“Why aren’t you rich?

You're in the resources industry

after all…

7 reasons..

Grant Musgrove

ACOR CEO

E-mail: grantm@acor.org.au

Reason 1: We are creating positive “Externalities” and NOT being paid for it!

• E.g. Carbon abatement, finite resouce

recycling

• The ERF may bring hope following ACOR

representations, (but unless you’re

organisation is an ACOR member I’m not

going to tell you how :)

Reason 2: Secondary resource prices are NOT telling the truth- they are too Expensive!!

• P- price

• Q – quantity

• D- demand

• MPC – marginal production cost

• regulatory cost–marginal cost from regulating a resource as a waste

• Regulation should be risk x probability basedD

MPC

MPC +Prescribed waste cost

P

Q

Reason 3:Resource scarcity is Multidimensional but the focus has been One dimensional

Physical

Not accessible

Decline of ore grade

Depletion of reserve

Economic

Price volatility

Profitability metrics and

markets

Skill supply/ shortage

Geopolitical

Resource nationalism

Political stability

Regional conflicts

Technological

Supply bottlenecks

Lack of innovations

Environmental

Social license to operate

Climate change

Environmental standards

Reason 4: “Imperfect information” is pervasive

• Focus of government strategies has been on

increasing the quantity of Recyclate VS Landfill

• Need to refocus on profitability through quality

recyclate (e.g. ACOR’s material specifications in

packaging across other streams)

• Markets “fail” through lower prices/profitability

for fear/risk of receiving contaminated/ variable

feedstock

• Two thirds of manufacturing costs are

materials.

• The productivity debate has been

dominated by labour productivity

• Lets take the agenda back to

business, not ideology

Reason 5: Need to focus on “total factor productivity”

Reason 6: Governments are not focussing on sector profitability and industry development

• Levy revenue that does not go back to industry

development is a tax on the resource recovery

industry via residuals to landfill

• Commonwealth Product Stewardship schemes

have been policy and commercial failures

because they are not focused on industry

sustainability (eg TVs and Computers)

Reason 7: Waste Crime is costing governments and the community up to $1 billion per year through:

• Levy avoidance

– waste “disappears”

– high value recyclables waste re- classified as low value waste exported or gets

dumped

– waste sent out of jurisdiction

– illegal dumping & stockpiling

• Tax avoidance

– Cash transactions, GST avoidance

• Market distortion

– E.g. lower prices, jobs lost

• Money laundering

– Metal theft and metal being traded in cash in black market

• Illegal exports

– Breach Basel Convention, e.g. e- waste, used oil, used batteries

• Environmental degradation

Reason 7: Waste Crime

• Criminal elements:

• Launder money (metals)

• Stockpile/ Dump

• Illegally export (international organised

crime)

• Effect: lower prices/unprofitability

Market distortions govt subsidies