Starting a Small Business in Plastic Recycling

Sooner or later, everything we use and consume becomes waste, including all these nice plastic items and plastic bags we use every day. Plastic consumption is rising and with it the amount of plastic ending up as waste. Managing plastic waste is a global problem with increasing amounts of waste in developing countries as well as industrialized nations.

There is a need for environmental sound solutions as environmental considerations gain ground legislation changes all around the world. Sustainable development is at the top of all agendas in the UN, EU and national governments. Better solutions for the rapidly growing amounts of plastic waste are in demand. High prices of virgin materials will also make recycling attractive.

These developments offer opportunities to people in developing countries enabling new economic activities through the collection, sorting and recycling of plastic waste material. This technical brief gives an overview of technical and economical aspects involved in these activities; it is intended primarily for entrepreneurs thinking of setting up their own plastic recycling business and for organizations dealing with communities in urban low-income areas and who seek opportunities either to create or to increase employment.

What are plastics?

Plastics are made up of long chain molecules called polymers. Various types of polymers can be made from hydrocarbons derived from coal, natural gas, oil and organic oils which are transformed into materials with desirable properties. Plastics that can be readily recycled are Thermoplastics which means they will soften when heated.

Thermosetting Plastics harden when heated, are often used in electrical applications and are not suitable for recycling. Thermoplastics are light, durable, mouldable, hygienic and economic, making them suitable for a wide variety of applications including food and product packaging, car manufacturing, agriculture and housing products. Thermoplastics can be repeatedly reformed into new products and are the focus of this technical brief.

Environmental concerns of plastics

Plastics have their impact on the environment through all stages of their existence from manufacture, to utilization and disposal. Manufacturing requires significant quantities of fossil fuels, a non-renewable resource. Burning of plastics releases smoke which contaminates the environment. The smoke contains small particulates, hazardous substances and green house gases.

The disposal of plastics products also contributes significantly to their environmental impact. Most plastics are not biodegradable and can persist in the environment for many years. Plastics can cause blockage of drainage and sewage systems resulting in water logging, flooding and spread of water born diseases. With more and more plastics products, particularly packaging, being disposed of soon after their purchase, the landfill space required by plastics waste is a growing concern.

Why recycle plastics?

Recycling plastics has many benefits, it contributes to energy savings and the reduction of greenhouse gas emissions. It also saves non-renewable sources like oil and gas. In addition to that, recycling provides livelihood for millions of people and families in developing countries, either in the form of formal employment or informal economic activities.

Although there is also a rapid growth in plastics consumption in the developing world, particularly due to the increasing demand for plastics from Asia, plastics consumption per capita in developing countries is much lower than in the industrialized countries. However, there is a much wider scope for recycling in developing countries due to several factors:

  • Labor costs are lower.
  • In many countries there is an existing culture of reuse and recycling, with the associated system of collection, sorting, cleaning and reuse of ‘waste’ or used materials.
  • There is often an ‘informal sector’ which is ideally suited to taking on small-scale recycling activities. Such opportunities to earn a small income are rarely missed by members of the urban poor.
  • There are fewer laws to control the standards of recycled materials. (This is not to say that standards can be low – the consumer will always demand a certain level of quality).
  • Transportation costs are often lower, with hand or ox carts often being used.
  • Low cost raw materials give an edge in the competitive manufacturing world.
  • Innovative use of scrap machinery often leads to low entry costs for processing or manufacture.

In developing countries the scope for recycling of plastics is growing as the amount of plastic being consumed increases. Collecting, sorting and recycling plastic waste becomes a viable activity.

Types of plastics

The six most common types of plastic can easily be recycled. The plastics industry has voluntarily devised a coding system which makes recycling plastics easier. Table below shows these 6 types of plastics with their identification code, general properties and common uses.

Understanding your plastic recycling business

Before starting a business in the plastic recycling sector, a proper investigation of all factors which might have an influence on the business is essential. By gathering as much information as possible, the entrepreneur is able to develop a comprehensive picture of the activities and prospects of his future enterprise (Source: Vest, 1999).

Three major areas have to be investigated:

  1. Availability of raw material: Which types of plastics are available? From which places? In which quantities? What is the quality? For what price are people willing to bring the plastic waste? Etc.
  2. Availability of technology and funds: What type of machinery is necessary? What is consumed during processing (energy, fuel, lubricants, water, etc)? What type of premises is needed? What investment is required? Etc.
  3. Market prospects for recycled products: Who are my customers? What is the market price? What are the transportation costs? Etc.

It is recommended to make a business plan as it brings ideas and information gathered into
a structured format. Furthermore, A Business Plan helps you to

  • decide if you should start your business or not
  • organize your ideas so that you will start and run your business in the best way
  • present your business idea to a lending institution such as a bank to get a loan for your business.

The following manual helps to prepare a business plan for the proposed business, download here

Collection of waste plastic

An important first step in starting a plastic recycling business is setting up a collection system of waste plastic. A constant supply of raw material to the factory is of utmost importance for the existence of the business. Collection of waste plastic may already happen through the activities of scavengers, middlemen and traders. It is possible to integrate in this system by letting them know that the factory is willing to buy plastic waste material. Another option is to cooperate with the municipality to get involved in collection schemes accompanied with a public awareness campaign. In this way the public can be informed about the advantages of plastic recycling.

Download full manual with illustrations here


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