Future investments in recycling with declining material content - challenges and opportunities

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1 September 2014 Future investments in recycling with declining material content - challenges and opportunities 1 Rasmus Bergström CEO Stena Technoworld

2 Where are we coming from?

3 Dematerialisation 3 3

4 Productivity where is the limit with more complex products? Old products Possible to dismantle or mechanical separate the block into more clean fractions Complex products 4

5 Productivity where is the limit with more complex products? Complex products Clued multi material parts -> Need to be milled down harder to be able to separate them More glass-> hard to separate when it is in small parts Small concentration of REM and precious metals-> Hard to get out More process step with increased cost for less valuable material 5

6 Where are we coming from? Change of business logic 2007 Producers paid 2014 Recycler pay swapped to

7 Gate fee development Danmark Have Italy we reached Sweden a mature Finland market Austria now Germany? Norway 7

8 Raw Material Prices

9 Metal content development in A-cards a constant decline % % Au Ag % % PD Cu

10 Is the recycling industry financial sustainable? 110 Need of transparency and indexation BA Technoworld Price change Revenue BA Sep Nov Jan Mars May July Sep Nov Jan Mar May 10

11 Sustainability Disposal of only one CFC fridge is equal of 2,000 kg CO 2 or km by car 11

12 Requirement in addition to WEEE Compliance will become key for succes! Or? 12

13 Legislation Is increasing the demand for serious recyclers and producers Groups according to Directive 2012/19/EU of 4 th of july 2012 Material recycling including resure + energy recovery Target in WEEE Target in Weee Quality Transparency Compliance Sustainability Competitive edge From 2019 and onwards the minimum collection rate to be achieved annually shall be 65% of the average weight of EEE placed on the market in the three preceding years in the Member State concerned, or alternatively 85% of WEEE generated on the territory of that Member State as foreseen in Article 7(1). 1. Large Households appliances Small Households appliances IT and telecomunnication 75 equipment 4. Consumer equipment and (photovolatic panels) 75 5 Lighting equimpent 70 6 Electrical and electronic tools Toys leisure and sports equipment Medical devices Monitoring and control equipment Automatic dispensers

14 Monitoring of down stream Each plant, fraction and customer Quality Transparency Compliance 14 Code of Conduct

15 Present situation Recyclers Recycling industry is under heavy financial pressure! Number of insolvencies increased during There is a consolidation phase ongoing. HP presentation

16 Heavy pressure on the producers Source HP

17 17

18 18 Electronic recycling A future not far away

19 Also plants are recycled Stena took the opportunity to acquire the property as a long term step supporting the growth strategy of the Group. Instead of a green field existing premises can now be reused for new purposes and 900 tons of glass manufacturing equipment have been dismantled and taken care of. Also plants can be recycled! 19

20 Trends requiring change Stena will be part of the future Decreasing material value Increased environmental requirements Reduced market weights Increased integration of components Instable macro economics Green fence Trends Need for change Cost reductions Process improvements Volume stabilisation Transparent value chain Downstream integration Consolidation Fewer transports Shorter transports Reduced overhead Access to higher market volumes Investments in processes Longer term fixed contracts Actions Halmstad 20

21 One hub - all our processes tons treated in one of the world s largest material recycling facilities of its kind. Non-Ferrous separation Shredder Light Fraction separation First treatment of WEEE LCD-process Shredder Precious Metal Recycling Plastic Recycling m2 area (60 football pitches) m2 indoors (10 football pitches) 21

22 Leading the industry development State of the art technology will improve recycling ratios and move the material upwards in the waste hierarchy. The new processes will increase material recycling ratio and further add to Stena s savings of resources and 8 million tons of reduced CO 2 emissions. Environmental and economic benefits go hand in hand. 22

23 WEEE Treatment Increased integration of product components requires new methods (internal batteries, glued telephones) More automation - adjust to high cost base in Nordic countries Closer connection to and integration with mechanical downstream Higher adaptability to varying input material In cooperation with our customers 23

24 Precious Metal Recycling To save the earth Increased efficiency Increased yield in processes Reduced material to landfill 24

25 Plastic Recycling Centre One of the challenges Stena s current process sorts out brominated flame retardants from SDAs and creates plastic concentrates Separate pure PE, PP, PS and ABS which will be delivered directly to compounders at an exact specification. Compliance 25

26 26 Fact for us in the business! We can not put our head in the sand The life time of a product is decreasing quickly More products are sold complex and not so heavy Margin for producers going down Low recycling rates Higher demands Change of business logic Margins for recyclers are low Commodity prices will not increase Commodity prices will be volatile Investment in technical processes needed High focus on being cost efficiency for all Compliance must be enforced

27 27 Producer responsibility with increased demands in a volatile environment and our common target to have a sustainable world demands quality recycling that will increase costs for recycling!

28 Future investments in recycling with declining material content - challenges and opportunities Rasmus Bergström CEO Stena Technoworld 28