Oil Price Slump Pushes Closed Loop Recycling Close To Administration

Closed Loop Recycling (CLR), the UK’s largest recycler of plastic milk bottles, has said that without financial support from the industry or government, going into administration is “inevitable”, after the slump in global oil prices have forced clients to cut back on the amount of recycled plastic they purchase. 

Closed Loop Recycling produces more than 80% of recycled plastic used in milk bottles in the UK. Prices that can be achieved for recycled material has fallen nearly 40% in the past nine months, due to a drop in global oil prices.

Chris Dow, chief executive of CLR, told the Guardian the company was in urgent need of financial support, without which going into administration is “inevitable”.

“Our customers want to buy recycled plastic but they don’t want to pay more [than virgin plastic],” he said. “Without the support of the industry or the government it is inevitable we will go into administration… We are the collateral damage from the drop in the oil price.”

CLR says it would cost just 0.1p per two-pint plastic milk bottle to secure the future of the company.

Chris Dow, Closed Loop Recycling – “Our customers want to buy recycled plastic but they don’t want to pay more [than virgin plastic],” he said. “Without the support of the industry or the government it is inevitable we will go into administration… We are the collateral damage from the drop in the oil price”

WRAP’s Marcus Gover told the Guardian if something can be agreed on then maybe Closed Loop could be saved.

“Commodity prices go up and down,” he said. “Recycled food-grade [plastic] will be a good buy again. But if we don’t stick with it now, there won’t be any to buy in the UK and that would be a real loss for us all.”

Dow said in a statement today: “We have 24 hours to reach a solution for the whole industry because Parliament dissolves on Monday. We understand that there are high level discussions between the Minister, WRAP, Defra and top level representatives of the supply chain, and we know that there is a solution on the table that will stabilise the market and long term sustainability of recycled HDPE and the Dairy Road Map.

“This will also ensure the future of our plant and provide a profitable business model for future investors.

The Resource Association earlier this week urged decision-makers in the supply chain to take note and support the UK reprocessing industry, after a public opinion survey shows clear public support for the use of recycled content in plastic bottles and legislation to require manufacturers to use recycled content. (See CIWM Journal Online story)

Closed Loop produces more than 80% of recycled plastic used in milk bottles in the UK
Closed Loop produces more than 80% of recycled plastic used in milk bottles in the UK

The online survey of 2,006 people across Great Britain revealed 68% of adults supported an increase in the price of a two pint plastic milk bottle by 0.1p in order to ensure that bottles were made from at least 30% recycled material and then recycled after use.

38% strongly supported and 30% “tended to support”. Only 10% of adults opposed.

In the same survey, 71% of adults would support the Government introducing legislation to require manufacturers/producers using a minimum amount of recycled content in products with plastic packaging (37% strongly support, 34% tend to support). Only 6% of adults opposed.

Dow said: “We are the most vulnerable part of the supply chain, yet are shouldering all of the risk. Surely a 10th of a penny is small price for the retailers and dairies to pay to show commitment to their own environmental policy and save 1000’s of green jobs and the future of the circular economy.”

Chris Dow, Closed Loop Recycling – “We are the most vulnerable part of the supply chain, yet are shouldering all of the risk. Surely a 10th of a penny is small price for the retailers and dairies to pay to show commitment to their own environmental policy and save 1000’s of green jobs and the future of the circular economy”

Ray Georgeson, chief executive of the Resource Association said: “We are encouraged by the comments from Marcus Gover of WRAP that there is a need to ‘agree[ing] quickly on a new way to price recycled plastic”.

“We are delighted to see that Ministers and WRAP are actively pursuing a solution – they have a solution available to them that was proposed by Closed Loop Recycling over a week ago that will provide market stability and ensure the survival of this critical UK infrastructure for plastic milk bottle recycling which is so popular with the British public.

“We wish them well in their urgent endeavours, but stress again that the clock is ticking and action this day from the key influencers in this process – the retail and dairy signatories to the Dairy Roadmap – will still have the potential to salvage a critical situation.”

Oil Price Concern

The British Plastics Federation (BPF) also expressed its concern at the impact of reduced oil prices in the UK plastics recycling Industry, calling on companies in the downstream supply chain, when considering their materials selection policies, to keep to the fore the fact that high recycling targets have to be met under the Packaging Waste (Producer Responsibility) Regulations and that many individual Corporate Social Responsibility programmes support increased recycling levels. (See CIWM Journal Online story) 

Areas of plastics recycling are becoming uncompetitive, according to the BPF, and this is threatening not only the viability of businesses but also, potentially, the recycling record of the whole supply chain.

BPF Director-General Philip Law said: “The carbon saving and resource efficiency benefits of plastic products has been enhanced by the increased levels of plastics recycling seen today.

“Plastics recycling is an essential component of the whole chain’s sustainability message and we should not allow our record to regress”.

Philip Law, BPF – “The carbon saving and resource efficiency benefits of plastic products has been enhanced by the increased levels of plastics recycling seen today… Plastics recycling is an essential component of the whole chain’s sustainability message and we should not allow our record to regress”

The news follows the renewal in commitment of the voluntary agreements that have driven progress in collection and recycling of rHDPE plastic packaging by ensuring minimum recycled content in plastic packaging, especially plastic milk bottles.

Many plastic packaging industry leaders – from retailers to milk bottling plants – have made a commitment to improve their recycling rates further under the Courtauld Commitment, which aims to improve resource efficiency and reduce the environmental impact of the grocery sector.

The meeting, which brought together leaders from across the plastic packaging supply chain, highlighted successes to date, including exceeding ambitious recycling targets, increasing the percentage of recycled content used in new products and introducing innovative technologies to allow more recycled plastics to be recycled again.

Attendees recognised the challenges facing all those in the supply chain and discussed how the industry can build on successes to improve recycling rates and continue to surpass targets.

Following the meeting, Recycling Minister Dan Rogerson said: “The plastic packaging supply chain has worked very hard to increase the amount of packaging being recycled, with the full support of government.

“I welcome commitment from across the supply chain to deliver on the existing agreement. This week’s meeting makes clear our commitment to go even further, continuing to embrace new technology to make sure more recycled plastic is used throughout the supply chain.”

The closure of Closed Loop Recycling would be another major blow to the waste and resources industry, after Aylesford Newsprint Ltd went into administration earlier this month (5 March) (See CIWM Journal Online story).


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