January 2009
In a mineral water bottling plant at Ghala industrial area, a German machine the size of a small truck flattens tonnes of used plastic bottles and other household plastic and pushes it into the side of a growing 30 metre pile. This waste is then shipped to Fujairah, a small port in the UAE, where it is recycled to make plastic pellets, egg trays, bubble wrap and synthetic fibre used in buckets, nets and toys.
The National Mineral Water Company (NMWC) has taken the lead as a major investor in setting up the first PET recycling facility in the region. The US$25mn plant will have an annual capacity of 20,000 tonnes of post-consumer PET bottles. For NMWC, which generates tonnes of plastic waste each year, getting into the recycling business is not just about reducing its carbon footprint but is also a business opportunity that offers big returns in the long run.
Company officials admit that releasing business forecasts or trying to calculate when they expect to reach the break-even point in this venture is a complicated task but they are certain that it is already giving them an opportunity to accelerate in the race to transform the company from an entrepreneur to an 'eco-preneur'.
Oman generates 10,000 tonnes of waste every year - including about 2,000 tonnes of plastic - which is dumped in the landfills in Bausher. Nida Helou, a senior official at the Environment Society of Oman (ESO), says, "In Muscat alone, around 6mn plastic bags are used every month."
Money from waste
The recycling business is a proven formula to make money but without government support it is still just scratching the surface. If the government makes it mandatory for residents to separate their waste and dispose of it systematically, then recycling plants will sprout up everywhere. "The regulatory environment is the final factor that needs to be considered. If the disposal of waste is formalised such that depositing the tyres at a recycling plant were obligatory (or even incentivised), then one side of the logistical challenge would have been eliminated," says L J Smith, a Green-peace activist based in the UAE.
Saibal Sen, group chief advisor of Sabco Group that owns NMWC, says businesses will only invest in and operate a recycling plant if it promises a profit. "Paying lip service to the issue and revealing shocking details of how plastic waste is choking the earth is very easy but cleaning up this mess and making it into a viable business proposition is a big challenge," says Sen.
The Crowne Plaza Muscat is leading the way for the hospitality industry in going green. In March 2008, the hotel launched a campaign with ESO to segregate waste. David Todd, general manager, says, "Guest rooms and hotels in general can produce surprisingly large amounts of waste every day and most of the material thrown away is recyclable. We are collecting and storing paper and plastic which will be sent to India where it will be processed and recycled."
Future prospects
Big companies in Oman working closely with consultants on a viability report for their new venture are looking beyond plastic at other types of waste including tyres, tin cans, solid waste, paper and wastewater as the raw material for the recycling plants. The final products manufactured from the waste can be numerous and everything depends on the technology and the money the company intends to invest.
"People ask us to do a survey report, look at business feasibility and make projections on recycling. We tell them that in the beginning it involves years of investment before the returns come," says Naveen Kandukari, senior manager, Ernst & Young.
Moreover, recycling or buying carbon credits is becoming vital for big businesses as most eye a tie-up or partnership with European companies who are increasingly dealing exclusively with those companies who have their "go green" policy in place. The chances are that many companies in the western world would not enter into any business alliance with you if you do not provide them with details on how corporate policies governing suppliers' environmental sustainability can be enforced to ensure green business practices multiply across firms, he says.
Recently, Ernst & Young conducted research on tyre recycling as a business proposition. Many tyres past their useful life find themselves being used as buoys in marinas or crash barriers at go-kart tracks but this informal form of recycling represents a negligible share of the tyres disposed of annually.
A more advanced form of tyre recycling grinds tyres down into crumb rubber, steel and textile fluff. Each of the end products has a potential market. Uses range from playground flooring, athletic tracks and tennis courts to applications in the automotive industry in products such as bumpers, car body under seal, floor mats and liners. The steel wire that is stripped from the tyres can be sold as scrap. There is a small market for textile fluff as a filling material.
From a macro-economic perspective, tyre recycling has a number of positive aspects. But before going ahead with any large-scale recycling plant, apart from viability in terms of volume, aspects like how tyres will be collected and delivered to the processing facility have to be considered.
Oman's efforts
Environmentalists say the biggest problem is maintaining a continuous supply of raw material in this business. "It is easy to buy technology from the western world, set up a plant and get efficient manpower but collecting non-contaminated plastic bottles and creating an awareness among people to segregate their waste needs government intervention; private companies have no right over this," says Smith of Greenpeace.
Oman's government is already developing businesses based on the need to manage solid waste in urban areas. While it is too early to understand and quantify the business model relating to recycling in this segment, best practices from around the world seem to suggest that the value chain of solid waste management does create enough viable business opportunities.
The Emirates Recycling Company, set up in Dubai in 2007 at a cost of AED65mn to address construction and demolition waste in the emirate, was created out of Dubai Municipality's recognition of the problem in managing the waste and the private sector identified this as a business opportunity. Al Rostamani Group has spearheaded this initiative. Similar business models are being worked out for Oman. The wastewater companies focus on collecting and treating the wastewater generated in urban areas.
An important by-product from the process is the treated effluent - water fit for certain activities such as gardening. Nida says one needs to differentiate between segregation and recycling. When companies, households, schools, ministries segregate the different materials they produce as waste into separate containers, they are doing their bit to help protect the environment by diverting these materials away from the rubbish dumps.
"But when businesses get involved in building recycling facilities, like the one that NMWC established in Fujairah, it generates income, creates job opportunities, boosts the economy and protects the environment.
Recycling protects the environment, first by diverting the materials away from the open dumps and saving space and second by saving natural resources because these materials are used as raw materials instead of virgin materials. We hope that more businessmen see the opportunity of generating money from waste."
Experts say the business of recycling can be a lucrative venture but the biggest challenge still remains - collecting and systematically segregating the waste to process it. Creating an awareness among people about participating in this exercise is as crucial as importing the right technology to recycle the waste and market it.
In a mineral water bottling plant at Ghala industrial area, a German machine the size of a small truck flattens tonnes of used plastic bottles and other household plastic and pushes it into the side of a growing 30 metre pile. This waste is then shipped to Fujairah, a small port in the UAE, where it is recycled to make plastic pellets, egg trays, bubble wrap and synthetic fibre used in buckets, nets and toys.
The National Mineral Water Company (NMWC) has taken the lead as a major investor in setting up the first PET recycling facility in the region. The US$25mn plant will have an annual capacity of 20,000 tonnes of post-consumer PET bottles. For NMWC, which generates tonnes of plastic waste each year, getting into the recycling business is not just about reducing its carbon footprint but is also a business opportunity that offers big returns in the long run.
Company officials admit that releasing business forecasts or trying to calculate when they expect to reach the break-even point in this venture is a complicated task but they are certain that it is already giving them an opportunity to accelerate in the race to transform the company from an entrepreneur to an 'eco-preneur'.
Oman generates 10,000 tonnes of waste every year - including about 2,000 tonnes of plastic - which is dumped in the landfills in Bausher. Nida Helou, a senior official at the Environment Society of Oman (ESO), says, "In Muscat alone, around 6mn plastic bags are used every month."
Money from waste
The recycling business is a proven formula to make money but without government support it is still just scratching the surface. If the government makes it mandatory for residents to separate their waste and dispose of it systematically, then recycling plants will sprout up everywhere. "The regulatory environment is the final factor that needs to be considered. If the disposal of waste is formalised such that depositing the tyres at a recycling plant were obligatory (or even incentivised), then one side of the logistical challenge would have been eliminated," says L J Smith, a Green-peace activist based in the UAE.
Saibal Sen, group chief advisor of Sabco Group that owns NMWC, says businesses will only invest in and operate a recycling plant if it promises a profit. "Paying lip service to the issue and revealing shocking details of how plastic waste is choking the earth is very easy but cleaning up this mess and making it into a viable business proposition is a big challenge," says Sen.
The Crowne Plaza Muscat is leading the way for the hospitality industry in going green. In March 2008, the hotel launched a campaign with ESO to segregate waste. David Todd, general manager, says, "Guest rooms and hotels in general can produce surprisingly large amounts of waste every day and most of the material thrown away is recyclable. We are collecting and storing paper and plastic which will be sent to India where it will be processed and recycled."
Future prospects
Big companies in Oman working closely with consultants on a viability report for their new venture are looking beyond plastic at other types of waste including tyres, tin cans, solid waste, paper and wastewater as the raw material for the recycling plants. The final products manufactured from the waste can be numerous and everything depends on the technology and the money the company intends to invest.
"People ask us to do a survey report, look at business feasibility and make projections on recycling. We tell them that in the beginning it involves years of investment before the returns come," says Naveen Kandukari, senior manager, Ernst & Young.
Moreover, recycling or buying carbon credits is becoming vital for big businesses as most eye a tie-up or partnership with European companies who are increasingly dealing exclusively with those companies who have their "go green" policy in place. The chances are that many companies in the western world would not enter into any business alliance with you if you do not provide them with details on how corporate policies governing suppliers' environmental sustainability can be enforced to ensure green business practices multiply across firms, he says.
Recently, Ernst & Young conducted research on tyre recycling as a business proposition. Many tyres past their useful life find themselves being used as buoys in marinas or crash barriers at go-kart tracks but this informal form of recycling represents a negligible share of the tyres disposed of annually.
A more advanced form of tyre recycling grinds tyres down into crumb rubber, steel and textile fluff. Each of the end products has a potential market. Uses range from playground flooring, athletic tracks and tennis courts to applications in the automotive industry in products such as bumpers, car body under seal, floor mats and liners. The steel wire that is stripped from the tyres can be sold as scrap. There is a small market for textile fluff as a filling material.
From a macro-economic perspective, tyre recycling has a number of positive aspects. But before going ahead with any large-scale recycling plant, apart from viability in terms of volume, aspects like how tyres will be collected and delivered to the processing facility have to be considered.
Oman's efforts
Environmentalists say the biggest problem is maintaining a continuous supply of raw material in this business. "It is easy to buy technology from the western world, set up a plant and get efficient manpower but collecting non-contaminated plastic bottles and creating an awareness among people to segregate their waste needs government intervention; private companies have no right over this," says Smith of Greenpeace.
Oman's government is already developing businesses based on the need to manage solid waste in urban areas. While it is too early to understand and quantify the business model relating to recycling in this segment, best practices from around the world seem to suggest that the value chain of solid waste management does create enough viable business opportunities.
The Emirates Recycling Company, set up in Dubai in 2007 at a cost of AED65mn to address construction and demolition waste in the emirate, was created out of Dubai Municipality's recognition of the problem in managing the waste and the private sector identified this as a business opportunity. Al Rostamani Group has spearheaded this initiative. Similar business models are being worked out for Oman. The wastewater companies focus on collecting and treating the wastewater generated in urban areas.
An important by-product from the process is the treated effluent - water fit for certain activities such as gardening. Nida says one needs to differentiate between segregation and recycling. When companies, households, schools, ministries segregate the different materials they produce as waste into separate containers, they are doing their bit to help protect the environment by diverting these materials away from the rubbish dumps.
"But when businesses get involved in building recycling facilities, like the one that NMWC established in Fujairah, it generates income, creates job opportunities, boosts the economy and protects the environment.
Recycling protects the environment, first by diverting the materials away from the open dumps and saving space and second by saving natural resources because these materials are used as raw materials instead of virgin materials. We hope that more businessmen see the opportunity of generating money from waste."
Experts say the business of recycling can be a lucrative venture but the biggest challenge still remains - collecting and systematically segregating the waste to process it. Creating an awareness among people about participating in this exercise is as crucial as importing the right technology to recycle the waste and market it.
By Rupam Nair
© businesstoday 2009
