How American and Canadian investors Plan to make money from the US$10 million Trade in Plastics and other Recyclables in Jamaica
“[There] is a law that says, if you have a Plastic bottle you have to charge a deposit on it. Essentially the person selling has to take back the bottle. Once you do that, there is an economic incentive”
Diana Macaulay of the Jamaica Environmental Trust interviewed by Erica Virtue, The Jamaica Gleaner, 2012AD
Despite the pitfalls of the Scrap Metal Trade, especially as it relates to making Telecom Providers and JPS Co (Jamaica Public Service Company) targets of armed thugs looking for easy pickings, the GOJ (Government of Jamaica) has decided to eventually re-open the lucrative Scrap Metal Trade.
LIME’s appeals to the GOJ with regards to theft of their Copper Cables for their Transmission system that powers their POTS (Plain Old Telephone System) combined with concerns expressed by the St. Elizabeth Parish over the rising incidence of Scrap Metal Thefts in that Parish had helped to force the hand of the JLP’s (Jamaica Labour Party) then newly appointed Minister of Industry and Commerce Dr. Christopher Tufton to halt the trade in early July 2011AD.
Back then he really had little choice. Despite bringing in nearly US$100 million per year, the Scrap Metal was largely unregulated and unlicensed with Scrap Metal Traders literally pillaging and Public Sector infrastructure since 2007AD, even affecting the operations of the Frome Sugar Factory in St. James.
So when the Scrap Metal thieves (as that is what they had become…..) decided to pick Friday July 15th 2011AD to steal some JRC (Jamaica Railway Corporation) Railway lines and NWC (National Water Commission), get caught and make the headlines, the pressure was really on the GOJ to take action.
It seems the GOJ had developed, now a year later, a severe case of amnesia, with the PNP (People’s National Party) then newly appointed Minister of Industry and Commerce Dr. Anthony Hylton now opting to now resume the Scrap Metal Trade, which had been so destructive to GOJ Infrastructure. The GOJ have earmarked four (4) locations at which metal will be sorted for inspection before being packaged unto containers for export, with an official announcement to be made soon as to the date of resumption of the Scrap Metal Trade.
I say amnesia, as Jamaica has a serious problem with Plastic, which regulation on Recycling Plastic that places onus on collection of Plastic bottles on the manufacturers and those in the supply chain of products made with plastics would Fix, according to Diana Macaulay of the Jamaica Environmental Trust.
This could be in the form of a Deposit Tax regulation. In such a case, merchandizers that sell products made of Plastic are empowered to collect a JA$0.50 deposit levy added on to each item made from Plastic sold, as is the case with empty Red Stripe Glass bottles. When the customer returns the empty Plastic container, they get back their JA$0.50, completing the loop.
In her estimation, there is no economic incentive to Recycles Plastic in much the same way companies like Red Stripe, Island Bottlers and Wysinco currently Recycle Glass and Plastic, as the market globally is flooded with Plastic, quote: “Paying for the Plastic so people have an incentive to bring in the Plastic is potentially a viable thing. But my understanding that the margins on the Plastic bottles, that is, the difference between what it costs to collect and store, ship them and then sell them, is not enough to pay people”.
Very true, even on the business side of the Recycling companies already in Jamaica, such as Nulife Recycling (Newspapers), JET (Jamaica Environment Trust), which Recycles PETE (Polyethylene) and HDPE (High Density Polyethylene) for Pepsi Jamaica and One Jamaica Recycling (Cardboard).
For them the prices and profit margins are only realized when they are able to collect tons of Recyclables each day, typically anything over 100 tonnes. This as the prices are very low and is quote by the metric tonne e.g. cardboard is US$100 per tonne.
Still, albeit the low pricing is not much incentive to the small business, the fact that Recycling is not being practiced or enforced in Jamaica, thereby makes it easy for people to just simply throw away Plastic wherever and whenever, with the Plastic washing into gullies and streams, creating a flooding hazard whenever it rains by blocking gullies.
Those that eventually reaches the seas end up choking and killing wildlife that ingest or swallow the Plastic. Plastic takes up to 200 years to degrade; it will be in the environment for a very long time, endangering countless sea animals in repetitive cycle of death. Disposing of Plastic by burning only makes it worse, as this releases poisonous toxins into the atmosphere that affects both land animals and humans directly via respiratory ailments related to the toxins.
I also affects the Climate as well by adding to the continuously rising levels of Greenhouses Gases already in the atmosphere, a direct contributor to Acid Rain and Global Temperature increases and the Rising Sea Levels. Folks it’s not always about the immediate short term profits; a future generation has to come along and clean up the mess left behind by the past, otherwise our Planet may soon become unlivable, Wall-E Style.
This Recycling activity would generate income for the GOJ via the enforcement of the Environmental Levy of 2007 against offenders who refuse to collect and properly Recycle Plastic. The Environmental Levy of 2007 previous was not being applied to imports from our CARICOM neighbours.
In that vein, recent discussions between the GOJ and manufacturer in 2012AD have come to light with the idea of re-imposing a levy of 0.5% on imported Plastic with the money going to fund the collection of plastics at all Public places managed by the GOJ, including GOJ buildings and National Parks. So something is being done as Jamaica’s environmental consciousness is being slowly awakened.
Interestingly too, despite the lack of an economic incentive, there are FDI (Foreign Direct Investors) coming to Jamaica with the intention of taking advantage of the apparent vacuum that exists in Recycling Plastics and other Recyclables, including Electronic Waste. They realize that the lack of a large scale collection of Recyclables and a lack of a culture in Corporate Jamaica geared towards Recycling is at the root of the problem in Jamaica, with profits being easily realized via:
- Economy of scale operations
- Rapid collection at a low enough cost from Jamaicans and sale to foreign markets that will pay a high upfront price for their material shipped by the tonne
- The use of low cost labour, which is plentiful in Jamaica, as Recycling requires merely collection and sorting of material and little technical skill
- Alternative Energy inputs, be it via Solar Power or Wind, which has to be factored into the set up costs for the long term in order to keep Operation costs down
On such company, Panther Corporation of Canada, has already set up shop with the intention of investing some US$26 million in Jamaica to take advantage of the still untapped US$10 million ($890 million) a year in Recyclables.
A fully solar powered plant in St. James, valued at some cost US$4.2 million, the investor and CEO of Panther Corporation of Canada Michael Mosgrove estimates a return on investment in the next six (6) years, quote: “The Recycling centre will be able to run on 600 volts on the solar system for eight hours a day without grid power. The solar system cost US$4.2 million and will pay for itself in six years. It is a completely green facility and will be the first of its kind in the world”.
Clearly he’s here for the long haul, having come to Jamaica and set up shop in June 2012AD and begun the process of employing nearly two hundred (200) people to begin operations in September 2012AD via a rather clever employment strategy: potential employees demonstrate for free their love for Recycling via a Project.
Again founder and CEO Michael Mosgrove explains this strategy, quote: “The one-day voluntary clause that has been attached to this employment drive is to observe how committed applicants are to the process of Recycling and to the job that they are applying for. We have various Recycling-based jobs available as well as administrative jobs so persons are encouraged to submit a detailed resume and we will match your skill sets with the jobs we have”.
The St. James Parish Council has welcomed them with open arms, especially as the company has the potential to generate nearly five thousand (5,000) jobs in the St. James area. Chairman of the St James Parish Council and Mayor of Montego Bay Glendon Harris was upbeat, quote: “We are committed to keeping the city clean, creating jobs, and increasing the level of foreign investments in the city. This represents a first for the parish of St James, which is why the council took a unanimous decision to allow this development to go through”.
Clearly, to be profitable, economy of scale and keeping their energy costs low via the use of Renewable Energy is key, which explains why their 30,000 square foot Solar-powered modular facility is located to close to the Retirement Dump in Retirement, St James. Whether or not their venture will be successful remains to be seen, as they’ll need to process and export a huge amount of Recyclables daily to countries such as China that pay a high price for Recycled material in order to break even and start making profit.
Also coming to Jamaica to take a slice of that still untapped market for Recycling Plastic, Cardboard and Newspaper is American company Jamaica Recycles headed by Founder and CEO Dennis Soriano. Jamaica Recycles aims to begin in October 2012AD after sinking some US$400,000 in the development of a plant located off Spanish Town Road near to the Riverton City Dump. Recycle Jamaica operate a collection Depot off the Three Miles Area to facilitate interested individuals to come in, sort and distribute their Recyclables.
Their plant, which is already up and running, can crank out 5,000 tonnes per month in compressed material. Their aim is to export in bulk, to quote Recycle Jamaica Founder and CEO Dennis Soriano: “The cost of a container is the same despite the weight,” said Soriano. The baler can compress 20 to 22 tonnes of the material to fit into a single container, compared to 14 tonnes if it’s just squeezed in. It means we can pass along a good part of the higher price to customers that bring the material.”
Most of this Recyclable material that these Recyclers are targeting includes:
- HDPE Plastic
- PETE Plastic
Hopefully, as these FDI’s set up shop and manage to collect as much of the Recyclable material as they can in bulk, they will also begin to expand their business through investments from interested Third-parties with Waste disposal problems and expand to Recycling the following which are already a problem in Jamaica to Recycle:
- Scrap Metal
- Wood chips
- Rare Earth Metal from RDA (Residue Disposal Area) from JAMALCO
- Oxalate from Bauxite production Process at JAMALCO
- Organic Waste Recycling as described in Solar Powered Organic Farming – Sustainable Agricultural Development and Jamaica’s Food Security
- Sewage, also described in Solar Powered Organic Farming – Sustainable Agricultural Development and Jamaica’s Food Security
- Water and Rainwater
- Cooking Oil
- Electronic Waste e.g. old computer and Cellphones
- Printer Cartridges
Like Panther Corporation of Canada, Recycle Jamaica is coming to compete against locally established Recyclers who are currently only exporting US$2.4 million Recyclable materials per year. Time to list out the Rogues Gallery of thus far inactive Local competitors in the as-yet fully developed Recycling Market:
- Nulife Recycling, a Local Jamaican company that focuses primarily on newspaper Recycling
- JET (Jamaica Environment Trust) and established 10 year old PETE (Polyethylene) and HDPE (High Density Polyethylene) Recycling contractor for Pepsi Jamaica.
- One Jamaica Recycling, a Local Jamaican company that focuses primarily on Cardboard Recycling
Especially profitable is the Recycling of Electronic waste, mainly due to the fact that these Electronics circuit boards contain Rare Earth Metals need for the manufacture of everything from smartphones such as the Apple iPhone to the electric motors in the wheels of All-Electric Vehicles as mentioned in Chinese Crisis in Rare Earth Metals: Afghanistan is Silicon Valley’s Savior and The American Race towards Alternative Energy.
Digicel had already begun the Recycling of Cellphones in August 2009AD in partnership with the GOJ. Albeit a competitive initiative to fight then entrant America Movil backed CLARO Jamaica by making it easy for Jamaicans to upgrade to a new Cellphone, the marketing strategy exposed a problem in Jamaica: disposal of Electronic waste, particularly the ever popular Cellphone.
Particularly note should be taken of the disposal of old Cellphone components, such as batteries, which contain dangerously toxic levels of Arsenic, Lithium and Copper that can leach out of exposed batteries into groundwater from Riverton City Dump in Kingston.
BOTH Telecom Providers are thus presented with an opportunity to be responsible Corporate citizens and like Bauxite producer JAMALCO they can have promotions to Recycle their Electronics Waste by having people return their old Cellphones in a bid to upgrade people to a more advanced feature phone such as a low-end Blackberry or a high-end smartphone, such as the Apple iPhone, Samsung Galaxy SIII and other smartphones the with the customer getting a significant discount.
Curiously enough, the trend in Jamaica is towards upgrading to a smartphone from a Blackberry on their second phone purchase as noted in Apple iPhone boosts Jamaican smartphone usage as BB goes Chapter 11 Bankruptcy. Thus with a good Marketing Campaign themed around Digicel going Green via their newly built Solar-powered Headquarters off Ocean Boulevard in Downtown Kingston as described in Digicel Jamaica’s Alternative Energy Future – Increased Electricity Bills and Energy Sector Opportunities collide, they can jump-start the smartphone revolution while in the same hand dealing with the problem of Electronic Waste created when Jamaicans upgrade their Mobile phone.
Like Digicel, LIME can also realize higher sales in smartphones via a Cellphone Recycling program and in the process upgrade all Jamaicans to the latest smartphones in a trend toward smartphones that’s showing signs of picking up among American-centric Jamaicans, if the reasoning of my article Apple iPhone boosts Jamaican smartphone usage as BB goes Chapter 11 Bankruptcy holds water.
In addition, via a partnership with any of the above Recycling Companies, Telecom Providers and even the JUTC (Jamaica Urban Transport Corporation) can set up Vending Machines that allow Jamaicans to drop off properly sorted Recyclable material and get Bus Passed/Tickets or Phone Credit based on the weight of the Recycled material. This in a move similar to the People’s Republic of China, which in July 2012AD set up a similar program in their country to encourage Chinese to recycle in exchange for getting Subway Tokens.
Worse, with the frequent fires at Riverton City Dump off Spanish Town Road, these Rare Earth Mineral can become airborne, posing a Rare Earth Poisoning risk to Jamaicans living within the vicinity of the Dump and inhaling smoke from the Dump.
In the long run, it’s really a wakeup call for Jamaica to take a look at the Man in the Mirror and do something about our Dumps in Jamaica, which present both a hazard that needs to be taken care of and an opportunity for the GOJ, Telecom Providers, Local and FDI Recyclers and Corporate Jamaica in concert to make revenue and a difference in the long term. In the process, it presents a long term viable source of revenue to Jamaicans and an opportunity to employ thousands of out-of-work Jamaicans in Recycling.
Most interestingly, it presents the possibility that Jamaica can also go into Rare Earth Mining via Recycling Electronics Waste and even recycling Aluminum, as currently Rare Earth Metals are in high demand worldwide to…..well, make more Electronics! No need to focus solely on Scrap Metal; Rare Earth Recycling fetches a higher price for smaller amounts of the Metal, boosting the Recycling Industry’s potential revenue well past the US$10 million estimated in Jamaica.
So what can Jamaicans do to aid Recycling? Contact any of the above mentioned companies and set up a Recycling program at their school or business place to have their Recyclables sorted and collected. In the short term, they benefit from money made from the sale of Recyclables to these Local and FDI’s coming on stream to help Jamaica make money from its Waste Recycling problem.