By Paul Gable
The Horry County Infrastructure and Regulation Committee heard an update on the Charleston recyclable deal yesterday.
As with any new operation, several months of experience is needed to determine if projections in the deal are becoming reality.
With five months of solid numbers now in place, it is possible to look at what Horry County residents can and cannot expect from the Charleston deal.
First and foremost, the HCSWA can forget any expectations of making a $1 million dollar per year profit on the contract that brings recyclables from Charleston County to Horry County for processing.
When Horry County Council reconsidered second reading of a budget amendment needed to approve the deal, council member Harold Worley asked if this deal would make money. HCSWA officials answered yes.
Not realizing too much of a loss will be considered a good result.
There are several reasons for this. The assumption of 14.5% reject rate of recyclables processed is much too low. The reject rate has been in the mid to high 20’s range and that is with the best interpretation of exactly what constitutes rejects.
For example, the months of Aug through Dec 2015 saw 21,382 tons of recyclables processed at the HCSWA. Of that amount, 13,192 tons of recyclables have been sold, leaving 8,190 tons not sold.
The HCSWA does not consider all of the 8,190 tons as rejects. Some is glass that is ground up and sold at $5 per ton by the HCSWA. In December, approximately 200 tons of glass was processed, according to the HCSWA. Another 600 tons remained processed on the floor waiting to be shipped out.
You get the idea, assuming only 14.5% rejects was a pipedream.
In addition, the contract established a minimum price of $135 per ton revenue on recyclable sales. If the price goes below that, Charleston is billed for the difference on its recyclables.
Last month, the HCSWA realized an average price of $113 per ton on recyclable sales and the price is expected to go lower in the coming months.
One other major change to the contract was made in December to help reduce HCSWA losses. The HCSWA initially agreed to pay transportation costs associated with bringing Charleston recyclables to Horry County. The HCSWA was supposed to recover these costs through sales of recyclables.
With losses mounting to over $120,000 per month as the months went along, Charleston agreed to a three month suspension of this clause of the contract.
With not having to pay nearly $100,000 to Charleston for transportation costs in December, the HCSWA managed to show a modest $20,000 profit on the operation in December.
Another major question about the deal was how much additional trash would go into the HCSWA municipal solid waste landfill.
Horry County Council mandated at the beginning of the contract that no additional landfill space be used for Charleston recyclables.
It seems the HCSWA finally got the message as Charleston recyclable rejects began to be shipped back to Charleston in December, according to HCSWA staff.
We can only wait to see what the future brings.