2016 ENV Ministerial - Christian Hageluken - Umicore -Circular economy
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1. Umicore began as a 19th century mining company but transitioned in the 1990s away from mining and base metals production towards recycling and high-tech products, adopting the philosophy of "closing the loop." 2. Umicore is now a global materials technology and recycling group with over 10,000 employees across 66 manufacturing sites generating €2.6 billion in revenues in 2015. It is a leading producer of automotive catalysts and materials for rechargeable batteries and the world's largest precious and other metal recycler. 3. Closing the loop for metals requires that end-of-life materials reenter products (the physical aspect), revenues match recycling costs (the economic aspect), and
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2016 ENV Ministerial - Christian Hageluken - Umicore -Circular economy
- 1. 1 Closing the Loop for Metals: The Umicore experience Dr. Christian Hagelüken Meeting of the Environment Policy Committee at Ministerial level 29th September 2016, OECD Conference Centre, Paris
- 2. 2 19th century: start as a mining company Vielle-Montagne / Union Minière 1990s: moving away from mining and commodities/base metals production to high-tech products and recycling 2001: New name: Umicore, promoting the “closing the loop” philosophy Umicore From Linear to “Closing the Loop” Closing the loop for metals, OECD, 29.9.2016
- 3. 33 A global materials technology & recycling group 10,400 people, 66 manufacturing sites, €2.6 Bn revenues (2015) One of three global leaders in emission control catalysts for light-duty and heavy-duty vehicles and for all fuel types A leading supplier of key materials for rechargeable batteries used in portable electronics and hybrid & electric cars The world’s leading recycler of complex waste streams containing precious and other valuable metals Closing the loop for metals, OECD, 29.9.2016
- 4. 44 The Circular Economy requirements from a metals perspective Physical: EoL-materials need to find their way into new products focus on quality & performance of applied recycling processes Economical: Revenues need to match costs of entire recycling chain comprehensive collection, chain optimisation, economies of scale special challenge for high quality recycling of complex consumer products Recycling – key contributor to resource efficiency supply side: primary & secondary RM are complementary demand side: resource efficient materials, substitution, product design & resource efficient use Circular economy = recovering materials comprehensively at product EoL, when ever and where ever this will take place Key role of business models Closing the loop for metals, OECD, 29.9.2016
- 5. 55 Provide legal certainty and appropriate frame conditions; not less but right legislation Creatively look for partners / alliances in business (upstream / downstream) and beyond (policy & society) Make it part of your business strategy link to your core competencies and (longer term) commercial benefits Closing the Loop for Metals, Christian Hagelüken, 8,09,2016 consider whole product life cycle to identify opportunities & synergies To increase “circularity” we need joint efforts
Editor's Notes
- Umicore has more than 200 years of history – starting from 1805 in Vielle-Montagne (Napoleon story of his zinc bath tub)… Union Miniere in 1906 … 3 Guiding Principles of the transformation of Umicore: Focus on businesses where we can distinguish ourselves through technology Focus on businesses where we can be among the global leaders Look at the businesses through a sustainability lens Between 1996 – 2008 was the portfolio of transformation – But also at management level (ideology and vision of the people also needed a transformation) Making Umicore Sustainable meant: Establishing the Vision Taking care of the past (cleaning up the historical legacy) Embedding sustainability in the strategy – looking for environmental improvements resulting in economic benefits: Eco-Efficiency: creating high-added value with less impact (less energy, waste, scarce resources) Investment in Innovation Ensuring performance Communication and branding An important driver for the transition was to secure our economic performance – and this proved to be quite successful. In the last 10 years before the transition we had operating profits (EBIT) between € 50 and € 100 million, with high volatility and even some years with losses or minute profits due to a high dependence on the cyclic metal mining business. Market Capitalization was between € 1 and 1.6 billion. In 2015 our Recurring EBIT was € 330 million and much more stable (ranging from € 220 to € 420 M between 2011- 2014), also thanks to contributions from a more balanced activity portfolio. For 2016 we foresee a REBIT between €345 - 365 million. Current market capitalization is roughly € 6 billion. in the difficult years after the financial crisis we could (over)compensate weak results in our product business by very strong performance in recycling. Now, with rather depressed metal prices our catalyst business and increasingly our rechargeable battery activities make up for reduced profits in recycling)materials, however, significant capacity increase in recycling will bring future contributions. The workforce remained relatively stable, worldwide between 10000 – 11000 people (fully consolidated companies only) but today we have much more higher skills jobs as in our mining days. And many of the operations we spun off over the last 2 decades today are still operating under other companies.
- To give you an idea of the things we do today and where our products and services make a difference here are three examples: Automotive catalysts … Rechargeable battery materials … Our recycling activities are on the one side a business unit on its own – and very successful over the recent years. But in addition, recycling is for us as well a strategic move to secure a low carbon metals supply for our downstream product business. On average, about 50% of our metal needs we can cover by our recycling activities – of course with differences between individual metals and products. So transition in our case means more than going from mining to recycling. Our move to clean and high tech downstream products plays a key role as well because it generates added value and is the basis for our strategic “closing the loop” philosophy. Without a secure and “clean” metal supply, clean mobility and clean energy technologies will be at risk. Today we can combine our comprehensive expertise around metals, material science and downstream metals applications to develop best solutions for our customers – including recycling and responsible metal sourcing. A good example for this are our frontrunner activities in the field of Li-Ion batteries - both for battery materials and their recycling. So indeed, circularity of our products is a key driver for our success and we are confident to further strengthen our business when the circular economy becomes a key policy goal.
- ensure high quality recycling along the entire chain ensure that revenues match costs for high quality treatment along entire recycling chain who pays for it? Circular economy does not mean that all metal needs can be covered by reuse and recycling, we need to apply the whole resource effciency toolbox on both demand and supply side Metal cycles are complex and interdependent - system approach and consideration of whole value chain is crucial Usually, B2B cycles are much more difficult to close than B2C. Business models are key for a circular economy of consumer products as they can generate the needed transparency of flows and incentives for lifetime extension and high quality recycling. E.g., leasing or sharing models for consumer products would - inherently foster appropriate product design, - create transparency on product flows and bridge the (expensive) collection gap between consumers and retailers/large collection points - generate a „critical mass“ at the OEM/Leasing company to allow cost effective high quality repair and recycling - provide benefits to OEMs in context of responsible sourcing (incl. conflict metals) and customer relations
- It must be more than a nice marketing story, it‘s about setting up something real and sustainable. It will only work when you are really competent in what you do and when you identify business cases with interesting economic growths potential. And it will take time to build it up, so you need a long breath. For Umicore the related business cases are in the area of clean mobility and recycling, core competencies are based on deep knowledge in chemistry, metallurgy and material science. You cannot create circularity in isolation, you need partners and alliances based on trust and a longer term perspective. Be creative and cooperative in addressing your (business) partners and make sure there is something in for them as well (win-win). And make sure you are also offering something to society, because you will not be successful without a broader support from people and policy The first 2 efforts are in our hands as a company, but for creating true circularity policy support is essential. This comprises an appropriate legal framework and its enforcement to secure investments and create a level playing field in the market that ambitiously strives for better circularity. We need appropriate legislation, just deregulation is the wrong approach. Car emissions or waste legislation are good examples, market forces alone will not bring the desired societal benefits. It is of equal importance to have the right metrics in place to measure the real progress towards circularity, wrong metrics will lead to false reporting and “pseudo success” (e.g. inappropriate definitions of recycling rates) Moreover, policy can play a role in promoting new business models and value chain alliances. Public procurement can be decisive to create a critical mass for a business case. To conclude, here a number of concrete topics where policy support will be essential: Promoting high-quality treatment of complex metal containing waste streams (e.g. WEEE) – instead of just looking for the “cheapest solution” - Introducing standards and certification schemes for certain waste streams to guarantee quality treatment - channelling relevant waste streams to such certified plants -> e.g. by limiting treatment permits to such certified plants purpose: creating level playing field conditions for operators with high technical and environmental performance - Making sure waste exports (from EU/other OECD member states) are recycled under equivalent conditions to high quality EU/OECD standards Facilitating cross boarder shipments/imports to certified recycling facilities (with proven high quality recycling standards) - harmonizing and strengthening the criteria for pre-consented facilities (e.g. on basis of above standards/certification schemes) - fast introduction of electronic formats for notification - establishment of a fast track procedure for flows to certified plants Making use of public procurement to establish circular business models and high quality EoL treatment (of public goods) - public procurement can generate critical mass for CE frontrunner companies (from eco-design over service focused business models to recycling) - requesting high quality treatment along the chain and full transparency of flows for Eol treatment of public goods - providing adequate financial means to pay costs for such treatment (in level playing field competition between companies that can prove to follow the standards)