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AM37001 AMA WASTE MANAGEMENT JANUARY 2001

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KEY AREAS

AMA Research has published its ‘The UK Waste Management Market 2001’ – incorporating original input and analysis of data from more than 60 sources. It is a highly detailed study covering origins of waste arisings, collection and disposal services and an analysis of the waste disposal services market.

Over 140 pages and 62 charts and tables the report covers:-

2001 is going to be a critical year for both the waste management industry & the municipal & business communities. Underpinning this is the phasing in of key EU Directives on landfill, incineration & producer responsibility. In the coming years, waste management will become a key issue in public sector & corporate strategy, driven by requirements to minimise waste levels, increase re-use & recycling rates & reduce landfill volumes. The waste management industry is likely to continue to consolidate, underpinned by the high levels of investment necessary for new waste recovery facilities

Areas of Particular Interest:-

Key areas of coverage in the report include:-

KEY MARKET DRIVERS

WASTE ARISINGS

WASTE COLLECTION & DISPOSAL

PREFERRED WASTE DISPOSAL OPTIONS

CONTRACTORS REVIEW

FUTURE PROSPECTS

Tables & Charts Included in the Report:-

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EXECUTIVE SUMMARY

AMA Research estimates that in 1999 some 435m tonnes of waste was generated in the UK, comprising both controlled and uncontrolled waste. Establishing an overall trend is difficult owing to problems with definition and quantification of some waste streams e.g. agriculture and construction & demolition. However, according to DETR data, municipal waste arisings have been growing by around 3 percent a year while commercial & industrial waste arisings are estimated to be increasing by an average annual rate of 1 percent. As the chart below illustrates, uncontrolled waste arisings account for around 53 percent of the total. Although municipal/household waste typically receives the most attention from the Government and environmental groups, it nevertheless only accounts for around 7 percent of total waste arisings.

Estimated Waste Arisings by Origin 1999

Source: AMA Research analysis of data from DETR and trade sources

In 1999 it is estimated that controlled waste arisings –municipal, industrial & commercial and construction & demolition –totalled some 200m tonnes. It is this area of controlled waste that has been the focus of EU and UK legislation, with UK laws covering waste and the environment largely being driven by an increasing number of EU Directives. Historically the burden of legislation has been borne by the waste disposal industry but since the introduction of the Packaging and Packaging Waste Directive in 1994, there is a clear trend to place more of the burden of waste upon commercial and industrial producers. This is reflected in two key pieces of Producer Responsibility legislation that are expected to pass into UK law within the next two years. These are the End-of-Life Vehicles Directive and a proposed Directive on Waste Electrical and Electrical Equipment. In addition, new UK legislation concerning minimum recycled content of newspapers is also certain to be implemented while amendments to the Packaging and Packaging Waste Directive are to be reviewed this year now that the original recovery and recycling deadlines are up at the end of June.

With respect to the waste management industry itself, the key piece of EU legislation likely to have the most impact is the Landfill Directive, which is expected to become law in the UK in early 2002. Landfill has long been the preferred waste disposal option for waste management authorities and contractors due to its comparatively low cost, relative alternative routes e.g. incineration and recovery. But, underpinned by Agenda 21 requirements and the shortage of suitable landfill capacity, combined with EU legislative requirements to recover and recycle more waste, the emphasis is on reducing the volume of landfilled waste.

But, the key issue here is one of cost, as incineration with Energy from Waste plants, materials recovery facilities and re-processing plants all require high levels of capital investment and operations costs. However, ultimately it is likely to be the waste producers that will bear these development costs as waste disposal operators pass on the additional costs to their customers. This largely explains the projected increase in the growth rate in the waste management services market, which is currently valued at around £4.2bn.

UK Controlled Waste Management Market by Value 1996 – 2004
Value £ bn Change percent
1996 3.21
1997 3.47 + 8
1998 3.78 + 9
1999 4.12 + 9
2000 4.50 + 9
2001 4.93 + 10
2002 5.53 + 12
2003 6.30 + 14
2004 7.18 + 14

However, it is anticipated that the impact of the new Landfill Directive will not be felt until it is passed into UK legislation although certain provisions are being phased in during 2001. Over the period 1996 –2000 the key underlying growth factors have been the Landfill Tax and higher waste volumes. Although the annual £1/tonne increases for active waste have clearly contributed towards market growth in terms of value, there is a widely held opinion among environmental groups, certain leading waste management companies and a number of MPs that its impact so far has been minimal. This is reflected in municipal waste data from England and Wales, which show that while the proportion of waste sent to landfill has decreased from around 85 percent to 82 percent between 1996 and 1999, actual volumes have not. However, the proportion of commercial and industrial waste being diverted to landfill is much lower at around 53 percent.

Commercial & industrial and construction & demolition waste collection & disposal is largely handled by the private sector, with less than 5 percent dealt with by municipal waste authorities. In the municipal waste sector, collection and disposal services have traditionally remained separate from one another, although the Government is now encouraging a greater degree of integration between Waste Collection and Waste Disposal Authorities in order to achieve an more effective waste management system.

In the municipal waste collection services sector, there continues to be a gradual tend towards outsourcing. Since the introduction of Compulsory Competitive Tendering (CCT), the proportion of contracts outsourced has increased from around 27 percent to 40 percent during the 1990s. With the replacement of CCT by Best Value in 2000, it is anticipated that the trend towards contracting out refuse collection services will increase. This trend is also partly underpinned by additional costs that will arise from the development of separate collection systems and new materials recycling facilities.

Due to requirements set out in the Environment Protection Act 1990, municipal waste services are provided mainly by private sector companies and to a lesser extent ‘arms length’ local authority waste disposal companies (LAWDCs). But, the number of LAWDCs still remaining under public sector ownership is fast contracting as an increasing number continue to be acquired by major private waste management companies. Consolidation within the industry over the last decade has been increasing at a phenomenal rate, with the top five companies doubling their combined market share to 32 percent in 1999. But, since then further acquisitions made in 2000 and 2001 are expected to result in the top 10 companies commanding at least 50 percent of the market by early 2002. Recent key acquisitions include Biffa’s takeover of UK Waste and the absorption of Serviceteam by Cleanaway.

It is anticipated that once UK Waste is fully integrated into the Biffa organisation, Biffa will see its current market share rise from 6 percent to around 10 percent. This should lift it ahead of Sita ( current share of around 8 percent), Onyx (7 percent) and Shanks (6 percent), while it is expected that Cleanaway’s market share will rise from around 5 percent to 7 percent. One of the industry’s fastest growing players is Waste Recycling Group, which has seen its turnover increase fourfold since 1998 largely due to a series of acquisitions, the largest being that of Hanson Waste Management.

Over the next few years, it is anticipated that there will be further consolidation, underpinned by the need for further integration of services and the high levels of investment needed to meet the various targets set out in the many EU waste Directives.

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TABLE OF CONTENTS

Tables & Charts Included in the Report:-

Text © 2001AMA Research

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Last updated by Jacob van Eldik 20th March 2001