Acquisitions in the spotlight part two: Cleanaway

Waste Management Review talks to some of Australia’s largest waste management companies about the role of scalability in the future of the waste sector. 

This article is the second in a three part series featuring Bingo Industries, Cleanaway, Corio Waste Management and SUEZ. 

With more than 300 sites, 115 prized infrastructure assets and around 6000 employees and 4950 vehicles, Cleanaway is Australia’s largest waste management company. 

At the heart of its approach to scaling up and supporting Australia’s recycling woes is Cleanaway’s Footprint 2025 strategy – a plan to significantly grow its infrastructure by 2025. Launched in 2015, Footprint 2025 continues to expand.

It’s already done so in 2019 with a new waste transfer station and resource recovery facility in Sydney licensed to process 300,000 tonnes of putrescible waste per annum. In addition, its recent infrastructure moves also include a new South East Melbourne Organics Facility, a 50 per cent stake in ResourceCo’s process engineered fuel facility in Sydney and a transfer station in Perth.

Official data on market share is difficult to come by, but CEO Vik Bansal estimates the company controls around the mid to high 20 per cent of the total waste management market.

Its annual report shows the integration of Toxfree is on track to achieve a $35 million synergy target by June 2020. Cleanaway’s acquisition of Toxfree in 2018 was unopposed by the ACCC and concluded that increased vertical integration would be unlikely to substantially lessen competition due to competitive constraints imposed by alternative suppliers.

The official review shows customers can and do disaggregate contracts if they are dissatisfied with pricing and/or service levels. Likewise, there are other large suppliers present in multiple waste streams and geographical areas throughout Australia.

Cleanaway’s net revenue, which represents gross revenue less landfill levies collected and passed through the customer, increased by 35 per cent in 2018-19 to $2.11 billion compared to the prior corresponding period. Its growth was driven by a combination of organic growth and the Toxfree acquisition.

“We have spent about $150 million building prized waste infrastructure across the country which includes transfer stations, resource recovery centres, used oil refinery and liquid, hazardous and non-hazardous waste processing facilities organically and via the acquisition of Toxfree,” Vik says.

Its earnings before interest, tax, depreciation and amortisation increased 34 per cent to $433.7 million in 2018-19 due to improved profit performances across solid waste services, industrial and waste services and liquid waste and health services. In its annual report, Cleanaway highlights itself as having an excellent balance sheet with debt ratios well within banking covenant requirements.

The annual report declares volatility in the commodities supply chain has led to increased sorting costs and instability in commodity pricing. Vik has often maintained Australia’s recycling crisis presents an opportunity rather than a threat to the viability of the sector.

“It is the right thing for the waste industry in Australia and in general. There is something not right about waste going to developing countries and them sorting it out. We just don’t want that to happen,” Vik says.

He says that being a publicly listed entity places additional pressure on Cleanaway as a company, but it’s a challenge it is pleased to take on.

“Because we are a listed entity and have to go to market every six months, our changes become a lot more visible than an international subsidiary or a company which is not listed,” he says.

The positive side effect of market fluctuations is that Cleanaway has fast-tracked much of its Footprint 2025 strategy to support the local marketplace.

Following the collapse of SKM Recycling Group, Cleanaway Waste Management acquired the senior secured debt in the group for around $60 million with the exception of its glass recovery services business. This includes the property, plant and equipment from a network of five recycling sites, comprising three materials recovery facilities (MRFs), a transfer station in Victoria and a MRF in Tasmania. SKM also has two sites in South Australia.

KordaMentha have been appointed the receivers of the group. At the time of Waste Management Review’s interview with Vik, Cleanaway was looking to acquire the assets and return them to a sustainable footing as part of the sale process being undertaken by the receivers.

Prior to the publication date, Cleanaway was successful in its bid for SKM assets with completion of the process on track for the end of October. One of its sites in the network includes an advanced plastic sorting facility in Victoria.

Commenting on the acquisition, Vik said significant progress had been made in clearing waste stockpiles from the sites, repairing plant and equipment and bringing the sites to required safety, environmental and operational standards.

“We expect to gradually restore operations in Victoria over the coming months,” he said.

Speaking to Waste Management Review, Vik agrees some systematic changes are needed to support the future viability of the industry. However, he concedes collection will be difficult to consolidate due to the low barriers to entry.

“There is something fundamentally wrong about the industry structure. Aside from Visy, there is not even a single big waste management player which is upstream and vertically integrated. There is not even a single big waste management player in commingled recycling in Victoria.

“China’s National Sword has triggered the industry structure to go back on a balanced, even, long-term sustainable footing and hence our interest in SKM assets.”

“A company like Cleanaway cannot have a Footprint 2025 strategy flowing through without commingled assets in Victoria. That is part and parcel of a vertically integrated waste management company.”

It was speculated that Cleanaway was interested in buying SKM’s glass recycling business not covered by the receivership. Vik says that while Cleanaway was initially interested in this, the acquisition is now in doubt given the scale of glass stockpiles.

Instead, should Cleanaway acquire SKM’s assets, Vik says Cleanaway will look at building its own glass beneficiation plant.

He says that Cleanaway’s future focus will be to become a downstream processor.

“We see ourselves investing in plastic pelletising and going downstream on glass crushers,” Vik says.

Vik says that Cleanaway’s view is that Australia needs to move to a harmonised national four-bin system with mandatory FOGO and glass bins the key to improving commodity value.

“We are ready to invest a lot more in different parts of the country if we can see that certainty of policy and harmonisation,” he says, adding there is a fair amount of Footprint 2025 still to be revealed.

Likewise, he says that whenever Cleanaway invests, it looks at the entire value chain, including location, policy framework and its total market share.

Vik says that each state should have a container deposit scheme but recognises it might be difficult to harmonise all at a national level.

He says this system would then become best practice through better education, investment in infrastructure and manufacturer and consumer acceptance of recycled material as the final piece of the circular economy puzzle. 

Footprint 2025 is going from strength to strength as Cleanaway in October announced a joint venture with Macquarie Capital’s Green Investment Group to develop a waste-to-energy (WtE) project in Western Sydney.

A site has been acquired for a potential facility in Eastern Creek and an environmental impact statement is being prepared and released for public consultation early next year. The site is expected to cut Western Sydney’s annual landfill volumes by 500,000 tonnes – almost a third of the red bin waste generated per year in the local area.

CONSOLIDATION DEBATE

Trevor Thornton is a lecturer in hazardous materials management at Deakin University and has prior experience with the Environment Protection Authority Victoria.

He says the metropolitan areas certainly benefit, but one concern would be whether the same level of service is afforded to regional areas.

“I’ve heard some issues about large companies that get a statewide contract but just outsource a lot of the more distant rural areas under their banner, but they don’t get the same service to the client.

“But I think in the main, if you’ve got five or six companies offering the complete service, I think that’s a good thing.”

Likewise, he believes the purchase of ailing companies such as SKM can only be a good thing, and that if additional oversight is required, that would be a matter for the ACCC.

He says the trend towards consolidation in Australia would mirror that of other more populous nations such as the US, Canada and parts of Europe.

Corio Waste Management CEO Mathew Dickens

Mathew Dickens, CEO of Corio Waste Management, a family-owned business focused on waste collection and organic waste treatment based in Geelong, sees an opportunity from consolidation to compete with the major players.

“Consolidation does lead to less competition, but it can also mean the acquirer has more to lose as you have most of the market share and that can only go in one direction, but for companies my size it creates opportunity,” he says. 

Mathew says with further consolidation, Corio can aim to compete on service standards, respond quickly to changing customer requirements and provide a point of difference as a family-owned business.

“From a customer perspective it [further consolidation] would mean less choice and higher prices, and that’s not a problem for us as we don’t compete on the basis of price. We know what our costs are because we measure and analyse them all the time,” he says.

He says that Corio tends to focus on what it can offer in terms of variety and frequency of service, collection standards and customer service.

Mathew says the recent consolidations are nothing new but rather history repeating itself in an industry cycle where consolidation inspires new entrants into the industry.

In the US, integrated companies such as Waste Management Inc, Clean Harbors, Republic Services and Advanced Disposal dominate the market.

Mathew points out that Republic Services is an example of smaller operators merging to become a larger organisation, a trend that could always repeat itself locally.   

Republic Services is one of the largest providers of non-hazardous solid waste and owns around 207 transfer stations and 190 landfills, according to Superperformance SAS data.

He says there will still be room for niche, specialised operations that handle smaller volumes.

“If there is going to be a remanufacturing industry that’s developed onshore, you need to spread that risk,” he says.

Mathew says that Corio remains focused on growing its organic waste collections in Geelong and Melbourne treated at its composting facility
based in Shepparton.

“We want to build tunnel composting facilities in other regions in Victoria. It relies on government contracts, but we’re confident we can make it happen,” he says.

Next week’s instalment features an interview with SUEZ CEO Mark Venhoek. 

Click here to read part one

Related stories:

MobileMuster releases 2019 Annual Report

Mobile telecommunication product stewardship scheme MobileMuster has released its 2019 Annual Report, to coincide with its 21st anniversary.

MobileMuster celebrated its 21st anniversary at The Mint in Sydney, with Telstra Executive Director of Regulatory Affairs and Australian Mobile Telecommunications Association Chair Jane van Beelen and Assistant Waste Reduction and Environmental Management Minister Trevor Evans.

MobileMuster Manager Spyro Kalos said the report examines the schemes performance in 2019, as well as the significant progress of the organisation over the last 21 years.

After 21 years of operation, MobileMuster is Australia’s oldest product stewardship scheme.

“The success of the program to date demonstrates how the industry can work together voluntarily to deliver social and environmental outcomes,” Mr Kalos said.

“We are committed to continuing to invest in the next generation of mobile phone users, educating them about the impact of their mobiles and how to act for a sustainable future.”

Since 1998, the program has collected and recycled nearly 1500 tonnes of mobile phones and accessories, including over 14 million handsets and batteries.

“Further, in this year alone, MobileMuster collected and recycled 84.1 tonnes of mobiles, their batteries, chargers and accessories and through the process, recovered metals, glass and plastics, averting 188 tonnes of CO2 emissions – the equivalent of planting 4840 trees,” Mr Kalos said.

Through the program’s recycling processes, over 95 per cent of the material from mobile phones and accessories is recovered and used to manufacture new products.

“With an estimated 25 million mobiles being stored by Australians, we hope to get more Australians recycling,” Mr Kalos said.

“In addition, we are working towards zero waste to landfill, that means no mobiles will be disposed of in the general waste stream.”

According to the report, MobileMuster has an industry participation level of 92 per cent, including Alcatel, Apple, Google, HMD Global (Nokia), HTC, Huawei, Microsoft, Motorola and Oppo.

To read the report click here.

Related stories:

Entries open for Victorian Premier’s Sustainability Awards

The Victorian Premier’s Sustainability Awards is now open for entries and features a new category to celebrate outstanding contributions made by volunteers.

The new environmental volunteering category will recognise the impact made by thousands of dedicated individuals and groups who give their time to sustainability projects and environmental protection.

Sustainability Victoria CEO Stan Krpan said as the most prestigious program of their kind in Victoria, the awards are a terrific showcase of leading edge sustainability practices.

“Through these awards we proudly showcase the businesses, government, schools, institutions and community groups that are leading the way helping to stop the effects of climate change, developing more integrated circular economies and creating a more liveable, engaged, prosperous community for us all,” Mr Krpan said.

According to Mr Krpan, recent research shows that while sustainability remains an important concern for most Australians, only half believe they are doing enough.

“Joining the program’s existing ten categories, the new environmental volunteering category will make the awards more accessible to more people who take environmental action in real, practical and tangible ways,” Mr Krpan said.

The Premier’s Sustainability Awards includes the categories built environment, community, education, environmental justice, environmental protection, environmental volunteering, government, health, innovative products or services, small to medium sized businesses and large business.

2018 winners include small business Yume Food, who won for building a marketplace exclusively for surplus food, the Caulfield to Dandenong level crossing removal project and a campaign by Zoos Victoria and Phillip Island Nature Parks that addressed the threat of plastic debris to marine life.

Entries in the Premier’s Sustainability Awards close on Thursday 13 June.

Related stories:

Tracking sludge flow for better wastewater treatment

A new way of tracking how sewage sludge flows during thermal treatment could help engineers design better wastewater treatment plants and boost the production of biogas.

Researchers at RMIT University have demonstrated how the flow behaviour of sludge can be used as a tool to gauge how quickly organic matter is dissolving at high temperatures, suggesting the potential for online monitoring.

Traditional methods of assessing thermal treatment performance require time-consuming sampling and chemical analysis,  rheology calculations however – which measure and detail how liquids flow – can be done in real time online.

The study, published in Water Research, found a correlation between how sludge dissolves and changes in its flow behaviour, indicating it may be possible to monitor thermal treatment performance simply by tracking flow.

Lead investigator Associate Professor Nicky Eshtiaghi said correctly estimating the rheological parameters of sludge is critical to efficient process design.

“Our technique enables engineers and plant operators to conveniently obtain these parameters without having to perform the measurements at high temperatures themselves,” Ms Eshtiaghi said.

“We hope the research encourages more serious consideration of flow behaviour in optimising and designing high pressure and high temperature sludge-handling processes.”

The new technique can measure flow behaviour without destroying samples, often a big challenge for concentrated sludge data collection.

The study also shows that varying the thickness of sludge has little impact on the effectiveness of thermal treatment, meaning plant operators could potentially increase biogas production by increasing the solid content of sludge during initial treatment processes.

“Thicker sludge can be beneficial for both optimising efficiency overall, and for producing more biogas,” Ms Eshtiaghi said.

“With our discovery that the thickness of sludge makes no difference, this research gives plant operators more flexibility in designing processes that can better exploit the renewable energy potential of wastewater sludge treatment.”

Related stories:

Yume and REMONDIS working together to reduce food waste

Yume, an online business to business marketplace for the sale of surplus food, is working with water and environmental services company REMONDIS to sell excess food and reduce waste.

REMONDIS will use Yume’s marketplace to assist customers in selling their surplus products, reducing waste disposal costs and delivering better environmental outcomes.

REMONDIS General Manager for Integrated and Managed Services Nathan Radley said working with Yume allows the company to expand its services on the waste value chain.

“Yume is a great way to access the first two stages of the food waste hierarchy, avoid and reuse, before we move onto recycling, waste to energy and ultimately disposal,” Mr Radley said.

REMONDIS recently listed 13.8 tonnes of maple syrup on Yume, sourced from a customer with excess stock.

“The product was quickly snapped up on Yume, providing a significant return to the customer while saving 952,000 litres of water and preventing the release of 27,600 kilograms of CO2 into the atmosphere,” Mr Radley said.

Yume founder Katy Barfield said through connecting suppliers to buyers, the company helps reduce the 4.1 million tonnes of food waste sent to landfill in Australia each year.

“Yume has already sold over 813,000 kilograms of quality surplus food, returning $2.6 million to Australian farmers and manufacturers.

“In doing so, Yume has saved 56,112 million litres of water and prevented 1,626 tonnes of carbon dioxide from being released,” Ms Barfield said.

At the 2018 Victorian Premier’s Sustainability Awards, Yume was recognised for its efforts towards reducing waste and landfill impact — winning the Premier’s Recognition Award, the Innovative Products or Services award, and the Small and Medium Enterprises award.

Related stories:

Better Bins to be implemented in 370,000 new households

Over the next 12 months the Western Australian Better Bins program will be implemented in more than 370,000 households in the City of Joondalup, City of Fremantle and Town of East Fremantle, plus additional households in the City of Melville.

The City of Melville trialled a full FOGO system in 2017-18, returning positive results for the diversion of household organics from landfill.

In its Waste Avoidance and Resource Recovery Strategy 2030, the Western Australian Government outlined food organics and garden organics collection (FOGO) as a priority for waste avoidance and minimisation.

Run by the Western Australian Waste Authority, the Better Bins program aims to ensure that all Perth and Peel households have a third kerbside bin for FOGO by 2025.

Better Bins runs on the principal that more waste separation at the source leads to less contamination and therefore greater recycling and reuse rates.

Under the three-bin FOGO system, food scraps and garden organics are separated from other waste categories at kerbside and reused to create high-quality compost.

The system also functions to keep other waste streams clean and uncontaminated, therefore making them easier to recycle, reprocess and remake into products, reducing the need for extraction of new materials

Currently 16 local governments participate in the program and of these, five are providing a full FOGO service.

After the 370,000 new additions the rate of household participation across the state will stand at 37 per cent.

The Department of Water and Environmental Regulation will soon start consulting with key stakeholders on how to promote and encourage local governments’ adoption of FOGO systems, hoping to increase material recovery to 75 per cent by 2030.

WA has extended the funding application period until 30 June 2019.

Related stories:

Victorian State of the Environment report lists recommendations

The Victorian State of the Environment 2018 report says the Victorian Government needs to align its institutional planning and procurement processes to support the delivery of its planned circular economy strategy.

The report, commissioned by Commissioner for Environmental Sustainability Dr Gillian Sparkes, says five out of six waste indicators are stable.

Indicators used were total waste generation, generation of municipal waste per capita, total food waste generated, diversion rate, littler and illegal dumping and total hazardous waste managed and reported.

While most indicators are stable, except litter and illegal dumping which is improving, the report says the total amount of waste generated is poor and offers two key recommendations to improve the waste situation in Victoria.

First, in 2019 Sustainability Victoria need to develop indicators and implement a comprehensive monitoring and reporting framework to measure delivery of the statewide Waste and Resource Recovery Infrastructure Plan against circular-economy design principals.

Recommendations suggest that from July 2020 this progress should be expanded and a reporting framework that tracks progress put in place, with a public report released annually.

Second, the Victorian Government needs to align its institutional planning and procurement processes to support the delivery of the circular economy strategy and clarify which agencies will be responsible for delivering policy, procurement, program, reporting and regulatory roles.

The report says this alignment should be adopted statewide to enable an orderly transition to a circular economy in Victoria by 2030, with the initial focus being reducing consumption and contamination levels in kerbside recycling.

Recommendations also note that the Victorian Government needs to commit to long-term, systemic, statewide community education to support these transitions and improve long-term system outcomes.

Related stories:

Engineers develop technology to transform plastic waste

Engineers at Purdue University have developed a new chemical conversion process that can transform polyolefin waste, a form of plastic, into useful products such as fuel, pure polymers and naphtha, a mixture of hydro-carbon.

Leading researcher Professor Linda Wang said the technology has potential to boost profits in the recycling industry and shrink the worlds plastic waste stock.

Ms Wang was inspired to develop the technology after reading only 9 per cent of the 8.3 billion tones of plastic produced globally over the last 65 years had been recycled, with the remaining 79 per cent ending up in landfills and oceans.

“Plastic waste disposal, whether recycled or thrown away, does not mean the end of the story.

“These plastics degrade slowly and release toxic microplastics and chemicals into the land and the water.

“This is a catastrophe because once these pollutants are in the ocean they are impossible to retrieve completely,” she said.

The chemical conversion process incorporates selective extraction and hydrothermal liquefaction and can convert more than 90 per cent of polyolefin waste.

If the plastic is converted into naphtha it can be used as a feedstock for other chemicals or further separated into specialty solvents.

Purdue’s School of Engineering Technology is hoping to optimise the conversion process to produce high quality gasoline and diesel fuels saying fuel derived from polyolefin waste could each year satisfy four per cent of annual demand for gasoline and diesel fuel.

A February 2019 University of Technology Sydney study that revealed Australia only recycles a third of its plastic packaging waste suggests Wang’s technology has application potential in Australia.

Related stories:

AORA announces NSW industry award winners

The organics recycling industry has celebrated its industry achievements over the past year in NSW.

The Australian Organics Recycling Association (AORA) event was held at the Novotel Parramatta and attended by more than 70 representatives from organic processors, to industry suppliers, state and local governments.

The event was hosted by MC Tony Emery (Soilco) who announced the winners with the assistance of David Bonser (Amiterre Ag and AORA NSW Chair), Christopher Malan (Komptech), Jessica Hurst (Hitachi Construction Machinery Australia), Rob Niccol (ANL) and Peter Wadewitz (Peats Soil and AORA Chair). NSW Government member of the legislative council Paul Green was also invited to share his views on the growing industry.

Peter Wadewitz, Chair of the Australian Organics Recycling Association said it was wonderful to see such great companies performing so well and leading the way at a time when food waste around Australia is such a hot topic.

The 2018 AORA NSW Award for “Outstanding local government initiative in organics collection or processing or marketing” went to Bega Valley Shire Council.

The council was nominated by Sean Hayes from C-Wise, who also accepted on behalf of the council, and the AORA judges agreed that the team at Bega Valley Shire Council should be congratulated on their community centric approach to composting and their recent introduction of a FOGO collection and processing service.

The 2018 AORA NSW Award for “Outstanding Contribution to industry development” was awarded to Duncan Le Good.

Mr Le Good was nominated by Angus Johnston and the judges agreed unanimously that he had made a large contribution to the industry and the association over many years, and particularly over the last two years. He sits on the AORA Board representing NSW and is the deputy chair of the NSW Branch. Within SUEZ he is a strong voice for active participation in the association and industry cooperation more broadly. With Tony Emery stepping down from the NSW Chair and Paul Coffey’s departure from board and management of the association, Duncan has stepped up and influenced others to make big contributions to industry development too. .

The judges found there was no clear winner for the AORA NSW Award for “compost user demonstrating innovation and advocacy in agricultural markets” this year.

The 2018 AORA NSW Award for “compost user demonstrating innovation and advocacy in amenity markets” went to Penelope Smith.

Ms Smith was nominated by Duncan Le Good and the judges agreed that she had been a critical member of The Hills Bark Blower team working tirelessly to promote and raise standards specifically in the area of custom mixes for unique applications. As a horticulturist and marketing specialist, she has applied her knowledge and advocacy successfully to the development and promotion of mixes for roof top gardens, green walls and specialist erosion control (compost blankets). She has also been successful in receiving grants from both rounds of WLRM Organics Marketing Grants Scheme.

The 2018 AORA NSW Award for “Rising Star for outstanding operations or sales team member showing leadership and commitment to a processing members business” was awarded to Gunther Neumann.

Gunther was also nominated by Duncan Le Good and the judges agreed that Gunther oversaw the successful construction and commissioning of the REMONDIS Lake Macquarie Organics Resource Recovery Facility – a new state of the art composting facility at Awaba – which now offers residents and businesses a food and garden waste collection and recycling solution unique in the Hunter. A serial award winner – Gunther was also named Young Business Executive of the Year (Age 18-35) at the Lake Macquarie Business Excellence Awards earlier this year.

Following the official awards presentation, AORA NSW presented a Certificate of Appreciation for “Exemplary and Meritorious Service to the recycled organics industry in New South Wales” to Annie Kavanagh, Senior Projects Officer in the Organics Unit at EPA NSW on the eve of her retirement later this month.

Peter Wadewitz, National Chair of AORA closed the ceremony with the induction of Paul Coffey as the inaugural Life Member of the Association for outstanding service to the Organics Recycling Industry and the Association.

Pictured: Penelope Smith and Duncan Le Good. 

X