Understanding process loss
We have had various conversations with industry players in recent weeks about process loss. Although process loss is one of the key parameters impacting the profitability of an operation, it is not something that seems to get enough attention in the waste & recycling industry.
Process loss is defined as the loss that occurs in the course of converting an input raw material into finished products. When applied to a Material Recovery Facility (and potentially any waste processing plant), we should consider this to be: the recyclates that are not recovered by the process as a sellable commodity.
A MRF will recover a variety of recyclates and sometimes bunch them together by type. Depending on the level of technology and the size of the plant, there will be more or less recyclate outputs. A small MRF may for example only recover all valuable plastics together (Mixed plastics output) while a large one will likely produce various grades of plastics (PET, HDPE, PP) in order to boost their selling value. Economy of scale will in part define how far material recovery goes. If a plant processes 10,000 tonnes of Mixed Dry Recyclables per annum, it will likely just produce a handful of outputs as plant capacity will not justify multiplying the number of equipment in order to specifically target each type of recyclates and get them to a very high purity. On the other hand, for a large MRF, it will be economically viable to produce more output product types as outputs that are not mixed typically command a higher resale value.
Why what is discarded is so important
But regardless of size, what all MRFs have in common, is that what remains at the end of the sorting process is the residual output. This residual output has a huge impact on the plant profitability because this output has a negative value. In the UK, when factoring transport, disposing of residual output will cost a MRF operator close to £100 per tonne. So keeping this residual output to a minimum is critical for a MRF to deliver its full commercial potential.
The impact to profits becomes even worse when the residue includes recyclates which could have been sold as products. For example, if the residue contains 1 tonne of HDPE natural bottles (a value of £900 at the time of writing), the impact to profits of disposing the HDPE as residue will be £1,000 (£900 lost revenue plus £100 disposal cost).
Residual output cannot be completely eliminated as there is always a share of residual material in the input. In the UK, across the MRFs we modelled we have rarely seen residual material in the input going below 10%. On some occurrences it goes over 15%. Now, not all this residual material will end up in residue output because some will actually end up contaminating recycle outputs. But when you have 15% residue at the start of the process, you can be almost certain that your residue output will be greater than the residual material in the input. The reason for this being the degree of error in sorting waste. The same way residue material will find its way to contaminate recyclate outputs, some recyclates will find their way to the residue output. As explained earlier, we consider that the amount of recyclates going to residue output is what determines process loss.
We could also argue that the recyclates going to the “wrong” recyclate outputs can be considered as a process loss. This is probably true, but the issue here is complex as these outputs will be reprocessed and you can also argue that these recyclates, although considered as a contaminant for these specific outputs, would still end up being sold for a positive value and therefore don’t impact a plant’s finances in the same way.
The share of recyclates in residue output can vary widely from one plant to another. When a process is optimised and has an efficient recovery loop in the process, it can fall below 25%, but in some circumstances we have witnessed over 50%. This is the direct consequence of process loss and its financial impact on a MRF is huge as we will explore further in a future post on the topic.