APPENDIX 8
Letter to the Clerk of Committee from
Ian Goldsmith, UK Public Affairs Manager, Corus
Corus is the UK's largest steel producer, making
some 11 million tonnes in 2001. We take our environmental responsibilities
seriously and have worked hard over recent years to minimise and
recycle our by-products, thereby reducing the amount of material
sent to landfill.
Indeed, our record is a good one. Around 90%
by weight of our by-products now find useful application, which
has led to a significant reduction in material that must be landfilled
with recent figures of some 600,000 tonnes of landfill per annum
compared to 1,700,000 tpa in the early 1990s. Of this, some 90kt
is at the standard rate and some 510kt at the reduced (inert)
rate.
As a major supplier of steel products to the
packaging industry, Corus takes a leading role in the development
of packaging recycling schemes. In recent years these have substantially
contributed to increased amounts of steel packaging being recycled.
In 2001, 278,000 tonnes of steel packaging was recycled. This
has shown estimated savings to the environment of:
— 4.4 million GJ of energy;
In this submission, we would like to raise three
issues:
1. Landfill Tax
We are concerned that the Government is considering
significantly raising the standard rate of Landfill Tax as a means
of "encouraging" companies to landfill less and recycle
more.
Whilst we are actively seeking additional ways
to re-use materials, there is a physical limit to that option
which is rapidly approaching. One hundred per cent recycling or
re-use of our by-products is presently not feasible. Neither is
it feasible to eliminate by-product production, even in those
processes that use steel scrap as their starting point.
In effect, an increase in Landfill Tax will
simply add to our UK operating costs.
It should be borne in mind that the requirements
of the Landfill Directive for pre-treatment and increased landfill
engineering also significantly increase the cost of landfill.
This will particularly be the case where innocuous wastes previously
considered to be inert are redefined as non-hazardous or even
as hazardous. We estimate that this could increase landfill costs
by £20-40/tonne, ie £12-24 million a year in our case.
Based on recent press reports of the future
rate of Landfill Tax, a worst case could see our Landfill Tax
bill rise to over £20mpa (600kt@£34/tonne). Taken together
with other landfill-related costs this would give a total cost
of £32-44mpa, equivalent to £3-4/tonne of product sold,
which represents a significant erosion of price (around 1-2%)
at a time when UK steel prices are under very serious pressure
from imports.
Manufacturing industry is already seriously
threatened by other tax increases that affect its cost structure
and the overwhelming issue of the uncompetitive UK exchange rate
compared to the euro. Whilst we and our customers are working
hard to deal with the impact of the many threats to UK competitiveness,
many of our customers are voting with their feet and relocating
manufacturing operations outside the UK, taking advantage of lower
labour costs and the more favourable exchange rate. Even if they
end up paying the same amount of environmentally-related taxation
as applies here, their overall economic position is improved.
2. Definition of Waste and Barriers to Recycling
There have been a number of recent examples
where secondary materials and by-products, eg some slags and millscales,
have been officially classified by legislators and regulators
as wastes. Once classified as a waste these materials often have
no market value, in fact they can become a liability, with payment
required for their removal. The regulatory burden is also more
significant, with additional administrative requirements and therefore
additional costs.
The inappropriate classification of by-products
as wastes is seen by industry as potentially serious as it affects
existing markets and creates a major barrier to the increased
reuse and recycling of materials that would otherwise have to
be landfilled.
As we have already indicated, we are committed
to reducing the amount we send to landfill. These efforts would
be helped by carefully considering the definition of "waste"
and by avoiding re-classifying such products into "higher"
waste categories. Better, more positive, definitions could serve
to encourage recycling or re-use opportunities, which would reduce
the amount of material sent to landfill.
3. Development of Recycling and the impact
of Legislation
Legislation on recycling is increasing at an
EU and national level. Generally this legislation sets targets
for increased annual recycling rates for various types of product.
Packaging was the first sector to be subject in 1998 to such legislation
(around 700,000 tonnes of steel packaging is used annually in
the UK), and recycling targets are now being set for other steel-intensive
sectors (end of life vehicles and electrical and electronic goods).
The UK Government and the EU Commission use
the principle of "producer responsibility" to put the
obligation on UK industry for reaching recycling targets. During
2001 the packaging legislation alone cost UK industry £70
million, and this is forecast to increase to £250 million
by 2006. During 2001 the levy for the recycling of all packaging
materials by Corus businesses located in the UK used was £284,000.
It could be some £500,000 in 2002, rising to over £1.5
million by 2006.
However, since Corus steel plants in the UK
are "accredited reprocessors" (ie approved recycling
operations) under the packaging regulations, we can earn revenue
from the recycling of steel packaging. We direct this towards
increasing the recycling rate for steel packaging in the UK. In
1998 it was 25%, in 2001 was 37%.
By 2006 or 2008, the UK steel packaging industry
(including Corus) will be legally obliged to reach 50% recycling
rate. This will not be possible unless the recycling infrastructure
at household level (which is severely lacking in the UK compared
to most other EU MS's) is put in place. The UK Government should
therefore:
— ensure that Local Authorities are
obliged to play their part in setting up new recycling schemes,
to complement the legal responsibility which is already borne
by industry;
— maintain, but reinforce, the present
funding mechanisms to ensure that the necessary finance will be
available; Corus has put specific proposals before DEFRA on this.
Corus is also concerned that some EU Member
States are introducing national legislation which actually serves
as an artificial barrier to trade which discriminates against
steel packaging. For example, deposit systems on non-returnable
packaging (usually for beverages) now active in Denmark, and proposed
for the Netherlands and Germany. In our view, such proposals are
to be strongly resisted. They are costly to administer and do
not offer significant environmental savings. In addition, they
are incompatible with the type of international trade upon which
the UK depends, because they favour domestically produced packaging
over imported packaging. Invariably, in our opinion, they are
actually proposed for this purpose.
Proposed UK recycling legislation on end of
life vehicles (ELV) and electrical and electronic goods has yet
to emerge from the Government. Corus has responded to the consultation
paper on ELVs. The fundamental point is that the steel content
of vehicles has a high recyclability and it is easily separable
compared to other materials used in their manufacture. It is important
that the legislation recognises this and does not load steel with
the higher costs of recycling these other materials. In fact,
it is likely that recognising the virtues of steel in this context
would lead to more being used in the construction of new vehicles,
which could also yield benefits in other areas, such as fuel efficiency.
November 2002
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