Bill Keegan, who runs a 150-acre landfill and recycling operation in Shakopee, is part of the long-term supply chain solution for all those small brewers and beverage makers whose sales are constrained by the shortage of cans and bottles.
Keegan’s company Dem-Con, established in the 1960s solely as a family dump, is expanding the recycling and reuse side of the business to process and sell used materials ranging from glass and aluminum to cardboard, steel and construction debris in increasingly lucrative markets. This company now diverts up to 75% of materials that once ended up in landfill.
Dem-Con has invested millions in processing and recycling facilities. The result: less waste. Reduction in the cost of manufacturing raw materials. Less energy. Less carbon production than with virgin materials.
“There’s a growing market and political demand for recycling what used to be ‘waste,'” said Keegan, whose company now employs 230 people in Shakopee and several smaller Minnesota factories.
Take aluminum, the most recyclable and valuable single-use beverage container.
The value of recycled aluminum has increased from 40 cents to over $1 per pound since 2020. It can be made into a new aluminum can or other product with 90% energy savings from processing aluminum from virgin bauxite.
The United States, which lacks huge reserves of bauxite, imports most aluminum for manufacturing from China, Russia, India and Canada. And the economic surge and demand for products over the past year, from jugs of beer to aluminum auto parts, have driven prices up amid geopolitical issues, shipping bottlenecks and soaring intercontinental fares.
International supply chain issues — along with the higher quality of recycled products being converted — have opened up a growth opportunity for Minnesota metals and paper companies like Dem-Con.
Moreover, over the past three years, China – a big buyer of US recyclables – has dramatically reduced its purchases, saying much of it is contaminated with food or otherwise unable to be made into new products. China has partly focused on higher value-added manufacturing.
It has also caused US regulators and companies to find more domestic markets for a growing glut of recyclables and produce them here.
“We knew China was coming,” Kate Bailey, Eco-Cycle’s research director from Colorado, told Governance magazine in 2021. “Tough conversations we should have had all along.”
And recyclers and manufacturers are slowly doing more business at home.
Scott McCarty, an executive at Ball Corp., a Colorado-based container maker that is a global producer of glass and aluminum containers, including a busy plant in St. Paul, said the company is investing $1 billion. dollars in the expansion and construction of new factories in the United States.
“I think this increase in demand for aluminum cans and bottles indicates an underlying trend that is likely to continue,” McCarty said. “In recent years, we have seen an increase in interest in cans largely due to the sustainability benefits. Aluminum is infinitely recyclable.”
While McCarty said the company didn’t discuss plant capacity or pricing, he said every can made in St. Paul is needed by domestic customers. In its fourth quarter earnings release, the company said of its North American operations, “The shift in packaging mix to sustainable aluminum cans continues and demand is outpacing supply.”
Ball is part of a consortium of manufacturers that has partnered with recyclers to increase the national aluminum recycling rate by approximately 60-90% and increase the recycled raw material content to 85% of new containers. Worldwide, Ball increased profits by 50% to $878 million in 2021 on revenue of $13.8 billion, a gain of 17%.
In 2020, WestRock, the paper and board manufacturer that operates a huge plant in St. Paul’s Midway, consumed a record 8.4 million tons of recycled paper and introduced its popular biodegradable “eco-collar” which has replaced tons of pollutants. plastic rings that hold together six and eight drink packs.
Mark Bergen, a professor at the Carlson School of Management at the University of Minnesota, studies how businesses and consumers respond to price increases and make substitutions. The increased supply of recycled raw materials and offshoring is also an example of how businesses will operate during a period of inflationary expansion.
“Companies are looking to cut costs,” Bergen said. “And among environmental sustainability projects, those that are profitable will fall off the page in these times of inflation. It’s also good for jobs, profitability and low-carbon production.”
Wayne Gjerde, the Minnesota Pollution Control Agency veteran who works with industry to develop markets for recycled products, said there’s been growing talk of opening a manufacturing facility for aluminum to serve manufacturers in the Upper Midwest, from microbreweries to auto and boat parts manufacturers.
Kate Davenport, co-chair of Eureka Recycling, which has 125 workers, said the increased use of recycled content in manufacturing is encouraging for environmental and economic reasons.
But that doesn’t lead to lower prices, she said, unless Minnesota has a manufacturing plant.
“We don’t have an aluminum manufacturing plant in Minnesota, we sell our aluminum to foundry operators in Kentucky and Tennessee, and they sell aluminum sheet to fabricators,” she said. “But if we use more recycled content locally and globally, that should lead to lower overall costs.”