Breaking through the glass ceiling

Material recovery facilities (MRFs) throughout the United States are complaining that the increased amount of residue they are receiving from their customers (cities and homeowners) coupled with the collapse in commodity prices have caused them to become unprofitable. Typical residue levels seen at MRFs have doubled, and this increase has caused yields to decline and processing costs to drastically increase. As a result, MRFs are looking for ways to quickly improve their economics. Subsequently, glass recycling economics and cullet consuming markets have come under scrutiny.

Some MRF operators today are asking to remove glass from the collection and processing systems entirely to help offset their losses, but shouldn’t we examine the problem more closely before jumping to an incomplete conclusion?
 

Similar situation

I recently served on a panel at an industry trade show with a pure-play MRF operator who showed a PowerPoint slide that indicated the value of glass at a particular MRF was -$7 per ton versus the aluminum the company recovered, which earned around $1,500 per ton. The MRF operator’s point was that while his company did not want to eliminate glass from curbside collection, glass’ negative value was adding to the MRF’s financial problems.

When the MRF operator said he was earning $1,500 per ton for aluminum, everyone knew—because of industry contract specifications—that he was talking about 98 percent to 99 percent aluminum and 1 percent to 2 percent maximum residue in each bale. We also knew that if residue exceeded the allowable levels that the material would be rejected or downgraded in value. Would any of us expect that he would receive the same $1,500 per ton for aluminum bales that consistently had 50 percent residue? Of course not.

However, when it comes to glass, we do not have a common definition because there is no industry specification for the required output of MRFs. As a result, each MRF defines glass by what it generates; but, when discussing glass economics, MRFs do not define the differences. Some MRFs define glass as 90 percent glass and 10 percent residue; others explain it as 75 percent glass and 25 percent residue; and there are MRFs that describe glass as 40 percent glass and 60 percent residue. If landfill costs are at $50 per ton, the value of a 90 percent glass stream versus a 40 percent glass supply is a difference of $25 per ton—just on the incremental landfill costs to the glass processor alone.

Glass processors have the same dilemmas that MRFs have. As the chief operating officer of the largest glass recycling operation in North America, I have experience to back this up. Our economics worsen as residue levels increase. Similar to a MRF, higher residue levels in our feedstock result in higher landfill costs, slower line speeds and lower yields. Our processing and cleaning equipment does not achieve perfect separation and becomes less efficient as the feedstock gets dirtier. We are forced to either slow line speeds or to install additional expensive processing equipment, which further raises our costs. Glass processors have had to establish a pricing matrix that takes into consideration all of these costs.
 

Capable cullet

The price changes implemented in light of inbound quality deterioration are sometimes interpreted by MRFs and their customers as “glass market weakness” or a lowering of the base value for glass. Both of these conclusions are incorrect. Glass markets are strong, and both the fiberglass and container industries share a genuine desire to use higher levels of cullet. These two industries consume more than 90 percent of all recycled glass. They have experimented with various formula changes to help solve market issues.

For example, green glass used to be undesirable and less valuable than clear cullet in most areas of the United States; but, today the fiberglass industry routinely uses green glass, and the container industry has learned how to use a green-brown blend to make amber bottles.

In 2008, the Glass Packaging Institute (GPI), an Arlington, Virginia-based trade association representing the North American glass container industry, publicly released an industry commitment that it would use 50 percent recycled content if it was available. Today, the container glass industry uses roughly 34 percent recycled content, meaning that it could use more than 1 million additional tons per year of recycled glass to meet this initial goal. In fact, the glass container industry could use recycled content levels higher than 50 percent if the cullet was available.

As an example, Luxembourg-based Ardagh Group’s Milford, Massachusetts, container manufacturing plant successfully has used between 80 percent and 90 percent recycled content in its glass containers for several years. Its high usage of recycled cullet has improved the plant’s competitive position and raises the bar for other container plants.
 

Correcting contracts

To increase diversion rates, cities decided to embrace single-stream recycling, choosing convenience over quality. Cities were aware that contamination levels would increase but thought that increased volume was worth the risk. Contracts with MRFs were highly defined to ensure enough equipment was in place to process the higher residue levels. However, somehow cities left glass specifications out of their contract language. This was a mistake and needs to be corrected. Cities need to start writing glass specifications into new contracts and should be willing to modify existing contracts as glass has been disproportionately affected by single-stream contamination.

The true economics of glass have been hidden by 40 percent to 50 percent contamination levels. Clean recovered glass has a positive value. We consistently pay more than $30 per ton for clean (98 percent pure) recovered glass, but as the material is layered in greater levels of contamination, dirty glass drops to a negative value. Many equate this negative value to glass alone while forgetting that the real underlying cause is contamination in its entirety.

Five years ago, we started inspecting all of our company’s incoming supply of mixed-color cullet, or three-mix, and documenting those results by supplier. After an initial validation period, we began sharing this data with our suppliers to help drive quality improvements.

Recently, we published a new three-mix specification that identifies 10 percent nonglass residue (NGR) and 12 percent undersize as the targeted maximum contamination levels. We arrived at these target levels by looking at several years’ worth of inbound quality data and confirming that approximately 20 percent of our suppliers already are hitting these performance numbers.

Everyone in the recycling industry would benefit from clear and defined goals for glass output from MRFs: Cities would gain an open and transparent view of all streams running through MRFs; MRFs would know what they were expected to deliver to the market and would price their services appropriately; glass market prices could be compared just as aluminum is today; overall system costs would be reduced and glass value maximized; residue levels would be identified early in the process and reduced; value to MRFs and cities (through their profit-sharing agreements) would be improved; and freight costs would decline substantially as we would have reduced the amount of residue shipped to a glass processing company that it then has to landfill.

Curt Bucey is president and chief operating officer of Houston-based Strategic Materials Inc., the largest glass recycler in North America. He can be reached at cbucey@strategicmaterials.com, or visit SMI’s website at www.strategicmaterials.com for more information.