India's recycling hub in danger over lower oil prices

DHARAVI, INDIA — Low oil prices are giving a nice boost to India's plastics industry, with one big exception — the country's plastics recyclers.

Judging from a recent visit to Dharavi, one of the centers of plastics recycling in the country, falling oil prices have sent the price of recycled plastic tumbling down 50 percent and shut down many local companies.

Dharavi is probably best known outside India as the setting for the 2008 movie “Slumdog Millionaire.” Located in Mumbai, it has several hundred thousand residents and is considered one of Asia's largest and most densely-populated slums.

It's also home to more than 1,000 small-scale plastics recycling companies that employ an estimated 10,000 people.

They're not recycling companies as you find them in North America, though — the work of sorting and cleaning waste plastic is all done manually, in difficult conditions, with workers earning $100 to $300 a month for more than 70 hours of work each week.

Dharavi has a world-wide reputation in recycling. A Google search of plastic and Dharavi turns up many references.

But its future as a major recycling hub could be in question, because of those low oil prices and more permanent challenges like high electricity costs and a shortage of space for factories, according to interviews Plastics News had during a mid-February visit.

Other problems

Even before oil prices dropped, companies were struggling with high power prices and a lack of space to make their factories more viable, said Hariram Tanwar, general secretary of the All Plastic Recyclers Association in Dharavi, which formed 18 months ago to advocate for industry.

APRA President Ladulal Jain, for example, said power costs in Dharavi are four times higher than in Silvassa, an industrial area 120 miles north of Mumbai. That prompted his company to open a recycling factory there.

Electricity costs in Dharavi, which sits in central Mumbai, have been rising for the last five years, APRA said.

The low oil prices have meant the loss of thousands of jobs, at least temporarily, in Dharavi's recycling companies, Tanwar said.

At one point during the interview, Jain sounded pessimistic about the future of local recyclers.

“Because of all these facts, most probably it will finish it off, it will die,” said Jain, speaking through an interpreter in an interview at APRA's small office. “Because of less land and because of high power prices.”

But the association leaders said they have some hope — APRA recently submitted a detailed proposal to the local government asking it to create a recycling zone, including setting aside land for companies and providing tax breaks and cheaper electricity.

That kind of support is needed because the industry in effect performs a public service, helping to keep Mumbai cleaner and collecting what would otherwise be litter on the streets, Tanwar said.

“We want to get recognized as proper recyclers,” Tanwar said, speaking through an interpreter.

During a walking tour and interview conducted by APRA, association officials pointed out companies recycling all kinds of plastics, including bottles, food containers, computer parts and housings for big items like TVs and air conditioners.

Working conditions were tough. In one small factory, eight workers squatted around boxes, hand separating different kinds of waste plastics. They said they worked 12 hours a day, six days a week, plus a half day on the seventh day.

Hygiene is sometimes poor. In one small room with an open door facing the narrow street, a few workers sorted through plastic from food waste as flies buzzed around the piles of discarded plastic plates, cups and clamshell containers nearby.

Much of the work was done by hand. Employees dunk buckets of waste plastic in water bins to wash it and break down large pieces by hand, or in one case, hacking garbage bins with a machete.

Material testing often consists of burning the plastic to smell it and, workers said, letting trained noses identify the specific polymer.

“Conditions are poor, unhygienic, and people are working in unsafe conditions,” said Vinod Shetty, director of the Mumbai office of Acorn International, an NGO which has one project advocating for workers in India's recycling industry.

“Workers are handling contaminated materials, they are exposed to a lot of bacteria, a lot of diseases,” he said, in a telephone interview with Plastics News.

Shetty, whose group has organized campaigns for better conditions for people who collect recyclable materials in the streets and landfills, said both the recycling companies and the factory workers face difficult conditions.

Because of weak government enforcement of rules, companies that want to operate responsibly face a lot of price competition from recycling factories working in the “informal” sector of unregistered companies, which often ignore rules.

And workers, most of whom are migrants who come to Mumbai to escape worse poverty in their hometowns, lack options and know that others coming from the countryside could replace them, he said

“Where they come from is total desperation.”

Shetty said he was aware of the APRA proposal to create a recycling zone, and said he hoped it would have a positive impact for the industry.

But he said that without stronger government rules, he fears that “it will just be another Dharavi somewhere else.”

“I always hope for the best, maybe something will come out of this, but unless you rectify the defects in the economy, the reasons people migrate, you only deal with the symptoms,” Shetty said.

Tough economics

Among companies interviewed during the walking tour, however, concerns were directed more toward the current economic situation.

The owner of one small three-person company, who has been in the Dharavi industry a decade, said falling prices have forced weaker companies to close.

Sheikh Mohammad Irfan, owner of Khizra Plastics, said recycled plastic used to sell for a little more than 90 rupees ($1.45) per kilogram but now, with the price of oil down, it's only about 45 rupees (71 cents).

Irfan and others said that as a result, much of the equipment like grinding machines was sitting idle. He pointed to a grinder unused in a room across the narrow alley from Khizra's small space.

India's not alone. Recycling industries worldwide are feeling the pinch.

The British Plastics Federation in mid-March put out a statement saying it was concerned that low oil prices were making plastics recycling in that country “uncompetitive” and “threatening not only the viability of businesses but also, potentially, the recycling record of the whole supply chain.”

Recycling remains a major part of India's plastics supply chain.

About 25 percent of the plastic used in India comes from recycled sources, amounting to the equivalent of 3.3 kg of recycled resin used per person in manufacturing each year, compared with 10 kg from virgin plastic, according to the Mumbai-based Plastindia Foundation.

India recycles 70 percent of its PET bottles, compared with 30 percent in the United States, and nearly 100 percent of rigid plastic containers, PIF said.

PIF estimates that 600,000 people work in the plastic recycling sector in the country, including the people (known as “ragpickers”) who try to scrape out a living collecting on the streets and selling to factories like those in APRA.

Because of their work, India maintains a high recycling rate with little government support.

It's those large economic and social benefits of the recycling industry that APRA wants to focus on.

The group formed only 18 months ago, based on recommendations from India's Institute of Chemical Technology, which sent a team to the neighborhood to study the industry. They recommended forming an association to help industry upgrade and better make its case to the public.

APRA members say they want the industry to be better recognized.

“Indirectly it helps the government because we take garbage from all of Mumbai and reprocess it,” said Ghopal Malpani, a recycling company manager who participated in the interview at APRA offices. “We help the government.”

Shetty, from the time his group has spent supporting ragpickers with projects like safety training, believes that group of people should similarly be recognized as “green collar” workers.

He said more should be done than establishing recycling zones.

One idea he favors, similar to the pressure labor groups put on Apple for better working conditions in Chinese factories, is pressuring the large companies that use the recycled materials in their products, so that they in turn work with recycling companies to improve conditions.

And he believes the plastics industry itself should help with financial or other support, since it's profiting from creating the products that at the end of their lives pass through Dharavi's factories.

“While we talk about the recycling industry getting status, this will have to be done over time,” he said. “The solution is for government to regulate this industry.”