Carlos Alberto Saldate Patón
Director General
Comercializadora Folgueiras
View from the Top

Missed Business Opportunity of Plastics

Wed, 02/19/2014 - 09:29

Q: What is the importance of the recycling sector in Mexico, and what are the main challenges in its operating environment?

A: The recycling industry includes glass, cardboard, metal and plastic. It has evolved slowly since it is not governed by a regulatory framework and there are no norms to foster the sector’s growth. A recycling system begins with recollection at homes, offices and manufacturing facilities and is based on the separation of material, which does not generally happen in Mexico. One first positive step was initiated by the Mexico City government when it established a norm, in February 2011, stating that organic and inorganic waste should be separated to improve the quality of waste. The second step were the modifications made to the General Law of Urban Solid Waste Management. For the past three years, laws and norms covering recycling and waste management have taken a higher importance. Another issue is that waste recollection in Mexico is very peculiar since it is a municipal responsibility but there is no legal framework outlining how municipal governments should do it. The industry is working with authorities to try and bring some clarity to the norms. The third issue is the lack of incentives for the recycling industry. In 2008, the recycling industry had a tax break that allowed us to deduct up to 70% of our operating costs, as well as having a 5% income tax, but these incentives disappeared, discouraging any further investments.

Q: What were the original motivations for the creation of Comercializadora Folgueiras and how have these changed until today?

A: Comercializadora Folgueiras began operations 27 years ago just as globalization was taking off. Mexico was a much more closed economy back then and protected by duties, although the possibility of free trade agreements was beginning to appear. This led us to create a company to enter the resin market and another company dedicated to plastic recollection, recycling, selection, and production. Comercializadora Folgueiras is the commercial division of Bio Reciclados Folgueiras. We reach across every industry and market segment, such as electricity, automotive, textile, footwear, construction, among many others. Plastic is present in all segments of the Mexican economy.

Plastic is mainly transformed in two ways: mechanical recycling and energy recycling. Mechanical recycling is a method by which waste materials are recycled into new, or secondary, raw materials without changing the basic structure. Energy recycling is when plastic is transformed into energy. In Sweden or Switzerland, almost 100% of plastic materials are recycled using both of these forms. Germany has advanced recycling systems; its mechanical recycling stands at about 38% and energy recycling at 52%. In comparison, Mexico has a mechanical recycling rate of 14% and energy recycling stands at 3%. There are signs that the Mexican industrial sector is beginning to adapt. The cement industry has started substituting its natural gas consumption for waste material, including plastic. The advantage of plastic over other waste materials is its high energy value.

Q: How is the company working to improve the current legal framework?

A: Our partners are well-known in the Mexican plastic industry as well as with the authorities, which has enabled us to design adequate recollection systems and advise government officials on how to improve the regulatory framework. We work together with the National Plastic Industry Association, and are one of the 264 companies authorized by the Chamber of Deputies to lobby and communicate the needs of the industry. In Mexico, around 3.8 million tonnes of plastic waste are generated a year, but only 1.4 million tonnes are recycled. This is a big area of opportunity that could be taken advantage of with the right blend of technology and investment, although this would require a legal framework and a clear fiscal policy. This could trigger investment of US$7-8 million for each of over 40 recycling facilities and would generate between 2,000 and 3,000 direct jobs.

Q: How do you develop new technologies and innovations for the sector?

A: We work with both a national and an international institute to pursue technological innovation. We collaborate with CIATEQ on the development of new formulas for plastic waste to generate better quality materials. The automotive industry has asked us to generate pellets from  recycled materials for car bodywork that match the required technical conditions. This represents a turning point for the industry. Additionally, we work with CONACYT and have long-distance programs with the Polytechnic Institute of Milan. We also have a technological exchange program with an American company to develop bioplastics in Mexico.

Q: What are the future ambitions of the company, and how do you see the waste management sector growing in the next five years?

A: By 2015-2016, we will open a new recycling facility with a recollection capacity of 100,000 tonnes annually of plastic materials and a production capacity of 25,000 tonnes more than we have right now. This will be possible thanks to Italian technology. It is a great project because it will contribute to recollecting waste material on the north

Pacific coast that today is either burned or sent to landfills. The current administration is well-disposed toward this industry. We have been working with SEMARNAT and other government agencies and we believe they are willing to make needed modifications to the legal framework. Recycling may seem like a trendy subject, but it could also bring many benefits to other industries. Incorporating recycled materials to lower costs and produce more sustainable products is a necessity. We need to reprocess more waste material at home to avoid importing products made with the same recycling materials. The idea is that we provide manufacturing companies with high quality raw materials, at a lower price, to make their products more competitive on the global market. Mexico could become a great competitor in recycled materials in Latin America and North America.