Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 110 - 119)




  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 two companies?
  (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 members.

  113. Okay. As far as the regulations governing the industry at the moment—I am not going to go down the road of the burden of regulation—what 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.

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