San Francisco, CA-Recycling is a great business, as long as commodity prices are high.
Unfortunately, the commodities markets aren’t playing along, said Steiner. With the slump in commodity prices, the profits from recycling have dried up.
“Recycling is not profitable. We have lost money in recycling over the last one and a half years,” he said. “Investment has slowed to a trickle.”
Steiner, however, says that doesn’t mean that Waste Management will dump the idea. The benefits of recycling—fewer landfills, less demand for virgin materials-are still there. Instead, he has begun to advocates new types of contracts that limit risks for both sides of the transaction. When commodity prices are high, municipalities can share a greater portion of the resale revenue. But a floor will also exist so that the trash hauler’ s profits are eviscerated by high diesel costs or other factors beyond its control.
In other words, garbitrage.
“If you want us to invest, we need a sustainable business model,” he said.