Urban Impact participated in the Chicago Paper Conference from October 11 - 13, 2017. Industry conferences are always a great place to catch up with suppliers and customers alike. This yea's Conference conversations and Agenda were dominated by information about the Chinese Government's new National Sword. Under the Chinese government’s “National Sword 2017” clampdown, close inspection of imported recyclable materials were put in place.
This blog post is Urban Impact's first update on National Sword.
National Sword is the name of the Chinese government's recent clampdown initiative to clean air, water and land in China. The Chinese government has targeted waste paper and plastic being shipped into China as they feel that the contaminants in this product are contributing to Chinese environmental issues. The Chinese government wants recycling material arriving into China to be much cleaner than it has been historically. Current industry standards are that we are allowed up to 2% contamination in a bale of waste paper. With National Sword, the currently industry standard is no longer good enough. The Chinese have communicated that they want the level of contamination to drop to 0.3%!
The Chinese government means business - they want clean air, water and land. Some of the actions that they have taken to try and make improvements in materials quality include:
- Cancelling importation licences for most agents who move recyclables into China.
- They have officially stated that Mixed Paper and Mixed Plastics will be banned and not allowed to be imported into China.
- Active inspections of paper and plastics arriving at Chinese ports. Loads that are deemed to be greater than 0.3% contamination are being rejected and returned to sender.
Officially the new standard for waste paper comes into effect as of December 31, 2017.
Trade Implications
National Sword is a big deal. ISRI (Institute of Scrap Recycling Industries), a US based recycling association is taking an active role in communicating with the White House, Chinese officials and the World Trade Organization. In 2016, US exports of waste paper to China were worth $US 5.6 billion and 40,000 jobs. China is a vital end market for the US, but for Canada as well.
How are other companies reacting and coping?
We talked to many companies and processors; every one is scrambling to react and to make this new quality specification. Processing facilities have been designed and built to create product with up to 2% contamination. A sudden change to this quality allowance is extremely difficult for existing plants to meet. As Plant Managers and plant staff know, the way Urban Impact has reacted to National Sword is to add labour (Quality Control staff) and to slow down the sorting and baling operations. Other companies have had to do the same.
There is of course an increased cost; slowing down production and throughput has many implications such as increased unprocessed inventory, plant accumulations and large piles. The conversations at the conference quickly turned to what capital investments will plants have to make to accommodate this new quality specification.
The export markets such as China are extremely important end markets for recyclables. The mills in other countries rely on our fibre to create their products such as new cardboard boxes, a variety of packaging and other products. With China being by far the largest importer of these types of materials, it has created a significant impact on material flow. Urban Impact and others do not exclusively ship into the export market, domestic markets also exist. The reality is that both export and domestic end markets are needed.
What are the implications if Urban Impact ships materials to China that are over 0.3%?
The Chinese will inspect the contents of the container and reject them if they feel contamination is greater than 0.3%. The cost of a returned container is approximately $10,000!
If a company ships into China and materials are rejected, this company will be banned for an undisclosed period of time from importing into China.
Key Learnings from the Conference
- The Chinese are serious, this is not a short-term issue.
- The cleanliness of baled material is of critical importance.
- This is a global issue not just Pacific North West.
- Active communication with Urban Impact customers is a vital ingredient to ensure that prohibitive materials are not included in the materials.
- Urban Impact will be closely monitoring the direction that China takes regarding recycling and their National Sword policy.
An ongoing issue and challenge for recycling organizations is to produce clean and marketable end products. Contamination can come in many forms. Minimal or eliminated contamination is key to operating any successful recycling operation. As such, Urban Impact has created a series of new signs to minimize contamination during collection.
Prohibitive items include:
Wax cardboard, any organic matter, medical waste, wood, glass, metal or any soft or hard plastics mixed in with the paper grade, plastic strapping, electronic waste.
