Dr. Subodh K. Das
President & CEO
Secat, Inc.
Aluminum Recycling –
Challenges & Opportunities
Presented To:
Can Manufacturing Institute
Aluminum Association
Aluminum Can Council
May 17, 2006
Washington, DC
Items to be discussed
• Enhancing UBC Recycling
– Sloan Center for a Sustainable Aluminum Industry
– Fayette County Recycling Laboratory
– Six Sigma Studies ( Published in Light Metal Age, June
2006
– Economics of Recycling ( To be Published in Journal of
Metals or Aluminum Now ? )
– Consumer Behavior Studies ( To be Published in
Aluminum Now ?)
– Future Studies
• Emerging Trends in Aluminum Recycling
Center for a Sustainable Aluminum Industry (CSAI)
• Founded in Jan. 2005
• Funded by several sources:
– Sloan Foundation Industry Centers Program
– Arco Aluminum, Aleris International, Wise Alloys, Nichols
Aluminum, Logan Aluminum, Ormet, Hydro Aluminum,
Century Aluminum
– The Commonwealth of Kentucky
– The University of Kentucky
Sloan Industry
CenterSynergy of
Partnership
Clark Distributing Co.
Commodities Shipped from LFUCG Recycling Center
06/01/04 to 06/30/05, 12 months
Recyclable Commodities
Weight
Shipped (lbs)
Price for April 2005 ($)
Composition by
Weight of Total
Commodities
Shipped (%)
Revenues
Generated ($)
Composition of
Total Revenue
Generated (%)
Ratio of Revenues
Generated to Weight
Shipped
15,151,025
82.50
per ton
624,980
50.0%
36.68%
0.73
4,940,336
77.50
per ton
191,438
16.3%
11.23%
0.69
Mixed Plastic
240,400
0.04
per lb
9,616
0.8%
0.56%
0.71
High Density Polyethylene (HDPE)
461,800
0.29
per lb
133,922
1.5%
7.86%
5.16
3,238,982
4.80
per ton
7,774
10.7%
0.46%
0.04
Fiberboard
951,160
44.10
per ton
20,973
3.1%
1.23%
0.39
Aluminum Cans
579,252
0.63
364,929
1.9%
21.42%
11.20
Steel Cans
638,920
200.00
per ton
63,892
2.1%
3.75%
1.78
2,101,710
105.00
per ton
110,340
6.9%
6.48%
0.93
Phone Books
588,600
49.70
per ton
14,627
1.9%
0.86%
0.44
PET-2 liters
659,480
0.20
131,896
2.2%
7.74%
3.56
Magazines
740,880
80.00
29,635
2.4%
1.74%
0.71
Old Newspapers (ONP)
Old Corrugated Containers (OCC)
Glass
Sorted Office Papers (SOP)
Source: James Carter, Manager LFUCG Recycling Center
per lb
per lb
per ton
Ratio of Revenues Generated to Weight for
Commodities Shipped
From LFUCG Recycling
Magazines, 0.71
Old Corrugated
Containers (OCC),
Old New spapers 0.69
Center
(06/01/04 to 04/15/05)
Mixed Plastic, 0.71
(ONP), 0.73
PET-2 liters, 3.56
High Density
Polyethylene (HDPE),
5.16
Phone Books, 0.44
Sorted Office Papers
(SOP), 0.93
Steel Cans, 1.78
Glass, 0.04
Fiberboard, 0.39
Aluminum Cans,
11.20
Beverage Can Recycling Update
Fayette County Program Update
• “Green” Proclamation – August 24
•
•
•
•
•
– Mayor Isaacs, President Todd, Superintendent Silberman
Calculating “True” Recycling Rate
– Data available from recyclers (MRF, Wise, Baker)
– Data available from distributors (AB)
– Information needed from distributors (Coke, Pepsi, Coors, Miller)
Collecting “Real” Data
– Supermarkets
– Waste Composition Analysis
Six Sigma Methodology Initiated
– Define Causes and Cures
Find Ways to Measure and Implement Higher Recycling Rates
Strategies
Enhancing Aluminum
Recycling
in Fayette County:
A Six Sigma Study
Dr. Subodh K. Das, President SECAT, Inc.
Dr. Pradeep Deshpande, President Six Sigma &
Advanced Controls, Inc.
Margaret Hughes, Doctoral Candidate, Gatton
College of Business and Economics, University
of Kentucky
Why Six Sigma for Aluminum
Recycling?
•
Every “aluminum can” not recycled is
considered a “defect”.
•
Finding causes of these defects and
recommending strategies to enhance
recycling rate.
Six Sigma Application to Aluminum
Recycling
Steps:
1. Find “true” recycling rate (first iteration 39%).
2. Draw process map to show recycling loop.
3. Find “gaps” or areas of improvement in the
recycling loop.
(i.e. Rosies delivered/vending
machines/businesses/apartments)
4. Alter the process map to plug gaps.
Revised Process Map
Supplier
No
Rosie
Delivered
Calls MRF
Retailer
Yes
Dispensing
Machines
Businesses
Recycling Bins\
At Schools
Dormatories
Redeem for
Money
University
Of
Kentucky
Houses
Trash
Rosie
Rosie
Picked Up
Baker
Wise
Alloys
Landfill
MRF
No
Going Forward….
1. Implement Changes in Fayette
County
2. Replicate Warren County project
3. Re-measure recycling rate to
calculate improvement
4. Formulate plan for sustainability and
replicability
5. Results will be published in August
2006 issue of Journal of Metals
The Economics of Aluminum Recycling: A
White Paper
Glenn Blomquist, Professor
Brandon Koford, Research Assistant
Department of Economics
Gatton College of Business and Economics
University of Kentucky
CSAI Steering Committee Presentation
January 2006
Review Economics Literature –
Large!
•
•
•
•
•
•
Aluminum: U.S. and International Markets
Solid Waste Disposal and Recycling
Pricing of Garbage
Deposit/Bottle Bills
Curbside Recycling
Municipal Recycling Facilities
Determinants of Recycling
International Experience
US Disposal Trends 1989-2002
90
80
70
60
50
40
30
20
10
0
1989
1990
1991
1992
1993
1994
MSW Landfilled (%)
1995
1996
1997
MSW Recycled (%)
1998
1999
2000
MSW Incinerated (%)
2001
2002
Why the Decline in Recycling?
• T.Kinnaman and D. Fullerton “The Economics of
Residential Waste Management” (1999, 2000)
Curbside recycling factors:
–
–
–
–
–
Tipping fee higher, landfill savings
Population density greater, collection cost
Convenience and household’s time cost
Education, college degree
Membership in environmental group
Price of Recyclable Material –
Factor?
• Price of recyclable materials falls → incentive
to recycle is weaker
• REAL Price of used aluminum cans:
– Price RELATIVE to prices of other things
– US Bureau of Labor Statistics
• Real Price Index Value for Used Aluminum
Cans = (Price Index Value for Used Aluminum
Cans/CPI) (100)
Real Can Price & Aluminum Can Recycling Rate
1.4
80
70
1.2
Real Can Price Index
50
0.8
40
0.6
30
0.4
20
0.2
10
0
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Year
Real Can Price
Aluminum Can Recycling Rate
Aluminum Can Recycling Rate
60
1
Socially Optimal Recycling
• Average net benefit of curbside recycling for
society as a whole is zero! (Aadland & Caplan,
2005)
• Recycling that leads to an 8% reduction of waste
is best for society (Palmer, Sigman, and
Walls,1997)
• Costs: $50 - $100 per ton more than landfill.
Consumer time is a factor.
• Benefits: less of - litter, raw material use, and
garbage. Willingness to Pay surveys.
Next Steps
• Results to date will be published in August issue of
Light Metal Age
• Funding will be awarded to collect new data for
one of the following two proposals to be selected
for future study
Proposal 1: Price and Time
• Part of study of recycling behavior and
marketing (Lexington)
• Investigate the role of real price of used
aluminum cans on recycling rate - statistical
• Redemption rate experiments – individual,
group
• Convenience & time cost experiments
• Reverse vending machines experiments
Proposal 2: Ripe Cities
• Identify cities with (estimated) positive social
net benefits of more recycling and target
efforts
• Cost and Benefit information from Aadland
and Caplan (2005)
• Adjust to Midwest, Southeast, and East
• Compare to current recycling rates
• Cities with positive net benefits and low
recycling rates are ripe for more recycling
Understanding Recycling Behavior: Who
Recycles and What Motivates Them
Dr. Fred Morgan and Margaret Hughes
School of Management
University of Kentucky
January 19, 2006
Recyclers Relative To The U.S.
Population:
 Older
 Larger incomes
 Live in households with fewer members
 More liberal in political orientation
So on balance, Kentuckians will be harder to
motivate to recycle because they are younger,
with less wealth, larger households, and more
conservative politically
Research indicates that the benefits of
recycling (and most voluntary
programs) are easy to understand by
nearly everyone if the facts are
presented clearly
What people need is to feel
“connected” to the reasons for
recycling so that they will participate
without dropping out
Explaining Recycling Behavior
Theory of Planned Behavior
- Theory of Reasoned Action
- Residual Effect of Past on Recent Behavior
-
Taken together, these theories suggest that
people act in ways that take into account:
• consequences of their behavior,
• ways others are likely to view their behavior,
• factors that help or hinder their behavior.
What These Theories Tell Us
• Behavioral Beliefs (How will I feel or what will
happen to me if I act in a certain way?)
• Normative Beliefs (How will people I know expect
me to behave and what will they think of me?)
• Control Beliefs (What events or results or people
could hinder my acting in a certain way?)
These lead to behavioral intention.
Then to actions.
Perceived Consumer Benefits of
Recycling from Empirical Research
• Environmental
– saving natural resources
– saving energy
• Economic
–
–
–
–
savings of using recycled aluminum
local jobs supported by recycling
community funds from recycling programs
Personal funds through compensation
• Personal
– participation in environmentally helpful activities
– sense of individual importance in a global program
– being recognized by others as being responsible
Research Model to Be Tested
Reasons for Acting
Desire
Intentions
Overt Signal of Intentions
Actions
Future Research
• Investigate impact of economic benefit
programs (ie couponing) on recycling for
lower income households.
• Investigate education programs to translate
planned behavior into action.
• Investigate effect of feedback processes.
• Action steps:
test programs – economic and educational
cross-sectional interviews
data collection
Emerging Trends in Aluminum
Recycling –
Reasons & Responses
Dr. Subodh K. Das,
President & CEO
Secat, Inc.
Presented to:
TMS 2006
San Antonio, TX
March 15, 2006
Number of Primary
Smelting Plants in the U.S.
35
2003: Fourteen (14)
30
Smelters Operating
25
20
15
SMELTERS OPERATING - 2003
• 8 Alcoa
• 2 Century
?
• 1 Alcan
10
5
• 1 Norandal
• 1 Ormet
• 1 Columbia Falls
0
1980
1990
2000
SOURCE: LIGHT METAL AGE
2003
2010
U.S. Trends Of Re-Melting vs. Smelting
(000 Metric Tons)
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1980
1990
2000
RE-MELTING
SOURCE: SECAT, INC.
2010 (e)
2020 (e)
SMELTING
2030 (e)
Why Recycling?
The Aluminum Can Recycling Rate, 1992-2004
70
65
1% change in recycling rate
has an economic impact of
approximately $12 million
60
%
55
50
45
Trashed cans contribute about
$600 million to the nation’s
trade deficit each year
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
National Aluminum Beverage Can Recycling Rate Trends.
Impact of Recycled Automotive
Aluminum
• Two largest areas are cans and autos
• Can recovery reached ~67% in early 1990’s – now at
~50%; cultural, societal and technical issues
• Auto metal recovery >90%; aided by regulations,
shredders and lack of individual choice.
• Recovery of Al from autos has exceeded all other scrap
sources since 2005
• We have to learn to make as much new aluminum
products as technically possible from recycled
automotive aluminum in the US