Landfill Mining: Current Trends


Landfill mining is a term used to describe a process whereby landfilled solid waste is excavated and processed for beneficial purposes.

The beneficial purposes can include recovery of recyclable materials, recovery of soils for use as daily or intermediate cover in active landfills, or recovery of land area for redevelopment. As urban sprawl has continued in many metropolitan areas, landfills—which previously were located in areas relatively distant from the population centers—are less so, and the value of those properties for redevelopment have increased.

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In the US, however, the term “landfill mining” has increasingly become a misnomer, as the primary driver has been to reclaim the old footprint and develop it to meet current Subtitle C regulations (i.e., typically at a minimum installing a bottom-lining system with leachate controls) and gain valuable additional airspace for active waste filling. The reclamation of recyclable materials—like plastics, metals, and glass, and plastics and paper for energy recovery—are secondary and do not typically justify the total cost to reclaim them with natural gas energy, both abundant and relatively “cheap.”

As pointed out in the recent International Solid Waste Association (ISWA) publication on landfill mining, the concept of mining landfills is not new. Some 60 examples have been cited in solid waste literature since the first reported project in Israel in the 1950s. Landfill mining is a practice not unique to any particular country or even region. The practice has both advantages and disadvantages, which are summarized in Table 1.

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Planning Aspects
An overview of the entire landfill mining process is helpful to be able to properly plan all of the parts of the process and have contingency plans ready if something does not go according to plan. Table 2 presents a summary overview of the overall aspects to consider on a mining project.

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What About Recyclables?
Some landfill owners have opted to separate and sell recyclables obtained from a reclamation project; however, the value of these materials is elusive. Cal Recovery, Hercules, CA, conducted a study for EPA of the Collier County, FL, landfill mining demonstration process in 1993, and concluded that plastic and metal were the only viable recyclables, but were not of acceptable quality for the resale market. They indicated that the actual “cost” of mining and separating the recyclables was about $115 per ton. Extrapolating that cost to today’s dollars would cost approximately $250 per ton. This cost is high, relative to the price being paid for recyclables as discussed in the section on benefit-cost.

Construction Timeframe
Basic landfill mining equipment may include the following:

  • Waste excavation: hydraulic excavators (backhoes)
  • Waste screening (large objects): grizzly screen
  • Waste screening (smaller objects): trommel screen
  • Screen feed: front-end loader
  • Waste hauling: dump trucks

The production of a landfill mining operation is mainly dependent on the size and number of pieces of equipment deployed, the types of soils used during landfill operations (e.g., sandy versus clayey materials), the types of waste disposed, weather conditions, liquid levels in the landfill, and gas emissions. More equipment means more production, but more equipment also means additional capital costs.

Certain types of waste are more difficult to excavate and process than others, which can slow productivity. High liquid levels and highly saturated wastes require additional steps to excavate and process, which, again, slows production. Inclement weather is a less controllable factor; however, the timing of major excavation efforts can be scheduled to take advantage of seasons with less inclement weather. Lastly, health and safety issues associated with gas emissions such as combustible gases, odorous gases, and such must be considered and can negatively impact surrounding properties if not controlled properly, ultimately impacting the excavation and processing activities.

Equipment involved in the waste excavation activities typically limits the actual capacity of an operation. This equipment is involved in excavating compacted waste, loading trucks, and moving as the excavation progresses. The other machines in a landfill mining operation, such as shredders, screens, magnets, and conveyors are generally static (i.e., they are not moved for periods of time), and are processing materials that have had some loosening and separation, and are for one function only, so their capacity usually does not limit the operation.

If you are considering implementing a landfill mining project, you should be realistic about the time it will take to complete the project. This timeline needs to coordinated with the overall landfilling activities of a site, assuming it’s an active landfill, and remaining site life calculations. A mining project and the necessity to dispose of much of the excavated materials back into the new landfill can temporarily increase the landfill tonnage by up to 80% over your normal throughput, if everything except the cover soils are put back in the landfill.

Take for example, an old landfill 40 feet high with a base dimension of 800 feet long by 500 feet wide, about a 9-acre footprint. That landfill will contain approximately 383,000 cubic yards of material. Working with three large bucket excavators (total bucket capacity 36 cubic feet), it would take at least a year, or more, to complete excavating, working nine hours a day, 6 days a week, without bad weather delay.

The most efficient approach is to stockpile recovered soils near or with other onsite cover stockpiles in order to handle the materials only once. However, this approach may not always be feasible. If that is the case, all of the mined soil may have to be temporarily stockpiled separately. Soils can make up to 40% of the materials mined from old landfills. In our previous example, that would amount to approximately 153,000 cubic yards of soil, which would be equivalent to a 4-acre stockpile area 40 feet high.

Benefit–Cost Assessment

A benefit–cost assessment should be conducted to justify pursuing a landfill mining project. One way to approach a benefit–cost assessment is to compare the estimated cost of mining the landfill cell against the value of the “new” airspace that created by mining and used for future landfilling (Table 3), or the value of the reclaimed property. We typically would not include the value of any separated recyclables, because the value of these recovered materials generally is inconsequential.

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Table 2 summarizes a simple cost analysis for an example landfill mining project at an active landfill based on the following assumptions:

  • Landfill cell volume = 383,000 yd³.
  • Volume of reclaimed soil = 20% of volume, and it will be reused as cover soil in the active landfill.
  • Remaining materials excavated = 42%, and is disposed in adjacent active landfill.

If we further assume that the landfill is reclaimed at an average cost of $4 per cubic yard, then the reclamation cost (383,000 yd³ x $4 per cubic yard) is equal to $1,532,000. Clearly, in this example, the reclamation benefit far outweighs the cost. If cover soil has to be purchased from an outside source, there could be another savings benefit by reusing the recovered soil. At higher tipping fees, the benefit gets even better.

Looking again at the potential value of recyclables, in this case plastics, the market price paid for plastics is down. If the plastics were of a quality to be acceptable on the market, at a price of 12 cents per pound, the value of the recyclable plastic is $240 per ton. Contrasting that to $250 per ton for mining and separation extrapolated from the Collier County study, plastic reclamation would not provide any significant monetary benefit.

Case Studies
Perdido Landfill
A pilot study was performed in 2008 that involved the excavation of 2.5 acres of an unlined cell at the Perdido Landfill in Escambia County. The main goal of the project was to acquire air space for future disposal.

Excavated waste was processed the following ways:

  • separating the waste with a shaker screen following shredding,
  • utilizing a shaker screen without shredding, and
  • using a trommel screen for screening.

After field testing was conducted, it was found that the trommel screen proved to be the most effective at separating the waste from the cover soil, with waste shredding being the most time consuming of the three.

Soil constituted approximately 70% of the unlined cell. This recovered soil was stock piled at the site to be used at a later date for cover material. The excavated refuse was returned to the landfill for disposal. In regard to cost benefit analysis, the project proved to be worth the investment. The value of the acquired airspace outweighed the mining costs themselves. The total cost of mining was $8.60 per yard with a total of 54,000 cubic yards being excavated, 38,000 cubic yards of which was reusable cover soil.

Naples Landfill
The Collier County Solid Waste Management Department was involved in managing and performing a landfill mining project at the Naples Landfill in 1986. This was one of the first landfill recovery projects to occur in the US. No federal or state regulations regarding landfill mining were in place when the project began. At the time, the site was an unlined 33-acre MSW facility.

The three main goals of the project were to: (1) determine if an alternative method to traditional landfill closure was available and more economically feasible, (2) develop a low-cost system to separate the waste, and (3) provide performance data for this system to assist with optimizing the design of said waste processing system. However, the main underlying premise of the project was to reuse the soil portion within the waste mass since cover soil was relatively expensive and limited in the area. At the completion of the project, the site had successfully mined 5 acres of waste and was able to utilize the recovered material for cover, as it showed high levels of decomposition.

In total, 292 tons of waste were processed, with 171 of those tons reusable as cover soil. The waste was excavated at a cost of approximately $115 per ton. In regard to funding, the project received the “Innovations” award from the Kennedy School of Government at Harvard University; therefore, much of the project cost was covered by the award funds. The total cost to the County for this project was only $40,000. Without the award funding, a similar project is estimated to have a total cost of $1.2 million.

Frey Farm Landfill
In 1990, a municipal solid waste combustor (MWC) was constructed by the Lancaster County Solid Waste Authority in Lancaster, PA. The WTE facility had available capacity when built, which was filled through landfill mining and then spot waste until Lancaster County grew into the plant’s full capacity. Since the waste in the lined landfill was less than five years old, a landfill mining project was a viable option for them. The facility was to utilize a mixture of new waste and reclaimed waste from the landfill as its augmented MWC input stream.

The waste was excavated from the landfill and processed using a 1-inch trommel screen. Approximately 56% of the excavated material from the landfill was acceptable for intake at the MWC, with 41% being composed of soil. Only 3% of the total excavated material was neither combustible nor able to be used as cover soil at the landfill, and had to be returned back into the landfill for disposal.

In order for the input wastestream of the MWC to achieve the necessary energy value, it had to be composed of 75% new waste and 25% reclaimed mined waste. While the project itself was cash flow neutral (revenue gains versus expenditures), it resulted in added value of reusing dirt for cover and reusing the cubic yard landfill space a second time. Once those assets were factored in, the overall gain was positive $13.30 for every ton of material excavation.

Lessons Learned
Some of the lessons learned over the last few decades from landfill mining in the United States include:

  • Personnel and equipment typically assigned to normal landfill operations generally have the skills and capabilities to perform landfill mining activities, assuming they are available, but if not, these activities can be contracted out to experienced contractors.
  • If there is soil and groundwater contamination under the landfill, sufficient time should be allocated in the schedule to remediate the area, preferably before re-lining and filling of waste.
  • The quality of recyclables in old landfills (say something more than 10 years old) is questionable for sale in the marketplace. Unless there are extenuating circumstances (i.e., like those of the Frey Farm mining project), the cost of separating recyclables will likely be higher than the potential revenue from the marketplace.
  • One needs to be realistic and conservative about the timeframe needed to mine an old landfill. Contingency delays for bad or seasonal weather, equipment breakage, or uncovering hazardous materials should be included in the schedule.
  • There are many good case histories of landfill mining in the US that can be reviewed to become familiar with many of the variables that were encountered, costs, equipment, and how well the particular project went.

References
Cobb, Curtis E. and Konrad Ruckstuhl.

SPM Group, Inc. Mining and Reclaiming Existing Sanitary Landfills. Aurora, CO.

Fisher, Harvey and David Findlay 1995. “Exploring the Economics of Mining Landfills.” Waste 360, July 1995.

Innovative Waste Consulting Services LLC. Landfill Reclamation Demonstration Project, June 2009.

International Solid Waste Association (ISWA) 2013. Landfill Mining, prepared by the Landfill Working Group.

USEPA. Solid Waste and Emergency Response. EPA530-F-97-001, July 1997.

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Contact WIH Resource Group
For more information, Visit our website by CLICKING HERE and contact us today to see how we can best serve you by phone at 480.241.9994 or by e-mail at admin@wihrg.com

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ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

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More information on WIH Resource Group and its services can be found at www.wihrg.com.

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7 Tips To Increase Your Productivity


With more demands, and what seems like less time, we are all looking for ways to increase productivity during our work days. Here are 7 simple tips to give you back some control in your work day and help you become more productive.
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1. Create a To-Do list
Before you start each day, make a list of your must do items. This keeps you on task and can bring you back to focus when you keep your list in front of you while working. We suggest you make it a paper list so it is visible at all time.
2. Take breaks
We all seem to overwork ourselves and don’t realize when we need a break. Allow yourself to take breaks when you find that you are getting overwhelmed, stressed, if you start losing concentration, or just need to clear your mind for a few minutes. Step away from your desk take a walk around the office or just stand up and stretch.
3. Weed out distractions
Social Media, push notifications and today’s technology make it easy to have constant distractions. Turn off the notifications on your phone and computer except for crucial appointment reminders so you are not constantly distracted. It is easy to get side tracked from one text or notification and realize 20 minutes later that you have completely lost focus.
4. Designate time to read emails
Allow yourself to check emails in the morning, after lunch and before you leave the office. When you are constantly checking your inbox and reading or replying to every email, it sucks down your productivity time. If you are sending out emails and need them to be responded to promptly, assign a Priority tag to them.
5. Sleep early and get up early
Take a look at every top executive, CEO or successful businessperson and you will find that they all have one main thing in common – they wake up early. Waking up early gives them time to get their morning started without being rushed, stressed and limited on time. Going to bed early ensures they are rested and recharged to start the next day.
6. Focus on one thing at a time
We have all heard that multitasking is detrimental for productivity. It reduces the performance of any task that we do when not being fully focused. Studies have shown that our brain is strained when we are constantly shifting between multiple tasks at one time. Would you rather complete one task with excellent results, or 3 things with mediocre results?
7. De-clutter and organize your environment
When you are working in a cluttered environment, it creates unnecessary stress on your mind and body. It is like having a stack of unopened mail that you know you need to get to. Not to mention, it is a distraction. Clean up your workspace so you can stay focused and more productive.
These tips are provided to you by WIH Resource Group, Inc
WIH Resource Group provides the following useful tips to improve your productivity.

Source: WIH Resource Group

Contact WIH Resource Group
For more information, Visit our website by CLICKING HERE and contact us today to see how we can best serve you by phone at 480.241.9994 or by e-mail at admin@wihrg.com

Visit our new website!   www.wihresourcegroup.com

wihwebsite

ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

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More information on WIH Resource Group and its services can be found at www.wihrg.com.

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Renewable Portfolio Standards drive the waste-to-energy industry


There is one single, constant driver that can propel the WTE industry forward or hold it back, and that’s renewable portfolio standards (RPS). These RPS’s are policies in 29 states and Washington, DC to increase renewable energy, usually from wind, solar, biomass, and sometimes landfill gas and municipal solid waste.

USA Renewables by State

How much capital is allocated to each of these sources depends on what “tier” within the RPS it is placed. Tier 1 generates more revenue than tier 2, allowing WTE technologies in this higher category to compete with solar and wind, which are the energy-producing forerunners right now. While biomass, biogas, and other WTE grew by 15% since 2008, wind grew by 65% in 2014 alone.

Then there is a market driver at the federal level: the Public Utility Regulatory Policy Act (PURPA). The law requires utilities to buy electricity from a qualified facility, but to only pay what it would cost the utility to produce that electricity.

“So they pay a relatively small amount, which rarely pencils out for renewable energy producers,” said Brian Lips, DSIRE project manager at North Carolina Clean Energy Technology Center. “But the RPS places [renewable energy producers] in a position where they don’t have to compete with fossil fuels; rather they compete against other renewables.”

Sometimes biomass, one of the more widely used WTE sources, is in tier 1 on the RPS. But what counts as biomass gets tricky as there is no standard definition; so feedstocks under this umbrella vary but could include organic materials like trees, crops, and animal waste.

How Maryland pays out for trash-to-energy

One state standing out on the WTE front is Maryland, the only state in the country that places trash-burning incinerators in tier 1, according to Energy Justice Network Founder and Director Mike Ewall. This incentive drew New York-based Energy Answers International to Baltimore, where it got a permit in 2010 to build what would have been the largest incinerator in the country — one that environmentalists vehemently protested, arguing the emissions would threaten public health.

Just last week, following a long, hard fight between Energy Answers and its opponents, Maryland announced that the incinerator project is no longer valid, stating the permit became void after an extended construction delay.

Some states have left trash incineration out of the RPS altogether, such as New York, which only allows the burning of biomass. However, that state is subsidizing crop burning. “Rarely can you make it work to grow crops just to burn them; it’s too expensive. But New York and Iowa have burned grass and or trees for electricity,” said Ewall.

Meanwhile, commercial scale trash-burning incinerators seem to be fading from the landscape. One to be built in West Palm Beach will be the first such plant launched in 20 years, at least on a new site. Many others are shuttering or at risk of closing, with the number currently in operation having fallen under 80 for the first time in decades, largely because of their cost.

Introducing more energy sources to the playing field

In quest of new options, Pennsylvania, Ohio, and West Virginia have put fossil fuels in their RPS, bringing a whole new category onto the playing field. “They are the first ones [and only ones] to do this,” said Ewall. He added that Ohio has put nuclear in their portfolio in addition to fossil fuels. And a fairly new industry direction is to pelletize trash and market it to existing boiler plants for energy.

Some of the growing options — and their price tags — are sparked by regulations mandating the amount of electricity that utilities must derive from renewable resources.

“In California where 50% of energy has to come from renewable sources, utilities may pay more. But in North Carolina where just 12.5%  has to be renewable, utilities have more bargaining power,” explained Lips.

The renewable energy market is particularly strong in New Jersey, and Hawaii has the most ambitious goal in the country: 100% renewable energy by 2045, he said. The island state has two motivators: outrageously high electricity rates as it burns imported oil, and its vast renewable energy resources.

How the Federal Clean Power Plan is driving state policies

More change may be on the horizon if EPA’s Clean Power Plan unfolds. It’s part of Obama’s push, claimed to curb greenhouse gas emissions from fossil fuel and coal-fired power plants, which would allow for natural gas and renewable energies such as biomass, incineration, and natural gas.

Analysts project this law will be a major market driver, and it’s already proving to be, at least in the natural gas front. There are about 300 proposals for gas-fired plants in the United States now, according to Ewall.

“Most were underway before EPA adopted the plan. But they were [further] fueled by the rule. So Clean Power would be a major driver to push for natural gas,” he said.

Source: Waste Dive

Published by WIH Resource Group

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ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

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More information on WIH Resource Group and its services can be found at www.wihrg.com.

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WIH Resource Group Launches New Dynamic Website


Phoenix, AZ — March 28, 2016—WIH Resource Group, Inc. (http://wihrg.com/) has kick-started its 2016 marketing campaign with a new, vibrant, and fully revamped and informative website.   “We’ve worked hard to deliver a website that can inform and inspire across our diverse client base and we are delighted with the results. We hope it answers a lot of the questions that we are commonly asked, and goes a long way to demonstrating the firm’s capabilities, expertise and experience” said Bob Wallace, President and Founder of WIH Resource Group.

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WIH Resource Group was founded in 2005 and is renowned for its exemplary service and industry individuality. Wallace explains, “We are a professional, innovative organization that focuses on giving our clients a high-quality, personalized customer experience and we want that level of care to remain synonymous with the WIH Resource Group name.”

“Our broad range of services allows us to offer our clients a full service package. We wanted a new website that reflects our professionalism, specifies our accreditations, introduces our exceptional team and gives some insight to our current clients, our meaningful partners, and our diverse areas of expertise. We’ve more than met that in the new website, which sums up the WIH Resource Group ethos perfectly.” said Wallace.  It also features downloadable Industry White Papers http://www.wihrg.com/onlinestore.html

About WIH Resource Group

WIH Resource Group is an American based leading global independent provider of environmental, waste management, recycling, transportation, financial and logistical solutions.  The company also provides its clients with strategic consulting solutions in alternative vehicle fuels, fleet management, operations, M&A transactional support, surveying and polling, collection vehicle route auditing, expert witness and transportation matters for corporations, federal, state, and local government clients.

WIH looks to establish long term relationships with their clients where they are called upon regularly to assist in developing viable and sustainable solutions.

For additional information, visit the new website http://wihrg.com/

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How Banning Food Waste from Landfills Affects the Industry


As a way to reduce the amount of waste sent to its landfills, Maine legislators have begun looking for ways to require composting for food and other organic wastes.

Food Waste - WIH Resource GroupOriginally included in LD 1578, sponsored by Sen. Tom Saviello, (R-Wilton), a mandate required those producing more than one ton of food waste to divert it from landfills by sending it to a composting facility within 20 miles. But Maine officials will have to find other ways to divert food waste because the mandate was recently removed from the bill.

“It had nothing to do with the merits of the proposal itself. It was more political. There was fear that including a ‘mandate’ in the bill would make it difficult to pass, and would definitely prompt a veto,” says Sarah Lakeman, Sustainable Maine Project director for the Natural Resources Council of Maine. “This was an omnibus waste bill, so they took it out to preserve the rest of the bill that they had a better chance of passing. The committee also thinks that they can bring it back for consideration in 2017 as its own bill. The start date of the ban wasn’t until 2020 anyway, so even with the delay in enactment, it could still start at the same time or sooner.”

Although Maine may have to wait until next year to decide the fate of food waste, the idea behind the ban raises some questions within the waste and recycling industry.“The original intent was to urge the largest producers of food waste to stop wasting; which would in turn help spur development in composting infrastructure in Maine,” says Lakeman. “We have adequate infrastructure now, but we need to expand it to make it more cost effective for everyone to participate. Particularly by lowering or sharing in transportation costs, and decreasing the distance traveled to a composting facility.”

Michael Van Brunt, director of sustainability for Morristown, N.J.-based Covanta Energy, says that states look to these types of bans to reuse, recycle and repurpose food waste and other organics to generate clean energy and rich, fertile compost, instead of wasting it in landfills.

“Diverting food wastes from landfills will require an investment in infrastructure, suitable time to implement, and an appropriate regulatory system to ensure compliance,” he says. “However, local and state policies can provide the impetus to facilitate food waste diversion. States like Vermont, Connecticut, California and Massachusetts have all adopted policies aimed at increasing food waste diversion, focusing first, like the Maine proposal, on large generators of food wastes. The European Union’s Landfill Directive, which reduced the amount of biodegradable waste going to landfills, has significantly contributed to the growth of sustainable waste management: more recycling, composting and energy recovery, and far less landfilling.”

Van Brunt also says he thinks banning food waste from landfills would have a positive impact on the waste and recycling industry.

“The most common alternatives for landfilling food waste are composting and anaerobic digestion, both of which are considered recycling when the residues are reused as compost or fertilizer. Banning food waste from landfills may also have the impact of reducing waste and possibly encouraging food reuse programs, even better than recycling,” he says.

“There is also the added benefit of avoiding significant greenhouse gases that are generated when food waste biodegrades in landfills,” he adds. “Reducing the amount of food waste deposited in landfills can significantly reduce the generation of methane a highly potent greenhouse gas, 34 times more potent than CO2 over 100 years, and more than 80 times as potent over a shorter 20 year time frame. Methane is a short lived climate pollutant, increasingly a focus of international action to reduce GHGs. In fact, the White House announced a strategy to reduce methane emissions two years ago that specifically targeted diverting food wastes from landfills.”

Source: Waste360

Published by WIH Resource Group

ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

More information on WIH Resource Group and its services can be found at www.wihrg.com.

Click on an image below to take you to WIH’s other sites!

Five Commandments for Down Recycling Commodity Markets


The accumulated wisdom of scrap recycling veterans leads to five important rules to help cope with difficult market conditions.

By Brian Taylor, Editor – Recycling Today

 

 

 

Illustration: Matt Collins

 

Scrap recycling company owners and managers live in a workday world in which changes can occur suddenly or, conversely, in which a distressed market can linger far longer than what is tolerated in many other sectors.

Industry veterans, thus, are not greatly surprised when prices drop sharply and stay low for an extended period, and likewise they have seen previous stretches where material generation goes into an extended slump.

The ability for a company to survive an extended downturn takes not just experience and knowledge, industry veterans say, but also discipline and foresight.

An entire management book could be written based on the accumulated knowledge possessed by recyclers who have weathered three or more market downturns of the sort that have put some of their competitors into receivership.

For the purpose of trying to distill some of that same knowledge into a format that can fit into a magazine article, what follows are five rules or commandments that fit within any lengthier volume offering advice on how scrap recyclers can manage through turbulent times.

By no means do these five commandments (or, if you prefer, strong recommendations) tell recyclers everything they need to know about how to survive a downturn. However, based on the common threads that emerged in talking to recycling industry veterans, they offer a good place to start.

i. thou shalt not take on burdensome debt.

Business loans and good banking relationships are as integral to the scrap business as to any other industry or service sector. What scrap recyclers seem to overwhelmingly agree on, however, is that the volatile revenue stream inherent to recycling means that debt-to-equity ratios that might be acceptable in other sectors can be a recipe for insolvency in the scrap business.

“Historically, it has proven to be true that lulls in business are great times to make changes: equipmentwise, efficiencywise and even just a change in business direction.” – Keith Highiet, Modesto Junk Co.

When scrap prices plunge and scrap volumes diminish, the monthly revenue for a scrap firm changes dramatically.

Recycling company owners may not agree precisely on when it is suitable to take out a loan or how much debt is too much, but they are nearly unanimous on the idea that there is a line that should not be crossed.

Overall, for a business to achieve a certain scale, “debt is not avoidable,” says Kevin Gershowitz, a principal owner of Gershow Recycling, Medford, New York. “But many times, industry members don’t manage debt well,” he continues. “While too much debt is never a good idea [in any business sector], in a commodity business and in a weak market, too much debt is a death knell.”

Melvin Lipsitz of M. Lipsitz & Co. Ltd., Waco, Texas, offers a blunt assessment: “Debt is a bad thing anytime. Typically, the interest you pay on debt and the typical net margin of profit for this industry [mean] the cost of money, even at low interest rates, can dissolve profits.”

Nonferrous scrap recycler Mark Lewon of Utah Metal Works, Salt Lake City, says that among the many scrap firms that purchased auto shredders during the (largely) bull market from 2003 to 2013, those who financed their purchases likely have learned a hard lesson.

Lewon, who also currently serves as chair-elect of the Institute of Scrap Recycling Industries (ISRI), Washington, states, “The buildup in shredders was fueled by debt. Now few, if any, shredders get enough material to run more than a couple of days per week. If that amount of volume isn’t enough to cover the payments, there is going to be a problem.”

Industry veteran Albert Cozzi, currently a principal with Bellwood, Illinois-based Cozzi Recycling, expresses a cynical view toward lenders, commenting, “Banks will always lend you whatever you want, as long as you don’t need it.”

The distressing corollary to that, he says, is that “in this environment,” when recyclers may benefit from a loan to supplement slumping revenue, banks “are just not lending to commodity-related businesses.”

Lewon says, “Debt is a tool, but it is a dangerous tool in that if the calculations for servicing that debt are inaccurate, and if volumes or margins fall short, disaster ensues.

“The bottom line is that the less debt a company has going into difficult economic times, the better the chances of its survival,” he adds.

ii. know thy costs.

Making a concerted effort to understand where outbound dollars are going and whether they are being spent wisely is an endeavor that proves worthwhile far beyond the scrap recycling industry. This knowledge proves particularly critical in a scrap industry downturn, however, when it comes time to react quickly to new market dynamics.

Sources cite careful recordkeeping and industry experience as factors that help savvier operators fully understand how and where money is being spent. “Those operators or entities who have been through prior low cycles understand the basic rule of ‘know your costs,’ managing your costs and keeping your costs low,” Kevin Gershowitz says. “This rule also allows for greater profits during better markets. The experience factor is very important.”

Steven Safran, president of Chicago-based wire processing firm Safran Metals, advises, “You should be running the business the same in the good times and the bad times, not just waiting for the bad times to ask, ‘Oh, where can I cut my costs?’”

Kevin Gershowitz expresses the same thought, saying, “The only way to survive the wake-up call [of a tough market] is to eliminate waste and fat. In good markets, efficiency can wane and costs rise. It’s easy to keep paying. However, in bad markets, those players that consciously choose to survive deliberately review their costs, efficiencies and spending.”

Cozzi offers a similar perspective, saying, “I am a big believer that operationally, when things are good, you run things as if things were going to get bad. That way, when things do turn bad, you don’t have to make many operational changes.”

The hard work is in the details, Cozzi adds, remarking, “It is important to look at every line item on the income statement regularly to see where costs can be reduced. Also, it is important to look at every item on the balance sheet to see where cash can be squeezed out.”

“The less debt a company has going into difficult economic times, the better the chances of its survival.” Mark Lewon, Utah Metal Works

When a downturn hits, “Yes, you may have to change to adjust to volumes,” he says, “but whether things are good or bad, you have to look at your business every day and find ways to be more efficient and continually improve operations.”

John Tiziani, chief financial officer of Gershow Recycling, sums up this management principle by stating, “The companies that know every detail to their businesses survive in low markets and thrive in high markets.”

iii. thou shalt not overpay for material.

The adage “Scrap is bought, not sold” is one of the first phrases someone new to the industry learns, and the importance of the phrase is magnified when scrap buyers are operating in a declining or depressed market.

In bad times or good, prices paid for inbound material are likely the biggest numbers on the expenses side of the ledger, so avoiding overpaying is directly related to the “Know thy costs” commandment.

What veteran recyclers observe, however, is that overpaying can cause even more harm to a company’s balance sheet during bad times, and yet some company managers have a greater tendency to make this mistake in a market slump as they try to meet volume projections.

“Warren Buffet says, ‘You cannot buy market share; you can only rent it for a short period,” Cozzi says. He says the purchase of any grade from any supplier should be scrutinized as to whether it is contributing to profitability.

“Most scrap companies are looking at average cost of their purchases rather than incremental cost or marginal cost of both their feedstock and their operating expenses,” Cozzi says. “During good or bad times, the most important financial metric is contribution margin. Very often those marginal tons are providing negative contribution margin.”

Cozzi, who helped run Chicago-based Cozzi Iron & Metal before that family business was sold to Metal Management Inc. (now Sims Metal Management) in 1998, says maximizing volume may keep machinery active, but that does not necessarily make it the right approach.

“Whether our family ran one or 40 yards, we always did a sensitivity analysis for each yard to make assumptions [about] what price would provide what tonnage, and at what levels is contribution margin maximized. Generally, that answer is at a lower tonnage and lower price point.”

Safran says his family company has remained a modestly sized business in part because it follows this same logic, even during boom markets. “This is the reason Safran Metals has been lean over the years: If we’re looking to pick up new business, we want to pick up business that makes sense. We’re not just looking to pick up marginal business. And I’m guessing too many dealers pick up marginal business, and especially business where you also have to increase your overhead. If so, then you’re putting yourself in more of a risk situation.”

Elliott Gershowitz, a co-principal at Gershow Recycling, along with his brother Kevin, comments, “Don’t overpay for market share on the basis of more volume. You can make the same profit if not more sometimes just by widening your spread and working on lower volumes.”

Kevin Gershowitz elaborates, saying, “Overpaying for raw material is a contagious, infectious disease. The old adage of ‘Make it up in volume’ is just as false today as it was then.” He concludes, “One has to be smart when buying. One needs smart buyers when buying. Anyone can buy if they overpay.”

iv. thou shalt not neglect good people.

When a downturn hits and then lingers, it becomes exceedingly difficult for a company manager to avoid painful personnel decisions. The negative impacts are clear to the employees being laid off or terminated and can be nearly as traumatic for the managers who have to make and communicate these decisions to their employees.

More subtle but of great importance in the long term is the risk to a company’s future when employees who are critical to the workplace knowledge base, culture, morale and future productivity gains of a company are among those who are terminated or leave the company after a payroll cut.

When asked about cost cuts to avoid during difficult times, Keith Highiet of Modesto Junk Co., Modesto, California, says, “Neglecting equipment or losing good people are not options. There are other expenses that can be cut first.”

A recycling company that wishes to retain its key employees through a downturn may need to turn to reduced hours as a cost-cutting technique. “Reduced hours and having good supervision are the keys,” Lipsitz says.

Safran says, “I have never laid anybody off [because of business conditions], maybe because we’ve been lean and mean. The workers help me make money in the good times, and I look at it that I have to take care of them in the bad times. We may need to cut back on hours, but if you have good people, and you spend money training them, you look at what you have to do to keep key employees.”

Lewon says good communication prevents workers from either being blindsided by bad news or from failing to understand the seriousness of a market downturn. “Explain to your people exactly what is going on so that they are aware,” he comments.

Even with the best management practices, “I think that choices have to be made,” Lewon says, when it comes to adjusting personnel levels to meet market realities. “Don’t be afraid to let marginal employees go. Tell the good employees that you want to keep them and that you will work with them to help them make it.”

v. continue to invest in quality.

When scrap prices are low and volumes have slowed to a trickle, it is likely that cash flow conditions will be on the tight side of the spectrum as well. A combination of tight cash flow and a commitment to avoid burdensome debt would seem to make a downturn an unlikely time to invest in operations improvements. However, veteran recyclers warn that neglecting one’s equipment for any consi

derable amount of time is likely to yield negative results. Retaining a high level of quality in operations starts with equipment maintenance, recyclers seemed to unanimously agree. (See the sidebar “Always Maintain”)

Beyond that important rule, veteran recyclers also say a market slump can provide managers with available time to research new equipment, adding that they often encounter equipment makers eager to make a sale during a lull.

“Historically, it has proven to be true that lulls in business are great times to make changes: equipmentwise, efficiencywise and even just a change in business direction,” says Highiet.

“Often, equipment salespeople are willing to deal in order to make sales in tough times,” Lewon says. “For anyone with cash and a long-term view, sometimes difficult times can be a great time to buy equipment.”

Kevin Gershowitz, who has encountered the same circumstance, says, “Better deals can be had on certain equipment from those sellers in need of making sales.”

Yet more critical than saving a few dollars, he says, is preparing to be competitive in the long run. “More important than the savings on the investment is the ability to be ready to go when the markets recover,” he states.

Kevin Gershowitz also points to the importance of keeping in mind the extended research, purchase and installation timeline for such a project.

“The workers help me make money in the good times, and I look at it that I have to take care of them in the bad times.” – Steven Safran, Safran Metals

“On some scrap processing equipment, from investigation to contract to install, it can take over a year for new processing equipment to become operational. Installing now and being in the game when the market recovers is better than beginning to install when the market recovers and then begin operating when the market tanks again,” he comments.

The first quarter of 2016 has provided financial press headlines pertaining in particular to China’s economy and the woes of the global steel industry that may well help to prolong the difficulties in the commodities sector.

Recycling industry veterans are far from complacent, but they do profess a certain amount of faith that abiding by time-tested management principles will help make the slump bearable.

“This downturn is having real consequences,” Highiet says. However, he adds, “The ability and wherewithal to weather prior [slumps], from controlling costs to accepting smaller profit margins with reduced flows of scrap, are helpful to rely upon in the current environment.”

Kevin Gershowitz says, “The fixed costs of operating a scrap yard are real and very expensive. The percent of gross margin needed to cover costs increases as market pricing lowers. When pricing is high, margins are wide and just about any company or individual can generate profits. Low pricing is a different business skill set. As market pricing lowers, margins get squeezed and do not expand. This explains many of the closures we read about.”

Cozzi returns to the idea of veteran leadership as making a difference for some scrap companies. “I believe that people in the industry prior to 2000 do have an advantage over people who are more recent to the business. They have lived through the cycles of the commodities market and of the economy,” he states.

Whether the rest of 2016 brings with it low prices or rising prices, employees of scrap companies with veteran leaders are likely to hear from them with variations of these five commandments and other lessons learned from previous experience.

Author: The author is editor of Recycling Today, Brian Taylor

Source: Recycling Today

Published by WIH Resource Group

ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

More information on WIH Resource Group and its services can be found at www.wihrg.com.

Click Here to Check out our Industry News Blog
Follow us on Twitter: @wihresource

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West Coast Boasts Highest Average Tip Fees in the Nation


Exclusive analysis completed by the Environmental Research and Education Foundation (EREF) shows that the Pacific region boasts the highest average tip fees in the country.

EREF maintains a database of 1,637 active Subtitle D MSW landfills across the U.S. This data base was used to develop a sample consisting of nearly 300 landfills that were categorized as large, medium and small. Large landfills process an average of 744,000 tons/year, while medium and small landfills processed 144,000 tons/year and 13,000 tons/year, respectively.

Live floor trailer

Landfill owners in this sample where then contacted and asked to provide gate rate information on their tip fees.  Of those contacted, 117 landfills reported their tip fee information, giving a response rate of roughly 40 percent. The data were then compiled by geographic region and basic statistical information computed.

The data show a national tip fee average of $48.27/ton.  However, there was substantial variation given the lowest and highest tip fees ranged from $14.47 to $119.00, respectively.  On average, lowest tip fees tended to be in the South Central region of the US while the highest were in the Pacific region.

Average Tip Fees for U.S. Landfills (January 2016). Source: EREF
Region States Average Tip Fee Std Dev Min. Max
Pacific AL, AZ, CA, HI, ID, NV, OR, WA $61.20 $26.43 $24.00 $108.00
Northeast CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT, VA, WV $58.20 $21.74 $17.00 $114.00
Southeast AL, FL, GA, KY, MS, NC, SC, TN $44.46 $25.06 $19.75 $119.00
Mountains/Plains CO, MT, ND, SD, UT, WY $43.38 $21.47 $21.00 $110.00
Midwest IL, IN, IA, KS, MI, MN, MO, NE, OH, WI $39.64 $16.46 $14.47 $85.00
South Central AR, LA, NM, OK, TX $36.34 $20.63 $16.00 $72.00
National Average $48.27 $23.09 $14.47 $119.00

Source: Waste360 and WasteDive

Published by WIH Resource Group

ABOUT WIH RESOURCE GROUP

Celebrating a decade in business, WIH Resource Group is a global provider of professional technical and management support services to a broad range of markets, including waste management, recycling, financials, transportation, M&A due diligence and support, alternative fuel fleet conversions, facilities, environmental, energy for private sector business and government clients.

WIH Resource Group is a leader in all of the key markets that it serves. WIH Resource Group provides a blend of global reach, local knowledge, innovation and technical excellence in delivering solutions that create, enhance and sustain the world’s built, natural and social environments.  WIH Resource Group serves clients in more than 175 key markets internationally.

More information on WIH Resource Group and its services can be found at www.wihrg.com.

Click Here to Check out our Industry News Blog
Follow us on Twitter: @wihresource

WIH Ten Year Celebration Logo

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