The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Renew Bahamas yesterday said it will have to export 10-12 containers of recycled materials daily from the New Providence landfill to “break even” and recoup its $8 million investment.

Gerhard Beukes, the landfill operator’s president and chief executive, told Tribune Business it was comfortable with the risk despite incoming waste streams being unlikely to support “much more than that”.

With Renew Bahamas’ materials recycling facility (MRF) set to begin operations next month, Mr Beukes said it was impossible to give precise forecasts of how it would perform because more knowledge was needed about the landfill’s waste streams.

He expressed optimism that Renew Bahamas would “hit” at least $8-$9 million in annual revenues from its recycling efforts, and disclosed that the Government’s share was based on a “sliding scale” capped at 50 per cent.

Mr Beukes said it was “unlikely” that the Government’s share would reach the 50 per cent mark, given that this only kicked in when Renew Bahamas’ annual recycling revenues hit around the $12-$14 million mark - a sum higher than his $8-$9 million estimate.

“In terms of breaking even and recouping our investment, we’re going to have to do 10-12 containers per day,” Mr Beukes told Tribune Business. “It’s probably not much more than that. We can probably hit that 10-12 mark, but we won’t know that until we start.”

The Government’s agreement with Renew Bahamas for the landfill’s operation and management has been shrouded in secrecy, at least from the Christie administration’s viewpoint, but Mr Beukes disclosed several details yesterday to Tribune Business and at a Bahamas Society of Engineers (BSE) luncheon.

He told this newspaper that the Government’s share of the materials recycling revenues is based on “a sliding scale” tied to the total funds being generated.

Mr Beukes said Renew Bahamas would “keep 95 per cent” of the revenues when the annual top-line was $5-$6 million, and the Government’s share would increase in 5 per cent increments as certain benchmarks were hit, with the cap standing at 50 per cent.

The agreement between Renew Bahamas and the Government is a five-year deal, lasting until 2019, and Mr Beukes admitted he would have liked a longer contract.

“I would have preferred a longer contract, as then we would have a longer pay back period,” he conceded.

Renew Bahamas is investing $4 million in its materials recycling facility, which is currently being constructed, and an equal amount in civil works and other upgrades that are required at the New Providence landfill. It currently has 61 employee and expects to expand to around 130 when the MRF is fully operational, with 20 set to be hired in the next several weeks.

“Our exposure is about $8 million,” Mr Beukes told Tribune Business, adding that he was “very confident” that Renew Bahamas could recover this and earn a return within five years.

“It’s a decision we made, at the start,” he said, “that we feel very comfortable we will recoup the investment, but we have to execute accurately to recover it. We went for it, and feel we will do a good job in five years.”

Mr Beukes said he had “no reservations” about Renew Bahamas’ ability to deliver on its commitments and obligations to the Government, acknowledging that the company would be “butchered alive” if it did not do so.

Mr Beukes expressed confidence that Renew Bahamas’ actions, and ability to deliver “substantial progress” at the landfill by its fifth year of management, would encourage the Government to extend its progress.”

“We know the country is watching,” he said. “We have many people who did not want us here for various reasons, but if we execute and do what we said we are going to do, people will take that at face value.”

Renew Bahamas took over at Tonique Williams Highway in November 2014, and Mr Beukes said it had already “made a large degree of progress in the first year”.

The company installed new weigh bridges by November 24 last year, replacing equipment that “nobody knows how long” it had been inoperative for.

Mr Beukes said the new weigh bridges were accurately recording the weight of trucks coming into the landfill to dispose of waste, enabling the Government to charge the correct tipping fees and increase its own revenues.

Renew Bahamas is sharing those tipping fees with the Government for the first year of its contract only, providing it with an income stream while the materials recycling facility is being built.

Mr Beukes explained that the landfill management agreement had enabled the Government to achieve all its objectives for the facility, transferring all the risk associated with it to Renew Bahamas.

It not longer had to spend/invest any money into the facility, and had also transferred the responsibility for remediation/mining and fire prevention and fighting to Renew Bahamas, all the whole earning an income stream from the tipping fees and recycling.

Mr Beukes also disclosed that Renew Bahamas was “obliged under the terms of our contract to go to the major Family Islands and advise on best practices” at those landfills, although this has not yet been acted on.

Apart from volumes, a key factor in Renew Bahamas’ success will be the composition of the waste streams that come in daily to the Tonique Williams Highway site.

Mr Beukes said the company’s focus was on plastics, cardboard, metals and some textiles as the primary materials targeted for recycling and exports.

He added that Renew Bahamas had already shipped out 45 containers of recycled products, mostly cardboard, to markets such as China, India and Taiwan where the material was in great demand among manufacturers.

Mr Beukes said achieving critical mass was vital to the success of recycling operations, and suggested that previous Bahamas-based efforts had failed due to a lack of scale and raw material.

“You need volume, and because we’re doing it on a national basis we feel there’s a bigger chance of success,” he said.

Mr Beukes told Tribune Business that the landfill operator was open to working with BISX-listed Bahamas Waste on recycling and other initiatives, after the latter’s chairman expressed concern that the two companies would essentially be competing with each other on recycled cardboard exports.

Responding to Peter Andrews’ concerns, Mr Beukes said: “From our point of view, we receive all the waste in the country.

“We’ve had some discussions with Bahamas Waste on co-operation. We’ve had discussions with them about the recycling business. Those discussions are ongoing. All options are open.”

Mr Beukes conceded that a cardboard recycling joint venture between Renew Bahamas and Bahamas Waste “potentially” made sense, provided both sides wanted to reach a mutually acceptable agreement.