Examination of Witnesses (Questions 110
TUESDAY 23 OCTOBER 2001
110. Good morning, gentlemen. Could I ask Mr
Hulse to introduce his colleagues and then we will start.
(Mr Hulse) Certainly, thank you very much. My name
is David Hulse and I am the Director General of the British Metals
Recycling Association, which is the trade association for the
metals recycling industry which is currently responsible for processing
virtually all of the end of life vehicles in this country and
recovering materials from them. On my immediate left is Andrew
Mason, who is the end of life vehicle specialist for European
Metal Recycling, which is the largest metal recycling company
in this country. On my far left is Stuart Cottam, who is the end
of life vehicle specialist for Simsmetal UK Limited, which is
the second largest metal recycling company. Stuart is also the
Chairman of our End of Life Vehicle Focus Group. On my right is
Shane Mellor, who is the owner of a small metal recycling company
in the area of Norwich, which is one of the feeder yards to the
metal recycling industry.
111. Thank you. That is helpful. Perhaps you
could help us to get a wee bit more of a picture. We understand
that there are 350 firms in your organisation. What percentage
of the market is that? You say substantial, how big is substantial?
(Mr Hulse) It is about 95 per cent of the market.
112. Is it correct to say that the shredding
capacity, however, is concentrated only in two companies, well
not "only" but something like 80 per cent of it is within
(Mr Hulse) The numbers are not quite right. There
is a significant proportion of the shredder capacity concentrated
in the two companies represented by my two colleagues on my left.
It is about 60 per cent of the market. The other 40 per cent is
made up of 11 independent shredder companies who are also our
113. Okay. As far as the regulations governing
the industry at the momentI am not going to go down the
road of the burden of regulationwhat do you have to operate
under at the moment for waste management licensing?
(Mr Hulse) There are quite a variety of waste management
licences which vary from site to site around the country. The
conditions of those waste management licences are infinitely variable.
I think I would like to defer this question to Andrew who is more
expert in this field than I am.
(Mr Mason) We operate under a lot of environmental
legislation, we are bound to. We are a waste operator. Obviously
we require planning permissions for land use restrictions. We
operate under the Environmental Protection Act 1990 and the Waste
Metal Licensing Regs 1994 which require all our sites to have
a waste management licence to handle waste end of life vehicles
or waste white goods or whatever else we are dealing with, or
you can have an official exemption if you are small enough to
be able to meet exemption targets. We also operate under a duty
of care, which relates to the shipment of waste legislation, the
Packaging Directive, which is already applicable to our operations,
and we have lots of fun with that so we are fairly well covered
in terms of environmental restrictions on how we operate.
114. On the shredding side of the business,
if we can look at this for a moment. Have the majority of cars
that arrive at the shredders been depolluted or do you have to
spend a lot of time removing batteries and other bits and pieces?
What is the position?
(Mr Mason) I would suggest that less than one per
cent of vehicles probably arrive at the shredder or at the scrap
sector depolluted. There is no explicit legislation requiring
depollution at the moment. The legislation is implicit in shredding
terms. We are not allowed to put oil into a river, that does not
mean we have to take oil out of cars, we have the systems to stop
our drains from putting oil into a river, we have oil/water separators
etc in our drainage systems. So, looking at the costs of depollution,
which is a very manual operation, it is taking out mercury light
bulbs, it is taking out oil from engines, glycol from radiators,
etc. It is quite a heavy manual cost there. The CARE group estimates
around about £40 worth per car of variable cost in there.
That is not done in the UK, and nobody would do it in the UK because
it would make cars quite strongly negative value at the moment
even if they are around about zero or slightly positive.
Sir Robert Smith
115. Your members are presumably the last link
in the chain in the sense that ELVs enter the recycling chain
either through dismantlers and then on to recyclers or direct
to the recyclers? Your figures show that the average ELV feed
to scrapyards was 51 per cent dismantler and 49 per cent non dismantler,
i.e from households, etc.
(Mr Mason) Yes. Or straight into the scrap metals
site, the feeder sites which were mentioned earlier.
116. Right. How do you expect the recycling
chain to change with the implementation of the Directive?
(Mr Mason) That rather depends on how it is implemented.
We certainly, as a shredding sector, are firmly convinced that
the dismantling sector has a very valid role to play in local
management of cars. If a car arrives in Cambridge, for instance,
and the dismantler, under an Option 4 or whatever, decides they
do not want to take it, well the nearest shredder is probably
going to be in East London. I do not think the last owner would
be driving or towing that car down to East London. I believe the
dismantler in that area will be the local ATF who will have to
do the depollution of that car and then the flattening of that
car to put it into a bulk loader to take it to the shredders.
Shredders in general receive most of their vehicles in bulk.
117. You would not expect more vehicles directly
from the last owner?
(Mr Mason) I think there will be some closure of both
dismantlers and some of the smaller scrap trade because they will
not want to invest in the requirements of the annex to the Directive.
That will be a natural wastage, I believe, through not wanting
to invest heavily in their sites. I would not see a major change
unless we force a major change.
118. In your submission, also, you say that
with the global steel prices declining the market value for natural
ELVs has now dropped to zero. What about the premature or crash
ELVs, have they still got value?
(Mr Mason) They would not come to us. Sensibly they
should go to a dismantler who sells car parts.
(Mr Cottam) Or to a salvage operator.
(Mr Mason) Indeed, yes, the same sort of thing. We
recycle metals so the premature ones should go to them first.
119. The market value of a natural ELV is said
to be currently zero. How do you make money on natural ELVs?
(Mr Mason) It is currently zero that we pay the last
owner. We make money on converting that car into individual base
metals. Most of the metals are sold abroad, chunks of steel or
chunks of aluminium. We do not sell them in the UK predominantly
now. The UK is not a large manufacturing site for metal base items,
mostly it will be Asia or the States. They are commodity value
products and they are sold on the commodity market. The concept
that we could sell our lumps of steel for £20 a tonne more
by painting them blue will not happen.