer to buy it in. Processing costs depend on the merchant's or processor's capabilities and the use to which the potential buyer will put it. Different buyers can have different requirements and one may take scrap in a form which another would refuse.

  Reclaimers' Trade Associations have grading schedules by which the quality and purity of material commonly traded may be described. Specifications are geared to the needs of the end user. Ungraded material is described as `unsorted', `mixed', or `collected'.

  Merchants, or the people they employ as sorters can quickly categorise most material offered to them by relying on their experience, by knowledge of or enquiries to the source, or by various spot tests. More firms are using sophisticated analysing equipment - the skilled sorter, who could categorise most materials by eye, is dying out. The main uncertainty is usually the weight of reclaimable material included in the lot offered. The larger merchants will be expected to grade the material they sell according to the relevant trade association grading schedules, or otherwise specify its nature.

• The cost of transporting the material. Usually, the price paid includes delivery to the buyer's premises, so a merchant buying-in will be concerned with the probable cost of shifting the material onwards to the likely client.

Transport costs loom large in all volume traders' calculations and most merchants will have machinery for either cutting, or compressing, crushing, shredding, ,melting, and/or baling materials in order to pack as much as possible into each load transported. The greater the throughput, the more extensive and sophisticated such machinery will be.

• Whether the seller is a regular supplier. Most buyers will pay extra to foster a source providing a steady flow of material of known, consistent quality.
• The weight offered (or an estimate of the weight, when bargaining at a factory etc). A weight greater than that usually traded normally attracts a higher price per tonne. Sub `standard' weights attract a lower price per tonne.

3 Scrap metal

This is by far the largest sector of the reclamation Industry. It has five main sub sectors, which in descending order of volume traded but ascending order of value per unit of weight, are

· Ferrous - Iron and Steel - accounting for over nine-tenths of scrap metal `tonnage' traded.

· Non Ferrous - general - Lead, Copper, Aluminium

Zinc, Brass, Gun Metal,

Phosphor Bronze - accounting

For most of the remaining

`tonnage' traded.

· Nickeland its Alloys - High Speed Steels, Chrome

Iron, Stainless Steel, Monel, Nimonic, Tungsten Carbide.

· Whitemetals - Tin and its alloys, Pewter, Solder.

· High Value Metals - Cadmium, Bismuth Metal,

Mercury, Tungsten, Molybdenum, Cobalt, Silver and its alloys, Palladium, Platinum, Gold and its alloys.

High Value Metals are generally traded in lots measured by the troy ounce, kilogram or pound: Whitemetals, Nickel etc. and the higher value general Non Ferrous by the tonne/ton: Lower value Non Ferrous in tens of tonnes/tons; Ferrous, from tens to thousands of tonnes,tons.

The wide variety of scrap metals traded are grouped by the various UK scrap metal Trade Associations into about 200 categories (`grades') of which 75 or so are the most commonly traded. For example the UK ferrous metals grading schedule has 26 grades of which 17 cover the lots most commonly traded. Unusual metals not graded will be specified by the vending dealer.

Apart from traders in metals as such there are various merchants and processors specialising in particular areas, for instance vehicle batteries (lead), silver extraction from used photographic film, recovery of high value metals (gold, etc.) from printed circuit boards, vehicle or engine breakers. Merchants are a major source of supply to the reconditioning trade - electric motors, vehicle components, bearings, engineers' tooling, scaffolding, storage tanks, etc.

The Totter seldom does more than break u the gleanings into their component metals and roughly sort them into `light iron' (sheet metal), `heavy iron' (cast iron, etc), lead, copper, aluminium, etc. The rubbish is dumped on the Council tip and the marketable metal sold on to a larger merchant. Any salvageable components (electric motors, etc) will be sold to local reconditioners.

Yard merchants obtain their supplies mainly from arising of `process' or `new' scrap (factories, engineering works, etc), partly from `capital' scrap (demolition contractors, totters, etc) and partly (non ferrous only) from arisings of `circulating' scrap (sheet, bar or ingot makers, etc). The larger the merchant, the bigger the suppliers with whom dealings will take place.

Incoming tend to be lowest during the main industrial holidays over August and Christmas. Additionally, the end buyers will also be on holiday. Merchants may have short term contracts with regular suppliers and may leave skips there to facilitate collection.

Where specialised processing is required (e.g. extraction of gold from circuit boards) the supplier may allow the merchant to process the parcel of material and then make payments for the metal extracted. Normally however the merchant will agree to quote a price `as seen' which entails estimating the weight as well as the potential value of metal viewed.

Processing

Once the scrap has reached Yard merchant's premises it will be stockpiled with like material to await sorting and processing. Most metal is sorted by eye, using machines to break up or cut out the required metal. Where a sorter is in doubt various magnetic, spark, chemical or electronic spot tests can be used for identification.

The size and sophistication of the processing equipment in use increases in line with the tonnage handled. A Yard merchant will usually have at least a crane, gas cutting equipment, a scissor type cutting `crocodile' shear and/or `nibbler' and a baling press. The `crocodile' shear and `nibbler' are used to `clean' scrap, i.e. hear off or cut out the less valuable or useless metal from the saleable scrap. Larger Yard merchants will also use cable strippers, crushers, compactors, engine breakers, vibratory feeders, small furnaces, and guillotine shears (usually allied to a precompressor box). The largest merchants have `fragmentisers' capable of reducing complete cars and domestic appliances to small pieces of metal.

The trend has been for merchants to employ more and more sophisticated equipment in order to keep their processing and handling charges to a minimum and also to extract as much saleable metal as possible, to beat the competition.

Where there are intermingled metals in the scrap down into a convenient size, using purpose built machinery or shears, etc; then feed it through machinery which roughly sorts the scrap as required (usually into ferrous, mixed non ferrous, and mixed non metallic by using magnets, centrifugal force, vibratory feeders, etc); and finally to pass the sorted metal along separate conveyor belts past employees who do the final sorting by eye.

A `fragmentiser' with ancillary sorting equipment combines all three stages and the larger models can swallow cars and domestic appliances and produce high quality scrap from otherwise low grade material. The high cost of such machines can only be recoupled by processing a high tonnage, and in 1986 the 68 machines in use in the UK had a combined capacity far in excess of the tonnage available for processing.

There are always technical and economic limits to the extent to which intermingled scrap can be sorted, cleaned and graded. The residue left after processing is deposited on landfill sites.

Scrap Metal Dealers Act

The Scrap Metal Dealers Act of 1964 replaced earlier legislation. It applies to England and Wales only, but merchants elsewhere may be subject to equivalent regulations through Local Authority by-laws. Dealers in precious metals (gold, silver, platinum etc) are exempted. It does not apply to traders for whom scrap is a by product of their business, consequently manufacturers, engineers, car breakers etc are outside its scope.

Broadly, it requires a Local Authority to keep a register of all scrap metal dealers operating in its area, and for all such dealers to apply to it for registration.

A dealer must record, in no more than two bound books, details of all metal received, processed and dispatched. The details required include,

• For metal received:- Its description, weight, and date and time of receipt; the name and address of the supplier of the metal, the registration number of the vehicle making the delivery, and either the price paid for it or the dealer's estimate of its value.
• For metal processed:- The date of processing and process applied
• For metal dispatched:- The name and address of the person receiving the metal and either the price paid for it or its estimated value.

The details must be entered immediately after receipt, processing or dispatch. The police may inspect the dealer's premises, stock, and the bound books.

A local authority may exempt a person such as a totter from the Act's requirements, but the person must keep receipts showing the price and weight of all metal sold for two years.

A court may impose additional requirements if a dealer contravenes the Act or is convicted of dishonesty.

The above is only a broad sketch of the Act's provisions.

Ferrous scrap

The ultimate consumers of ferrous scrap are steel milk and foundries both in the UK and abroad. They require that scrap supplied to them meet strict specifications, to ensure efficient charging of their furnaces and to avoid contamination of the melt.

The scrap has to be prepared to a maximum size and/or thickness, and be free of dirt, rust, non ferrous metal and other foreign materials. The specification for some `grades' allows a degree of contamination different `grades' may not be mixed together.

The schedule of `grades' agreed between the UK Trade Associations and end consumers lists

• Old heavy steel
• Fragmented scrap
• Cylinder block scrap
• New production steel in compressed sheet/strip/bales
• Compressed old light steel scrap
• New loose light steel cuttings
• Heaving carbon steel turnings
• Cast iron scrap (light, heavy and borings)
• New production steel scrap (heavy and shovellable).

Foundries consume cast iron and `short' steel (scrap under two feet long).

The UK end uses buy their scrap through twenty or so mill merchants, and may pay them a premium for their services. The mill merchants act both as `brass plate merchants', directing yard merchants to make deliveries to the mills and foundries on their behalf, and as yard merchants in their own right.

There has been a rapid growth in exports since 1980. In 1985, roughly half the ten million tonnes of ferrous scrap produced was exported. The top twenty mill merchants handled all sales to the UK mills and about three quarters of the exports, the remaining quarter being handled by the larger yard merchants.

The minimum load for exports at least 500 tonnes whereas the usual load for UK delivery is about 20 tonnes. The top merchants have had to invest in port facilities to store and prepare the scrap prior to export and their export trade is channelled through the few ports with those facilities. The bulk of yard merchants' deliveries are accordingly directed towards either the UK mills and foundries or the mill merchants export facilities.

Scrap prepared to the end users specifications has always had a relatively low value per tone and preparation costs alone can account for a large part of the selling price. It has to be acquired, prepared, and transported in bulk to ensure profitability. Accordingly the majority of ferrous scrap merchants are situated in industrial areas.

Many merchants have invested in equipment which can reduce preparation costs when a high volume is processed. In 1985 total processing capacity was about 20 million tonnes p.a. whereas only 10 million tonnes was processed. This has led to heightened competition between merchants to obtain supplies.

Non ferrous

Non ferrous scrap is traded in much smaller quantities than ferrous scrap, but is more valuable. Merchants dealing in the general grades are considered to have a larger trade if their `tonnage' exceeds 10,000 tonnes a year. Specialist merchants handling whitemetals or the high value metals will have a much smaller throughput.

The largest source of non ferrous scrap is `process' scrap (factories, etc) followed by `capital' scrap (used items) and `circulating' scrap (ingot producers, etc).

Yard merchants dealing primarily in ferrous scrap receive non ferrous scrap in the normal course of their business. Depending on their processing resources and the weight available for sale a ferrous merchant will either sell on to a non ferrous merchant, or to an end consumer. Cat breakers are also suppliers of non ferrous scrap (gearbox casings, wiring, radiators, batteries, etc).

The ultimate consumes of non ferrous scrap, both in the UK and abroad (there is an increasing export trade) are

• Refiners, who buy in scrap which is so intermingled as to require specialist processing beyond a merchant's capabilities, such as the extraction of copper or high value metals from telecommunications equipment and electronic circuit boards, or the extraction of lead from car batteries.
• Foundries, which purchase scrap containing some impurities and produce ingots or castings for reuse in industry. Most aluminium scrap is sent to the foundries. A merchant may melt aluminium scrap in a small furnace to produce purer and consequently more valuable ingots, for sale to a foundry.
• `Semis' producers who buy in and recycle commercially pure scrap (`process' scrap) into semi finished products for use by manufacturers, such as rods, boards and extrusions. The scrap used includes bright copper wire and production brass scrap.
• Chemical and metallic powder or manufacturers, who purchase commercially pure scrap such as bright copper wire.

Some metals (such as Nickel-iron or Chrome alloys) are supplied in scrap form to the steel mills.

There are about 70 different `grades' (specifications) covering the more commonly traded non ferrous metals, which have been agreed between the merchants' Trade Association and interested bodies. Whitemeatals, and the high value metals, are not graded as such but defined according to their purity.

There is a wide variety of non ferrous metals and alloy scrap presented to the merchant, who has to identify it and decide how best to utilise it. The aim being to sort and process incomings to ensure that the metal sold is as pure as is economically possible since this increases its value. Scrap which is beyond the merchant's processing resources or which is uneconomic to process, is sold to a refiner.

Process scrap (from factory production) usually needs little or no processing before sale to the foundries and `semis' works except perhaps to remove any damp, or cut to size.

Sources of supply of precious metal (gold, silver, platinum, etc) such as jewellers, usually sell direct to the refiner although a merchant may appear as an intermediary, for instance dentists' waste amalgam is purchased by merchants for sale to refiners.

4 Vehicle breakers

Car breakers from the majority of this trade, with a minority specialising in either commercial vehicles or motorcycles.

Breakers are not part of the hierarchy of scrap metal merchants and are not subject to the Scrap Metal Dealers Act. They are a source of supply to both scrap merchants and the reconditioning trade.

All breakers will have some means of transporting vehicles, parts and shells - usually a low loader or a breakdown lorry fitted with a winch. They will also have cutting equipment, dismantling tools, and usually some means of stacking bulks: Some breakers have a crusher (for shells) and an engine splitter.

Their main sources of supply are MOT failures, abandoned vehicles, unsaleable vehicles from auctions, garages, the general public, and damaged vehicles disposed of by Insurance companies. Local authorities are required to appoint someone (usually a breaker) to collect and dispose of abandoned cars. A breaker is required to notify the Vehicle Licensing Authority when a vehicle is scrapped, and send it the registration document (if held).

Commercial vehicle breakers or renovators may have agreements with road haulage operators whereby they will buy in, at a previously agreed price, all the vehicles that will be taken out of services over a certain period.

Insurance companies have two methods of selling `vehicle salvage' to the trade. On is the `contract' system under which one trader buys all the company's salvage', paying it a percentage of the amount paid by the company to its claimant. The other is the more common bid system under which the company invites bids for each vehicle from the breakers on its list. Recent (1986) trends may affect these methods. A consortium of some twenty of the larger dismantles are trying to establish exclusive contracts with most Insurance companies and so corner the market in vehicle salvage. A larger Insurance Company, in association with a car breaker and vehicle rebuilding firm, is experimenting with the use of components from written-off vehicles to repair and damaged vehicles insured with it. The company is also considering selling vehicle salvage through public auctions.

The sequence of operations is generally the same for all breakers. Incoming vehicles are examined to see if it is worth restoring them to a saleable condition. If so, they will either be sold on to a garage or repair shop, or offered for sale together with a quote for restoration, or repaired and sold (using so far as possible parts available from other vehicles held).

Such vehicles (`damage repairables') together with the more valuable stock, and cars on which bids have been made to Insurance companies, are held away from the general stock of cars being broken (`breakers').

The traditional method of breaking is to strip out the readily saleable items (front end panels, doors, radiators, headlights, batteries, starter motors, alternators, steering gear, younger engines, gearboxes and transmissions) and sell them from store. This is partly for customer convenience and partly to avoid theft.

The bulk will be left for a time to allow customers to remove what they need, and then striped as necessary to enable the shell either to be cut to pieces with a gas torch or flattened by means of a `crusher' to facilitate transport in bulk to the nearest scrap metal merchant with a `fragmentiser'. Alternatively a merchant with a mobile crusher may visit the yard at intervals to buy the shells.

In recent years some car breakers have opened shops in their yards and begun to sell cleaned, guaranteed used parts wholly through the shop together with some new accessories, pattern and reconditioned parts. The breakers who have adopted this `shop' format have usually concentrated on dismantling recent model cars obtained from Insurance companies, since the costs of dismantling and cleaning, and the market they are aiming at (people who otherwise buy a reconditioned part from an accessory shop, and motor traders requiring `good as new' panels) preclude the more worn parts from older cars. They prefer to be described as `vehicle dismantlers' to distance themselves from their more downmarket brethren. It is likely that those traders who have resources will follow this trend and since it markedly increases turnover.

Pricing is normally based on a percentage of the current cost of the component as new, more popular items being a higher percentage than the slower movers. The motor insurance repair research centre at Thatcham produces a monthly guide to the current price of most vehicle parts. Many traders' prices (especially at the lower end of the market) are guesstimates influenced by the customers' apparent means - one method is to ask the year of the customer's car and reduced the price with increasing age.

Apart from the public, a breaker's outlets include used car dealers, garages, body repair shops, and reconditioners; tyre dealers; scrap batter dealers; engine breakers; scrap metal merchants; and other breakers (for particular items or vehicles, or stock in general). A breaker may operate a fitting service, garage, or body repair shop alongside a breaking business, and is very likely to run a vehicle recovery service. A number of breakers subscribe to a service (`Find a part') which advises any enquirer where particular vehicles are being dismantled. A trade association runs a similar service.

One firm specialising in engine breaking processes 300 tonnes of engines a week to produce 220 tonnes of clean cast iron and 80 tonnes of aluminium and steel. The aluminium is smelted in a small furnace to purify it and is sold to the foundries together with the cast iron. The steel is sold to scrap metal merchants.

5 Waste paper

The hierarchy of merchants in this trade is similar to that in the scrap metal sector. There are fewer merchants engaged in waste paper collection.

Paper and cardboard (`board') consist of interwoven wood fibres, coated with various materials to achieve the desired finish. The wood fibres can be extracted from waste paper and board by the paper and the board mills and reused, although the fibres eventually deteriorate and become useless.

Waste paper and board from UK sources has to compete with imports of wood pulp and waste paper, as a raw material for the mills' use. Most waste collected in the UK is sold to the UK mills. A good part of the relatively small export trade consists of contaminated paper which the UK mills cannot use. In these circumstances the mills are able to exert a strong influence over the prices at which they buy in the wasted.

There are constant fluctuations in the amount of waste required by the mills. Merchants do not keep large stocks on hand and react to downswings in demand by reducing the amount they collect, which may cause the loss of a source of supply.

The grading schedule agreed between the various Trade Associations and the mills lists ten groupings of waste, which briefly are:-

• Group One - paper shavings;
• Group Two - wood pulp cuttings;
• Group Three - tabulating cards;
• Group Four - stationery and ledgers;
• Group Five - once read newspapers, telephone directors, `pams';
• Group Six - manilla and kraft;
• Group Seven - new kraft lined corrugated waste;
• Group Eight - container waste;
• Group Nine - mixed paper and card;
• Group Ten - all other types.

`Pams' are pamphlets, paperbacks, and coverless books. `Kraft' is wrapping paper or packaging. `Container waste' or `Container board' are boxes.

More generally, waste can be classified into `deinking stock' (groups one to five) and `board making stock' (groups six to ten).

The finer qualities of deinking stocks are used by papermaking mills. The newsprint mills and tissue/toilet paper mills utilise the lower grades of deinking stock. Wrapping and packaging paper is produced from the better grades of board making stock. Cardboard is produced from the lowest grades.

The bulk of waste collected falls into groups 5,7,8 and 9. Merchants' sources of supply include printers, stationery manufacturers, newspaper and magazine wholesalers, box manufacturers, factories, offices, local authorities, supermarkets, charities, etc.

Manufacturing sources are preferred since the waste should be free of `contraries' and is of one type, i.e. papershavings, cuttings, etc. Other sources such as paper and magazine wholesalers provide volume waste of one type. Offices, supermarkets etc provide a mixture of paper requiring sorting.

The smaller merchants (`collector' merchants) sort the waste by hand into rough categories - usually `news', `kraft', `board' and `mixed', or simply `news', `whites', and `container'. The sorted waste is baled and sold on tot he larger merchants, known as merchant processors. Some Collectors do not sort their material but simply deliver it loose and unsorted to the processor. A collector may receive a `transport allowance' from the processor for delivering the waste.

The merchant processor collects from the larger suppliers as well as from smaller merchants. The waste will be sorted more accurately by hand in the grades required by the mill that has placed an order with the merchant, and may be shredded before being baled for onward deliver.

Alternatively the waste may be sold to a merchant dealing in particular grades, for onwards sale to a mill which has specialised requirements. A number of merchants are active in the export trade.

A good number of the merchant processor firms are owned by mills, i.e. are `Mill merchants' as described earlier.

6 Oil chemicals and solvent recovery

The majority of traders in this relatively small sector deal in waste oil, the bulk of which arises from the vehicle servicing operations carried out b garages, road hauliers, transport undertakings, and the in house servicing of company fleets. Other sources include shipping, aviation, railways, electricity supply (transformer oil) and industry.

The oil is either purchased and refined for reuse in its original form as lubricating oil (which is a relatively costly and specialised operation) or, more simply and cheaply, is cleaned for use as fuel oil. Nowadays, most waste oil becomes fuel oil.

The bulk of waste oil is collected by small firms which either produce fuel oil themselves or sell on to large companies. The larger companies may undertake the refining or cleaning of a client's oil on a fee basis, as well as buying in oil either directly or from smaller collectors.

A small firm which produces a lower quality fuel oil is able to offer a higher price for waste oil than its larger competitors, since it has lower processing costs and overheads.

Subsidiary areas of the trade include the recovery of waste chemicals, the recovery of high value metals from waste; the recovery of contaminated solvents obtained from paint and pharmaceutical manufacturers, dry cleaners, etc; and the recovery of used specialised oils such as hydraulic oil. As well as buying in, processing and selling waste materials, a company may process a client's waste material on a fee (`toll')

7 Waste plastics

This trade is still in its infancy and there are few merchants involved in it as yet.

Waste plastics fall into two broad categories; thermoplastics, which can be remelted and recycled and thermosetting plastics, which cannot. Only slightly soile waste which does not have much labelling etc attached can be used. A mixture of different types of thermoplastics will produce low quality material when processed; plastic of the same type is needed to produce a high quality product. Any agents added to the waste, when it was originally manufactured, will also affect the quality of the recycled product.

There are ten types of thermoplastics

Acetal - Poloycarbonte

Acrylic - Polyethylene

ABS - Polystyrene

Cellulose Acetate - Polypropylene

Nylons - PVC

The main sources of supply to the merchant are industrial concerns using plastics for mouldings, pressings etc and concerns which use, or have to dispose of, large quantities of clean wrapping material or sacks (supermarkets, etc). The merchant will only be interested in the more valuable types, such as polyethylene or `LDP' (low density polythene).

The merchant collects, sorts, bales and sells the plastic on to a processor. The material is sorted by means of various spot tests, such as cutting melting, burning or immersion in water. The material is so light that a large volume of it is required to make up sufficient weight to make a sale (usually in bales of 50kg or so).

The processor will remelt the plastic and convert it into granules for reuse by manufacturers. Plastic of a lesser quality will be converted into coloured film or sacks.

8 Waste textiles

This sector of the industry has declined, following the closure of many UK textile mills in recent years. Many merchants have diversified into other activities besides waste collection. There are two sub sectors

• Firstly, merchants who collect the fibre waste from the manufacturers of man made fibre, and from the mills which spin cotton and main made fibres into yarn.

The coarse or short fibres of cotton rejected by the mills preparatory to spinning are known as `droppings', `fly', `strips' and `comberfly'. Nowadays, the bulk of these cotton fibre wastes are imposed are imported by the merchants. The waste is processed on the merchants' behalf by a `willower' to extract useable fibre. Fibres from `droppings', `comber fly' and `strips' are sold to spinning mills producing lower quality yarns. Fibres from'droppings' and `fly' are also sold to wadding and felt manufacturers.

Only certain kinds of the waste from man made fibre manufacturers can be utilised by the merchant. These are sold to him to `pullers' and `garnetters', who extract useable fibre for spinning or for wadding manufacture.

The fibre rejected by the mills during spinning (waste yarn) is similarly sold to `pullers' and `garnetters'.

Sub standard spun yarn from the mills is sold by the merchant to surgical dressing manufacturers and other textile outlets.

The merchants' expertise lies in assessing the nature and quality of the waste he obtains, and in supplying his various outlets with material which meets their specifications. A great deal of his output is exported.

• Secondly, merchants who collect the waste from the mills which spin the yard into cloth, and the waste from clothing manufacturers. Old clothing is also collected, from charities and totters. Manufacturers' waste may be collected by leaving skips at the source of supply.

Off cuts and remnants of cloth are termed `clips'. Roll ends are known as `fents'. Loose yard is known as `rovings', and old clothing is described as `flimsy'.

`Fents', `clips', and cloth seconds can be sold to small concerns manufacturing duvets, dolls and patchwork quilts. Clothing seconds are sold on to shops or market stalls.

The remaining waste is sorted by hand and by eye which requires a great deal of experience. Where necessary,s amples will be stained, burnt or examined under a microscope to aid identification.

The value of the material depends on the type, quality and colour of the fibre it contains, in that order. Natural fibres (wool, cotton, etc) are more valuable than synthetic fibres (nylon, rayon, acrylic, etc). White is more valuable than coloured fibre. Where it is economic to do so, material containing different types of fibre will be processed to extract the more valuable fibre, for instance, cotton stitching can be removed from wool by `carbonising' (treatment with hydrocloric acid).

Woollen (not worsted) yarn is one of the more valuable fibres, since it can be processed and blended into yarn which can be used for high quality clothing.

The most valuable fibre is sold to the `pullers' and `garnetters', who will only accept material containing solely one type of fibre. The less valuable cloth is sold to manufacturers of wiping cloths for use in industry. An alternative outlet for used clothing is the export trade (via the larger merchants) to the third world, although this is now in decline. Cotton fibres are also sold to firms producing high quality paper and bank notes.

Waste Disposal

9 Landfill sites

The vast bulk of hazardous and non hazardous wastes are disposed of on landfill sites. Only a relatively small tonnage of especially hazardous wastes are destroyed by incineration.

The Control of Pollution Acts of 1974 and1980 empowered County Councils (in England) and District Councils (elsewhere) to monitor the disposal of `controlled' waste by requiring disposal sites to meet certain criteria. The movement of wastes classed as especially hazardous (`special wastes') has to be documented from creation to disposal. The Acts do not apply to material destined for recycling.

The councils consider the suitability of the site and the expertise of the site operator before granting a licence. They follow guidelines issued by the Department of the Environment, although they differ in their definitions of hazardous waste and in the conditions they attach to the granting of a licence.

A Class One licence allows the depositing of only `non hazardous' wastes - `clean fill'- inert, non polluting or non poisonous wastes such as hardcore, soil, etc. A Class Two licence allows the deposit of both class one waste and of ;hazardous' wastes - potentially or obviously poisonous or polluting wastes such as industrial wastes. A Class Three licence allows the deposit of classes one, two and `Special' wastes (especially dangerous wastes such as flammable wastes, medicines, asbestos, etc).

General, a site licensed to receive only non hazardous waste is unlikely to be required to keep detailed records of what is received. A site licensed for hazardous or `special

Wastes will probably be required to keep a record of the right and nature of all hazardous or special wasters received together with the name address, and vehicle registration number of the deliverer. The site may also be restricted as to the amount that can be dumped each day, and that can be deposited in total.

The regulations have had the effect of reducing the number of sites available for landfill and of channelling hazardous waste disposal into the bigger sites owned by local authorities and the large companies specialising in commercial waste collection and disposal. Nowadays, only a few small sites are still run by small operators or farmers and these are generally licensed to receive only non hazardous waste.

Site operators prefer to receive a variety of waste - domestic and paper waste to soak up liquid hazardous waste, heavy waste to compress other waste, hardcore and soil to seal in waste such as asbestos. A good deal of waste is landfilled on the `co-disposal' principle, that non hazardous waste will buffer and neutralise hazardous waste.

Depending on the nature and size of the site, the operator will use bulldozers, compactors and other specialised equipment to deal with the waste received. Each operator sets his own scale of charges which vary according to the frequency that his clients use the site, the tonnage and nature of the waste deposited, and the convenience of the site to the majority of its users. Larger clients may have contracts permitting the tipping of a specified tonnage or volume of waste. Useful waste. Individual quotations such as heavy loads, hardcore or soil may be accepted at normal prices. Individual quotations are usually given for especially hazardous waste.

Most `controlled' waste travels considerable distances from collection to disposal. The larger landfill sites licensed for hazardous waste are nowadays valuable properties, especially if they are convenient to the conurbations.

Inland Revenue March 1987

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