Exporting resources has historically posed challenges for developing countries. Recently, however, there has been significant investment in resource recovery and processing within these countries, specifically GCC, promising higher economic value and sustainability. The issue of exporting recyclables is both economic and environmental, necessitating immediate attention.

MEPCO's recent announcement to double its waste paper annual processing capacity to nearly one million tonnes brings to the agenda the controversial subject of the necessity to examine why recyclables should remain within the country. This growing importance is further highlighted by multiple reports of acquisitions and increasing capacity in recyclable processing.  

This article aims to analyse the impact of exporting raw recyclable material on sustainability.  Additionally, it will delve into the dynamics of the markets involved.

Why sustainability matters

Sustainability revolves around three pillars: Economic, Environmental, and Social. Keeping recyclables within the country impacts each of these areas significantly.

1. Economical impact:

Lower GPD: Exporting recyclables deprives the country of added value. For instance, while OCC sells for around $160 per tonne, the processed product containerboard can be sold for $500 per tonne. By processing recyclables locally, countries can capitalise on this significant value addition. This example underscores a broader economic principle: the transformation of raw materials into finished goods within the domestic economy multiplies their value, contributing more substantially to GDP.

Job losses and economic dependence:  Exporting raw recyclables means jobs related to processing and value addition being lost to other countries. This not only results in loss of employment opportunities but also creates economic dependence on foreign processing and manufacturing. Strengthening the local job market by processing recyclables domestically can mitigate these vulnerabilities. 

Reduced circular economy benefits: A circular economy aims to minimise waste and maximise resource utilisation. Exporting recyclables disrupts this cycle, as the resources are not fully reintegrated into the local economy. Keeping recyclables within the country fosters sustainable, closed-loop systems, enhancing waste reduction efforts.

Weakened industry development:  Exporting recyclables hampers the development of a robust local recycling industry. Investing in domestic recycling and processing not only generates jobs but also promotes innovation and expertise in waste management and sustainable production. Local industries benefit from the availability of raw materials, reducing reliance on imports and stimulating technological advancements in recycling processes.

2. Environmental impact: Exporting recyclables when local processing is available is environmentally unsustainable. The logistics of shipping recyclables long distances lead to higher carbon emissions due to increased fuel consumption. This practice contributes to greenhouse gas emissions, undermining sustainability, and the principles of a circular economy. 

3. Social impact

The social aspect of sustainability emphasizes the industry's connection to society, demonstrating the tangible benefits of sustainable practices. Localising the recycling industry can:

• Community engagement: Engaging the community in recycling efforts increases awareness and participation in sustainable practices. Demonstrating the local benefits of recycling can foster a culture of environmental responsibility.
• Education and advocacy: A localised recycling industry can serve as a platform for educating the public about sustainability, encouraging responsible consumer behavior, and advocating for policies that support environmental and economic resilience. 

Moreover, industry leaders, especially large corporations, must play a significant role in CSR initiatives, contributing substantially to societal well-being and environmental sustainability. 

During my discussion with Basem Abu Sneineh, Director, Resources and Waste Management at ROSHN Group, he mentioned, “At ROSHN Group, we implement a zero-waste strategy with source segregation. We educating our residents to ensure a greener community and improved air quality. This fosters community engagement and promotes environmental responsibility, advancing sustainability through comprehensive education and CSR initiatives.” The company is one of the major contributors to Vision 2030. 

As Abu Sneineh further added “Retaining recyclables within developing countries, particularly in the GCC, is essential for driving economic growth and social development. Local investment in resource recovery boosts value and strengthens the economic and social pillars of sustainability.”

Here is a quick glimpse into the recycling landscape in Saudi Arabia

Saudi Arabia generates significant waste annually: approximately 3 million tonnes of plastic, 1.2 million tonnes of metal, 500,000 tonnes of glass, and 300,000 tonnes of e-waste. As of 2023, recycling rates are low: 10% for plastic, 15% for metal, 5% for glass, and a small fraction for e-waste. This presents a substantial opportunity to increase domestic recycling capacity. Investing in modern recycling facilities can reduce waste, provide valuable raw materials for local manufacturing, and decrease dependency on imports. The National Center for Waste Management aims to increase plastic recycling to 50% by 2030, and the Saudi Investment Recycling Company (SIRC) has announced ambitious investment plans towards sustainable waste management practices across the country.

Focusing on the paper industry

The global recovered paper demand reached 253 million tonnes in 2019 and is expected to grow worldwide to reach almost 255 million tonnes by 2023.

The paper industry in Saudi Arabia is experiencing significant growth, driven by both economic and environmental factors. Recovered paper demand in Saudi has reached 1,000,000 tonnes in 2019 and almost 1,200,000 tonnes by 2023. It is expected to double by 2030 supported by the implementation of the waste management regulation, which impacts both waste generator and waste processor by encouraging sources segregation and higher recyclable recovery due to the expected new recovery facilities. 

Source: RISI – WASCO.

What is happening in Saudi? 

Many companies are increasing their production capacity and started to see a foreign investor in downstreaming and further recycling processes, which make it a necessity to regulate the recyclable. Recently MEPCO announced its new plant to double its production capacity to reach almost one million tons. What this means in number, it means direct investment of around 1.7 billion SAR, treating 0.5 million tons of wastepaper and resources are recovered and safely recovered in the city. 

We are witnessing a great step towards regulation to support proper waste management measures including source segregation. This will lead to an increase in the amount of recyclable material within the country to make a real economy of scale for sustainable investments. 

Looking ahead, the Saudi paper industry's growth trajectory is expected to continue, driven by both regulatory frameworks and market demands. By 2030, the demand for recovered paper is anticipated to double, necessitating further investments in infrastructure and technology to manage this increased volume efficiently.

The strategic focus on recycling not only addresses environmental concerns but also positions Saudi Arabia as a leader in sustainable waste management practices within the GCC region. This leadership is vital for regional integration and the promotion of best practices across neighbouring countries.

Best practice in the UAE

The UAE has taken a leading step by introducing an export fee on recyclables, helping local businesses source materials within the country, promote investment in recycling and eventually help make a shift towards a circular economy. We expect to see this across the region, and this could be a step towards collaboration among the countries in the region. 

Finally, these thoughts are not against the foreign trade, on the contrary, it advocates for the regulation of maximum resource utilisation and benefits derived from recyclable materials, specially within the country when there is a capability and an interest to invest and utilize these materials domestically. This will create a positive impact on the environment, society, and economy.

Regulating the export of recyclables and focusing on local processing is crucial for sustainable development. Economically, it maximizes value addition, creates jobs, and supports a circular economy. Environmentally, it reduces carbon emissions and promotes eco-friendly practices. Socially, it strengthens community engagement, and fosters a culture of sustainability. By keeping recyclables within the country, we can build a more resilient, self-sufficient, and sustainable future.

By embracing these principles, Saudi Arabia and other developing nations in the GCC region can lead the way in sustainable waste management, creating a model for other countries to follow. This shift towards domestic processing and recycling is not just a necessity for environmental stewardship but also a strategic economic opportunity that promises long-term benefits for the entire region.