Memorandum by the British Metals Recycling
In response to the House of Commons Trade and
Industry Select Committee's proposal to conduct an inquiry into
the economic impact of the End of Life Vehicle Directive, this
memorandum is submitted by the British Metals Recycling Association
The BMRA is the trade association for the metal
recycling industry in the UK, which has an annual turnover of
over £1 billion. The sector plays an important role in the
UK economy, employing over 10,000 people and generating significant
export revenue, in excess of £500 million. If the metals
recycling sector is not properly considered, there could be a
severe economic impact for recycling businesses, many of whom
are small to medium sized enterprises.
The BMRA represents some 350 members who, collectively,
recycle around nine million tonnes of ferrous, and one million
tonnes of non-ferrous scrap metal annually into secondary raw
materials. This includes almost all of the approximately two million
end of live vehicles (ELVs) arising annually in the UK.
ELVs enter the recycling chain either through
dismantlers for parts re-use and then on to the metals recycling
industry or, increasingly, directly into the metals recycling
industry (see attached ELV flow chart). The metals recycling sector
recovers 98 per cent of the metallic content through 37 capital
intensive, high productivity shredding plants. This combined process
recovers around 75 per cent by weight of ELVs.
The remaining 25 per cent by weight (comprising
plastics, glass and other non-metallics) are currently landfilled
as these materials are not commercially viable to recycle in the
UK (without subsidy).
The recent decline in global steel prices has
caused a significant reduction in the value of ELVs. Consequently,
the market value of a natural ELV (one which is scrapped due to
old age as opposed to a crash damaged late model) at the point
of entry into the recycling chain is currently negligible, zero,
or even negative. This has led to an increase in the abandonment
of vehicles by the last owners, as there is little financial incentive
nor easily enforced legislation to prevent them being disposed
of in an unsuitable manner.
ELV DIRECTIVE ITSELF,
THE BMRA SUBMITS
The individual treatment/de-pollution of ELVs,
as prescribed by the Directive, does not presently occur in the
UK, as there is no statutory requirement to do so. This activity
is predominantly a manual operation that initial studies have
indicated will cost significantly more than the market value of
a natural ELV.
In addition, the Directive requires that, in
due course, higher levels of recycling than those currently being
achieved must be attained. As this will necessitate recycling
those materials which are presently uneconomic to process, it
is clear that additional costs will be incurred.
Implementation of the Directive's requirements
is impossible without specifically addressing the question of
the funding of the costs of both the capital investment necessary
to install appropriate treatment/de-pollution facilities and their
ongoing operational costs. Operators will require robust business
plans to raise the capital necessary to invest. Ultimately, these
costs will have to be borne, directly or indirectly, by the consumer.
We recognise that the early introduction of
manufacturer funding could put many vehicle makers in a difficult
financial position. Equally, the essence of this legislation is
to impose producer responsibility, and any suggestion by other
interested parties that costs should be borne by the metals recycling
sector is not acceptable, as it would not apply these principles.
It seems likely that a measure of Government support may be needed
for an interim period until full producer responsibility can be
In the past, producer responsibility systems
for Packaging have been enacted elsewhere in Europe (and initially
in the UK) which have given rise to competition policy issues.
We would favour a system that embodies fair and reasonable access
by all stakeholders to the post-Directive ELV management market
for our members, and not a monopoly control system issuing contracts
to a small number of players.
The legislation should seek to preserve, substantially,
the existing recycling infrastructure, comprising many small to
medium sized enterprises as well as major publicly and privately
owned businesses. The current numbers have grown organically and
a competitive and economic structure is in place across the country.
Critically, any substantial reduction in the number of players
is likely to lead to more fly-tipping as facilities would be further
away from ELV owners who are frequently those most inclined to
Regulations must be introduced to ensure that
the abandonment of ELVs does not dramatically escalate and increase
the financial and management burden already placed on Local Authorities.
This could be achieved through a disincentive to fly-tip; for
example, through a system of continuous licensing by the DVLA;
or by an incentive to the last owner to deliver ELVs to an authorised
treatment/de-pollution facility, ie a bounty system.
Once implemented, the policing of the legislation
must ensure a "level playing field" for economic operators,
to protect those that have invested and ensure that no commercial
advantage can be gained by those who do not.
Representatives of the BMRA would very much
welcome the opportunity to explain and expand upon these views
at the Select Committee oral evidence session in October.
British Metals Recycling Association
21 September 2001