The sale of Niagara Recycling will be a “sad day” for many
The sale of Niagara Recycling will be a “sad day” for many
For the folks at Niagara Recycling, the news that the Region had reached an agreement to privatize the facility was not surprising, but it was a difficult day nonetheless.
“This is a bittersweet moment for the board of directors and for me,” said Norm Kraft, Niagara Recycling’s chief administrative officer.
“On the one hand, we are grateful that our 26 years of partnership with the Region have allowed Niagara Recycling to truly fulfill its mandate and provide opportunities for those challenged by development, while managing the facility and recycling surpluses back into the community.
“There are many organizations we have supported over the years. When the sale is completed, it will be a sad day, knowing that we will not do this as part of a public-private partnership that, frankly, will never be repeated.”
The region publicly announced it was selling Niagara Recycling to Burlington-based Emterra Environmental Friday afternoon. The sale follows an extensive public procurement process that began in December 2021 and included a third-party valuation of the company.
For the region, the move will help prepare Niagara for upcoming changes to residential recycling programs across the province. The price has not been announced.
Emterra has 60 days to conduct due diligence on the sale, with a closing date of spring 2023. The company did not respond to an email seeking comment on the story.
“It seemed like it was almost full, the mindset of the Region was that this was the way they were going to go,” Kraft said. “They felt the risks didn’t make sense for them, and they couldn’t look past their past to take a chance on a future with a partner of 26 years.
“We understand that it’s their job to make those decisions, but for some of us, there will always be the question of what could have been.”
Niagara Recycling has been around in one form and name for 44 years. At first, collection was limited to newspaper bundles that residents would order over the phone. In 1985, he partnered with Pelham to establish the province’s second recycling program (Kitchener-Waterloo was the first).
Cooperation with the Region began in 1996 when the Region took over the waste collection of 12 local municipalities. The region owns the facility. Niagara Recycling manages it and its operations.
Kraft said the partnership has allowed Niagara Recycling to return more than $3 million to the community over the years through donations to organizations such as Red Roof Retreat and Momentum Choir, many of which support those with special needs.
“One of our goals has always been to employ developing adults, and I think it worked because recycling is a social enterprise,” Kraft said. “The things we do with the environment come from a social perspective.
“We are a non-profit, and our board of directors is made up of volunteers from the community. Some are retired or current teachers and others are entrepreneurs. We have a good mix of board members.’
In their years of working with the region, Kraft estimates that Niagara Recycling has sold more than 1.5 million tons of recyclable materials (from plastic fiber to metal to glass) with a gross value of more than $187 million.
“I think together we’ve had one of the most profitable operations in the province, and there are many who believe the partnership created one of the most diverse recycling programs in Ontario, not to mention across Canada and North America,” Kraft said.
The province’s introduction of new Blue Box regulations under the Resource Recovery and Circular Economy Act will make product and packaging producers 100 per cent responsible for the cost and operation of Ontario’s Blue Box program. Currently, producers pay 50 percent of the cost through a stewardship program.
The new regulations will come into effect on July 1, 2023, and Ontario municipalities will make a phased transition away from residential recycling. The last municipalities will make the transition by December 31, 2025. Niagara’s transition date is January 1, 2024.
The region will still be about the collection of materials and organics.
Kraft said the partnership between the Region and Niagara Recycling was profitable in more ways than one.
“The Blue Box was just the beginning of the story,” Kraft said. “We diversified. We have made a bid for third party contracts. We’ve had an agreement with Kitchener-Waterloo for over eight years, and we’ve been doing Haldimand Country for almost as long. This has brought more materials and labor to Niagara.
“We also had more diversification in our commercial recycling programs, glass and crushing. All these elements add value to a unique facility.’
There are more than 50 recycling centers across the province of Ontario, and producers responsible for half of the Blue Box bill undergo detailed process audits.
“They look at our costs and how Niagara Recycling compares to everyone else,” Kraft said. “Time and time again, studies show that we run one of the lowest cost recycling programs in the province.
“The net cost of recycling will always be negative, because there is a collection component. What we tried to achieve here is to generate profits and offset some of these collection costs as best as possible by diversifying into other programs.’
Kraft said Niagara Recycling had to work to stay ahead of other facilities, but that allowed it to consistently make money for the Region.
Among the innovations was the first operation in Canada, which used a pair of optical sorters to separate cardboard from newspaper. One of the latest projects, Niagara EcoGlass, has a high demand for sand works and Niagara Recycling can barely keep up with the demand.
“Yes, there’s a back and forth,” Kraft said. “There were years when we were making millions and other years where we would be operating the same or with a small loss, but our losses are not as serious as in other territories.
“At the first break or even when we closed, I can tell you that all those other plants were in the red, and it’s disappointing that they’re going to sell us for the board. I will always ask if there was another way. Was there another way forward?
“Due to the changing landscape of the province, selling was an option, but it is worth mentioning that this is the only region or city that has sold its factory.
“Durham and London are still in business. Sudbury and Peel, and a lot of those facilities, look like they’re going to lease the operation and probably try to make a profit on that.”
Kraft said even with 100 percent of the costs covered by Blue Box, the facility could still bid on future contracts.
“I’m just saying this, but it seems like the Region felt it was too risky a scenario, and they should probably invest in new capital to keep the facility up to date and state of the art,” Kraft said.
“You could create a model to stay in business, continue to bid on future contracts, continue to grow your commercial glass and recycling programs.
“It’s been 26 years, so we must be doing something right.”
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