Examination of Witnesses (Questions 120
TUESDAY 23 OCTOBER 2001
120. There is value in it for you.
(Mr Mason) There is value in it for us, absolutely,
otherwise we would not be doing it.
121. Do you charge people at all to take them?
(Mr Mason) Not at the moment in the scrapyard and
shredding sector, although I am aware that some dismantlers have
to charge now because they have to pick it up at natural end of
life, so there is a charge.
(Mr Cottam) It depends entirely on markets. If one
goes back to the second half of 1998 then, yes, we were charging
to take end of life vehicles.
122. You say, also, in your submission that
I think it is 25 per cent is plastics, glass and non-metals. Do
you think there is scope there for more development to find ways
of recycling that or do you think the manufacturers should do
more to assist making that part of the product?
(Mr Mason) If cars were made more out of aluminium
we would be very happy, it is a high value metal. I personally
believe there is a great scope for recycling non-metallics as
we go forward. I do not think in the next five years there is
going to be a wonderful scope there. We are fighting a Packaging
Directive which is forcing plastics recycling and the WEEE Directive
coming along behind it which will force plastics recycling. You
are having a forced recycling rather than a market pulled recycling
which I do not think will add a lot of value to the system but
I think long term, yes, absolutely, some of the engineering plastics
will be like non ferrous metals, they have a high value, but that
is in the ten year period, not in five.
(Mr Cottam) Worldwide there are no proven recycling
technologies, not even on a laboratory scale never mind an industrial
scale. It is a steep hill to climb.
123. Your submission notes that the treatment
of ELVs prescribed by the Directive does not currently happen
in the UK and that, therefore, there are costs involved in this.
What sort of ballpark figure are we looking at for an average
recycler to invest in the necessary treatment facilities?
(Mr Mason) For an ATF to invest in a state of the
art type rig, you are looking at a shade under £100,000 for
a twin rig, a state of the art depollution rig, if you are looking
at the top end of it, but there has to be a building and a building
has restrictions on petroleum storage because you are removing
products from vehicles, etc.. We have just installed one in North
London. We will not have any change out of about £240,000
for the building, the storage of the liquids, petroleum licences,
changes in working plans and licences and the acquisition of the
building in the first place.
124. £240,000 provides you with the capacity
(Mr Mason) 10,000 vehicles a year for depollution.
(Mr Cottam) That is the fixed cost, that is the asset
cost. There is a variable cost of them going forward.
(Mr Mason) Staff costs.
(Mr Cottam) If one takes the ARN model, the Auto-Recycling
Netherlands model, that is currently £61 being put to the
car to fund the recycling of 100 kilos of materials for the car
and to depollute the car.
125. Okay. For shredding companies, where does
the major cost of putting in place the Directive lie?
(Mr Mason) If you look at the Directive and look at
the changes, I think that is probably the easiest way to look
at it: the changes from the current operation require us to depollute
cars before they are shredded and that will be either the dismantler,
the scrapyard or the shredder, anybody can depollute, any ATF.
That is a large variable cost. The CARE group estimates £40
variable but that does not include the capital depreciation. We
have got to recycle more. We have to recycle plastics and, as
I say, I think in the long term that will probably be quite useful,
in the short term that will be a cost to us. I think it will cost
us more money than we will recover recycling plastics. We then
have to have a data collection system. We do not collate data
at the moment about which cars are shredded and how much we recycle
of each car. Looking at the packaging system the PRNs are not
a million miles away from being a data collection system, that
will add a cost to the ELV. All those three areas will add cost
and the argument is where does that cost get recouped from.
126. Presumably there is some more cost in having
to take more ELVs?
(Mr Mason) We already shred all the cars in the UK.
They do not go to landfill, they go to shredders, along with all
the white goods and lots of other materials.
(Mr Cottam) It is important to understand as well
that most of them already do come complete, a significant majority
come complete. 50 per cent come direct from the public, it is
natural to assume they are complete. You also have the dismantling
chain acting as treatment facilities, not stripping any parts
but dealing in natural end of life vehicles, for the fee that
they can take from the last owner for collecting them from the
last owner's drive and for the payment for the materials cost
of those cars that they can get from those shredders. It is natural
to assume that a proportion of the vehicles going to a dismantlers
do not have spare parts removed at the moment. So the argument
that we get more complete cars by dismantlers only taking positive
value vehicles for spare parts, those vehicles have been dismantled
for spare parts now, the ones that do not have a value are not
127. Perhaps unsurprisingly, unlike the manufacturers,
you have said that the costs will ultimately be borne by the consumer.
Do you think that these costs should be split across all elements
of the chain rather than just consumers?
(Mr Mason) Looking at our own shredding model, if
you like, we sell all our products on commodity markets, so we
are selling mostly to Asia and the States. We cannot increase
the value of what we sell. They are lumps of metal at base commodity
markets. So we cannot increase the value of our products. Can
we reduce our costs? Well, everybody can always reduce their costs
but our biggest variable cost would be electricity, that is going
up with the Climate Change Levy, not going down. Our second largest
cost would be the landfill and the 25 per cent residue, that is
going up in Landfill Tax, not going down. Our third largest cost
would be staffing costs, they are going up, not going down. Our
fourth largest cost will be depreciation of equipment, well that
is not changing. Whether we can reduce our costs, I think, is
limited. We cannot sell our products for any more, what we can
do is pay less to the last owner and currently we pay at our London
siteI was there two days ago£3 a car to the
last owner. We can stop paying that £3 a car but I do not
think that will really cover some of the sizeable costs we are
talking about in terms of depollution which may be in the £40
a car region. I cannot see where we can partition those costs
off to. Certainly we should stop paying the last owner for their
car rather than expecting the manufacturers to fund all depollution
and us paying the last owner for that car, we fully accept that.
128. How far do you depollute cars now?
(Mr Mason) Not at all.
129. All the extra costs you say come from depollution?
(Mr Mason) The cost in the short term, as in next
year, will all be depollution. There will be a bit of data collection
cost, which will start coming in, and the recycling of plastics
costs, obviously a slightly longer timescale in the Directive.
130. When you were describing the process nowI
am just trying to work out where the extra costs are going to
(Mr Mason) Yes.
131. If I summarise what I understand you have
said so far it is that at the moment even though natural ELVs
have no market value, the recycling of metals for you does have
(Mr Mason) Absolutely.
132. You already get a lot of complete cars.
(Mr Mason) Absolutely, which are not depolluted.
133. Which are not depolluted. So what do you
do with those?
(Mr Mason) Put them straight into the shredding machine
without depolluting them.
134. Would you not see that without the End
of Life Vehicle Directive the trend would be towards more depollution
(Mr Mason) I am not sure where the driver for that
(Mr Cottam) Even if it was, the result would be that
we would have to charge the public to take their end of life vehicle,
the Directive precludes us from doing that.
(Mr Mason) Without the Directive, if we were forced
to depollute, if that was a £30 a car cost to us then we
would have to pass that on to the public. Instead of paying them
£3 we would charge them £27 to take it if that cost
comes into the system. At the moment, as I said earlier on, the
legislation prevents us from putting oil in streams, it does not
say we have to take oil out of cars. We have to put infrastructure
systems in instead to do that, like oil/water separators in our
135. Just to follow up on that. Do you not think
that the manufacturers ought to take a more responsible line and
put more recyclable metals or whatever into that and try and reduce
the part that is going to landfill? They have a role to play as
well in this.
(Mr Mason) In new car manufacture?
136. Yes, in new car manufacture.
(Mr Mason) Absolutely and I think, to be fair, they
do. We are not going to go away from using plastics in new cars.
There are a lot of advantages in terms of weight, in terms of
fuel, also environmental advantages throughout the life, so we
are not going to go away from plastics. I think the manufacturers
are generally being fairly sensible in looking at minimising the
variance of plastics, the dissimilar plastics which would make
it difficult to recycle. If they continue progressing on that
line in terms of minimising the variance of plastics then it will
help us to recycle plastics in 12 or 14 years' time when those
cars come to end of life.
137. Do you work together on looking at the
benefits of trying to recycle to try and get the costs down?
(Mr Mason) Plastics recycling we see as a good opportunity
for us. We currently fund a research project on plastics standards
through the British Plastics Federation and some of our staff
sit on the Automotive Plastic Study Group.
138. We would love aluminium cars.
(Mr Mason) I would love aluminium cars.
139. I want to take you on to a statement that
was made. The BMRA suggests the system must allow for "fair
and reasonable access by all stakeholders to the post-Directive
ELV management market for our members". They believe that
producer responsibility systems for packaging elsewhere have given
rise to competition policy issues. What system would you like
to see in place for dealing with ELVs and what sort of competition
problems do you anticipate?
(Mr Mason) The competition problem we anticipated
there is perhaps looking at packaging in its early days. We had
one compliance scheme in the early days so if you were a recycler
of packaging you could only really sell your packaging to one
compliance scheme, which is perhaps not the most attractive position
to be in if you only have one outlet to sell your product to.
That was our concern in that particular area. We were concerned
about having one collective scheme where we basically have a monopoly
sitting above us in terms of who we contract with in terms of
recycling cars. I think in general we would probably like to see
an Option 1 type process at the moment. We have not seen an official
version of the Option 4 as a sector yet, although obviously we
are fully aware of the unofficial versions. We would like to see
probably an Option 1, however we are fully aware there is a large
accruals problem for the manufacturers and that has to be dealt
with for them. A direct contract system, obviously large manufacturers
will not want to contract with the two or three thousand players
in the sector at the moment, that will be a very unattractive
structure for them. We envisage service providers will sit there
between those doing the work and the manufacturers wanting to
contract. I would not see the average manufacturer in the UK wanting
to deal with 2,000 current operators.