The packaging business by SCA is going to be purchased by DS Smith, and as part of this takeover deal, the recycling business owned by SCA, based in Southampton, MRF, is also going to be purchased by DS Smith.
The facility, in Southampton, is capable of recycling around 200,000 tonnes of waste every year. It was opened in 2009 and cost the company £15 million. It is currently responsible for recycling material collected from the regions, Essex, Monmouth, Kenneth, the West Midlands and Cardiff.
Another facility that is going to be taken over by DS Smith is based in Leicester and processes dry recyclables. It is capable of dealing with 150,000 tonnes of waste per year and it was opened in 2012, it cost the company over £20 million to build. This facility is only going to be partly taken over by DS Smith and SCA are going to retain a 50 percent interest in the facility.
This acquisition marks the first move into this type of recycling by DS Smith. It is expected the company have gone ahead with the move so that they can continue to supply recycled paper to their UK mills.
The facility in Southampton was expected to reach full capacity in 2012, but due to the sale of the facility, the company has not been able to release information about whether they are meeting their target.
In recent years there has been a great deal of discussion over the quality of recycled materials. DS Smith are going in with an attitude that is going to focus on quality. In the past the company is not utilised a lot of recycled paper, simply because they were not sure about the quality.
Currently, the majority of SCA’s business comes from the manufacture of hygienic tissue products, but it also has a focus on creating recycled paper for publications. It has three paper mills across Europe; one in Austria, one in Sweden and one in Kent, in the UK. The plant in Kent is based in Aylesford and 50 percent of it is owned by a separate company, Mondi.
A report from Mondi that was released in 2011 stated, “The newsprint facility in Aylesford is struggling to remain profitable, largely because of the newsprint market across Europe being rather weak.” The fact that this facility is not included in the negotiations with DS Smith comes at some surprise to market analysts.
Sorting of papers for this facility is done by a company in Cheltenham called Printwaste Recycling. A recent announcement by the company stated, “We recently invested over £100,000 in improved sorting equipment. This is going to mean that the newsprint manufacturers in the UK are going to be getting higher quality material sent to them.
We are capable of processing six tonnes every hour in Cheltenham. We remove any sort of contamination from the recycled paper and ship the waste to Aylesford newsprint, so that it can be manufactured into paper that can be sent to newspaper printers.”