Recycling of waste
electrical and electronic
equipment

Segment description

1. COLLECTED AND PROCESSED MATERIALS

This area of ​​Elemental Holding's activity is strongly dependent on the regulatory environment. First of all, we refer to Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on waste electrical and electronic equipment, whose main purpose is to increase the level of recycling of waste electrical and electronic equipment.

In accordance with the Act of 11 September 2015 on Waste Electrical and Electronic Equipment, the companies belonging to Elemental Holding perform functions of entities collecting WEEE, waste treatment plants and entities operating in the field of recycling. This means that WEEE recovery organizations outsource these functions to them and pay them remuneration on this account, which is the first of Elemental Holding's revenue streams in this segment. The second stream results directly from the sale of materials recovered during WEEE treatment.

Functioning of the WEEE segment in Poland



Source: the Company, Vestor DM

The Act of 11 September 2015 on Waste Electrical and Electronic Equipment provides for the functioning of 7 types of entities on the WEEE market:

  • entities introducing electrical and electronic equipment (EEE) (producers, entities placing it on the market), responsible for organizing and financing the collection, processing of WEEE. They are also responsible for achieving minimum annual collection and recycling levels.
  • EEE distributors who make it available to customers and receive WEEE free of charge instead of new equipment sold or, if their store area exceeds 400 m2, they are obliged to accept all small-size WEEE.
  • EEE buyers who purchase EEE, produce WEEE and transfer it to collection points.
  • WEEE recovery organizations, joint-stock companies created by entities introducing EEE that act on their behalf, organize and manage processing and recycling processes.
  • entities collecting WEEE who conduct registered business in this respect, carry out initial selection and transfer it to processing plants. They are obliged to inform competent commune authorities about the collection points being run.
  • waste treatment plants that carry out WEEE disassembly processes and prepare them for recycling by companies operating in the field of recycling. They are required to obtain an official permit to operate in this area.
  • entities operating in the field of WEEE recycling

The WEEE recycling process is financed by entities introducing electrical and electronic equipment to trading. A price of each new product includes the cost of waste management, otherwise called a recycling fee, which is entirely allocated to the organization of the WEEE collection system. The more environmentally harmful substances are contained in the waste electrical and electronic equipment produced, the higher the fee included in its price. The introducing entities may fulfill the obligation by organizing the system themselves or entrusting it to the WEEE recovery organization, at the same time transferring receipts from the recycling fee to such organization. These entities sign contracts with collecting entities and processing plants.

 

2. BUSINESS MODEL

WEEE processing steps



Source: the Company, Vestor DM

Terra Recycling plant located in Grodzisk Mazowiecki specializes in the recycling of refrigeration equipment, which is carried out with the use of a modern line enabling total freon disposal and the production of energy from polyurethane foam, which, like freon, is harmful to the environment. The plant receives refrigeration equipment from households, as well as refrigeration equipment being part of retail chains, food outlets, vending machines, etc. Processing of equipment containing substances harmful to the environment, such as freon, requires the use of appropriate technology, therefore it involves high recycling fees.

In connection with the growing demand for processing and recycling services, Elemental Holding is considering construction of a new plant in Grodzisk Mazowiecki, which would allow a significant increase in the scale of operations in this segment. The cost of its creation is estimated at EUR 5-7 million and the decision on the construction commencement depends on the result of the company's talks with recovery organizations regarding a long-term contract for the said services.

 

3. DESCRIPTION OF THE MARKET ON WHICH THE GROUP OPERATES

The market of recycling of used electrical and electronic equipment is regulated by Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on waste electrical and electronic equipment (WEEE). The Directive, which sets minimum collection levels for individual Member States, as well as a ban on the import or export of WEEE, means that activities of entities from the WEEE recycling industry are limited to areas of individual countries.

According to data as of October 2018, the WEEE recycling market in Poland is made of:

  • 6099 entities introducing WEEE
  • 8 authorized representatives
  • 2224 entrepreneurs operating in the field of collection
  • 146 entrepreneurs operating in the field of processing
  • 132 entrepreneurs carrying out recycling processes and recovery processes other than recycling
  • 8 organizations for the recovery of electrical and electronic equipment

The Directive imposes on producers and entities introducing EEE on the market an obligation to finance the collection, treatment, recovery and disposal of WEEE. Furthermore, it assumes a minimum annual collection level, calculated as the ratio of the total WEEE collected in a given country and the average weight of EEE placed on the market in that country in the three previous years, also being in charge of the aforementioned entities. In the case of failure to achieve the assumed weight of collected WEEE, severe financial penalties are imposed on them. From 2016, the minimum collection level of WEEE in the EU was 45%, while from 2019 it will be already 65%.

Poland and 9 other EU countries, due to the shortage of necessary infrastructure and the relatively low level of EEE consumption, have been obliged to meet slightly less demanding standards. The Act of 11 September 2015 on Waste Electrical and Electronic Equipment established minimum collection levels of WEEE, which are:

  • in the period from 1 January 2018 to 31 December 2020: 40% of the average annual weight of EEE placed on the market in the three previous years.
  • From 1 January 2021: not less than 65% of the average annual weight of the equipment placed on the market or 85% of the weight of waste equipment produced in the territory of the country.

In addition, the Minister of the Environment in the Regulation of 21 July 2017 on minimum annual levels of collection of waste electrical and electronic equipment has set the following levels:

  • in 2018, 50% of the average annual weight of EEE placed on the market in the three previous years,
  • in 2019, 55% of the average annual weight of EEE placed on the market in the three previous years,
  • in 2020, 60% of the average annual weight of EEE placed on the market in the three previous years.

In 2021, pursuant to the Act of 11 September 2015 on Waste Electrical and Electronic Equipment, entities introducing equipment will be required to achieve a minimum level of WEEE collection of not less than 65% of the average annual weight of equipment placed on the market in the three previous years or 85% of mass of waste equipment produced in the territory of the country.

Weight of equipment placed on the market and weight of waste equipment collected in Poland

thousand tons



Source: General Inspectorate of Environment Protection, Vestor DM


Minimum levels of WEEE collection

%




Source: General Inspectorate of Environment Protection, Regulation of the Minister of Environment of 21 July 2017 on minimum annual levels of collection of waste electrical and electronic equipment, Vestor DM

 

Division into groups of equipment in force since 01 January 2018

1. Equipment operating on the temperature-exchange basis
  • fridges
  • refrigerators
  • freezers
  • air conditioners
  • drying equipment
  • heat pumps
  • oil heaters
2. Screens, monitors and equipment provided with screen with a surface greater than 100 cm
  • screens, monitors
  • TV receivers
  • laptops
  • notebooks
3. Lamps
  • fluorescent lamps
  • pressure sodium lamps
  • metahalogenic lamps
  • LEDs
4. Large-size equipment (any of external dimensions exceeds 50 cm)
  • washing machines, drying machines
  • dishwashers, cookers, ovens
  • equipment to reproduce sound and picture
  • large-size computers
  • printers, copying machines
  • automatic dispensers
  • medical equipment
  • PV panels
5. Small-size equipment (none of external dimensions exceeds 50 cm)
  • vacuum cleaners, sweepers
  • sewing machines
  • lighting fixtures
  • cookers and microwaves
  • ventilators
  • irons, toasters, kettles, clocks
  • scales, shavers, calculators
  • radios, cameras, players
  • smoke sensors, thermostats
6. Small-size computer and communication equipment (none of external dimensions exceeds 50 cm)
  • mobile phones
  • GPSs
  • calculators
  • routes
  • personal computers
  • printers
  • telephones

Source: Act on WEEE, Vestor

The division into 6 groups has been effective since 1 January 2018. Previously it comprised 10 groups of equipment: 1) Large-size household appliances, 2) Small-size household appliances, 3) Tele-information and telecommunications equipment, 4) Radio and TV equipment, 5) Lighting equipment, 6) Electric and electronic tools, 7) Toys, relaxation and sports equipment, 8) Medical instruments, 9) Control instruments, 10) Machines for dispensing: drinks, sweets and ATMs. The change of the division resulted in the fact that entities introducing refrigeration equipment on the market can no longer meet the required minimum levels of collection and processing by ordering the processing of cheaper in the recycling washing machines or other large-size household appliances. This is a favorable change from the point of view of plants specializing in the recycling of refrigeration equipment. Due to the fact that this process requires appropriate technology and a line enabling complete siphoning of freon from the equipment being processed, there are few entities on the Polish market that operate on a scale corresponding to the needs of the recovery organization. Among them, the most important entities are: Terra Recycling (Grodzisk Mazowiecki), Biosystem (Bolęcin near Trzebinia), RemondisElectrorecycling (Łódź, Błonie), Elektro Recycling (Sękowo near NowyTomyśl), and MB Recycling (Piekoszów near Kielce).

In 2010-2016, an upward trend was observed in terms of the total weight of electrical equipment placed on the market, as well as the weight of collected used equipment. The first of the categories grew during this period at an average annual rate of 3%. The increase in the weight of the equipment placed on the market is influenced by the shortening lifecycle of the equipment, as well as the favorable economic situation, which results in a higher demand for appliances from households. This is important because the share of the weight of waste equipment coming from this source in the years 2010-2016 ranged between 92-95%.

Higher demand for electrical and electronic equipment from households, especially large-size ones, can be associated with the number of flats commissioned for use. Each of the flats in a short time is equipped with basic household appliances (fridge, washing machine, cooker). The demand translates into a greater weight of equipment being placed on the market, which increases the minimum collection level (in nominal terms).

 

Flats commissioned to use and the total weight of equipment introduced in the years 2010-2017

thousand tons, flats



Source: General Inspectorate of Environment Protection, Vestor DM

Weight of WEEE produced on a global scale (in million tons) in the years 2016-2021p

million tons




Source: The Global E-waste Monitor 2017, Vestor DM

 

According to estimates presented in the report of The Global E-waste Monitor 2017, in 2016, 44.7 million tons of WEEE were generated globally. The weight of WEEE generated in 2017p, according to estimates, exceeded 46 million tons. Forecasts assume a further increase in the weight of WEEE generated globally to 52.2 million tons in 2021, which means CAGR in the range of 3-4%.

In 2018-2021, the weight of waste equipment collected and processed will be influenced by increase in the weight of equipment put into use and regulatory factors - minimum collection levels.

The processing capacity in the WEEE segment is estimated at approx. 80 thousand tons.

4. BUSINESS UNITS OF THE SEGMENT.

In the Elemental Holding Group, the following companies operate in the WEEE segment:

  • Terra Recycling (Grodzisk Mazowiecki)–itoperates one of the most modern processing plants of waste electrical and electronic equipment in Poland. It provides comprehensive solutions in the field of professional processing and recycling of large-size and small-size household appliances, in particular refrigeration appliances, as well as IT and telecommunications equipment. Through the company, most of scrap generated from waste electrical and electronic equipment is recovered and returns to the market in the form of secondary raw materials, which significantly contributes to reducing the consumption of natural resources.
  • EMP Recycling (Lithuania) - a leader of the Lithuanian market of processing of waste electrical and electronic equipment and automotive catalysts. It has a refrigerator processing plant, production lines for the processing of catalysts, cables and waste electronics, and a laboratory for sample analysis.

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