Russian recycling companies lack contracts with manufacturers of household appliances

After the departure of Western electronics vendors and the freezing of production in the Russian Federation, Russian recycling companies lost 80% of contracts under extended producer responsibility. Market participants claim that new Chinese brands have not yet begun to enter into contracts, and some of them prefer to pay fee compensation directly to Rosprirodnadzor. If this trend continues, recycling companies risk going bankrupt.

Due to the departure of a number of foreign electronics manufacturers and the freezing of their production in the Russian Federation in 2023, the number of concluded contracts for extended producer responsibility (EPR) services, which includes mandatory recycling of electronics, has decreased by 80%, the deputy general director of Corporation JSC told Kommersant. Ecopolis” Ilya Fedorov. According to him, this affected categories such as refrigerators, washing machines, computers, etc.

According to Law 89-FZ, a manufacturer or importer of equipment is required to enter into an agreement with state-authorized companies for the recycling of at least 15% of the total amount of electronics produced or imported into the country. “The recycling company independently organizes the collection and transportation of old electronics according to the nomenclature, disposes of them and provides the manufacturer with a document that confirms compliance with the law,” explains Mr. Fedorov.

Citizens continue to hand over their used equipment for recycling. According to the results of the first half of 2022, an increase in such delivery by 25–40% was recorded (see “Kommersant” dated July 26, 2022). According to M.Video-Eldorado, over the eight months of 2023, network clients handed over for recycling more than 1 thousand tons of old refrigerators, televisions, etc., which amounted to about 40 thousand units and turned out to be 15% more than a year earlier. The retailer clarified that all electronics received from customers are sent for recycling.

However, these volumes are not enough to support the business of specialized recycling companies. Mr. Fedorov clarified that Ecopolis has a processing agreement with M.Video-Eldorado, but their enterprise is designed to process 75 thousand tons of electronics per year, “therefore, the volume delivered only by the retailer is not enough.” He argues that new brands entering the market have not yet begun to enter into recycling agreements, and electronics that come through parallel imports “often remain in the shadows.” According to him, recycling equipment in the format of simple reuse of raw materials, without contracts to comply with the EPR standard with the manufacturer or importer, can lead to a drop in the recycler’s revenue by up to 60% and “in the future, recycling companies face bankruptcy.”

Director of the recycling company SimbirskVtorResurs Alexander Kuzmin confirms the trend: “We will reduce the volume of collection and recycling.” According to him, due to the lack of profit, the company began to develop other types of business not related to ecology.

The reduction in demand for recycling services is the result of the exclusion of manufacturer associations from the EPR (according to the amendments to 89-FZ adopted in August), because it was business associations that created effective demand for recycling services, says Vladislav Bondarev, director of the SKO Electronics-Recycling Association. “It is easier for individual manufacturers and importers to pay the fee to the budget rather than collect and dispose of goods that are no longer in circulation,” he explains. The associations, he explains, were engaged in auditing, searching for legal recyclers, organizing waste collection and monitoring processing and submitting reports to government agencies.

According to Kommersant’s interlocutor among recyclers, manufacturers and importers have two options for paying the recycling fee. The first is concluding a direct agreement with recyclers and obtaining a certificate of fulfillment of the recycling minimum. The second is compensation of the fee to Rosprirodnadzor at a rate of 26 thousand rubles. for one ton of electronics, and in return the department undertakes an obligation to dispose of waste. “Over the past two years, Rosprirodnadzor has not received large-scale orders for the processing of out-of-circulation electronics,” he says. Rosprirodnadzor said that “all funds provided for this year were collected in full,” and the number of contracts for disposal will be visible in next year’s report.

Timofey Kornev