In some ways, being a recycling company has become easier in the UAE.

"I am happy that now I no longer have to explain the need for recycling of e-waste as companies are increasingly aware of the hazards behind environmentally irresponsible dumping," said Zornitza Hadjitodorova, division manager of e-Waste at Enviroserve.

However, companies say there is still a long way to go.

Demand for locally recycled material remains quite low mainly due to the difference in cost (virgin material is generally cheaper). Because of this, the majority of recycled products are exported and sold outside the UAE.

The Union Paper Mill, which was established in 1987, was one of the first companies to introduce the paper recycling technology to the UAE. For example, it has a strong export customer base in the GCC, North Africa and South Asia. Its facilities recycle 480 tonnes of paper every day, out of which 400 tonnes are sold to manufacturers.

Lucky Group, which was founded in 1973, recycles aluminium waste and then sells it on the international market to companies that produce cars, aircraft parts and other aluminium product.

Prime markets

It sees Europe and India as prime secondary aluminium demand markets. Most of Green Foundation's trade in second-hand mobile phones is with Asia and Africa while products bought by local manufacturing companies make up no more than 10 per cent. Sourcing the waste material can also present difficulties. Since the UAE is not a renowned industrial hub, it lacks the manufacturing activity that can guarantee a steady stream of waste to recycle. Union Paper Mill is one company finding it increasingly difficult to collect enough waste paper to process its daily 400 tonne quota. A rise in the number of traders who collect waste paper and export it from the UAE to nearby countries such as India to be recycled has meant a decrease in local waste paper supply.

The company has resorted to importing waste paper from regional countries such as Qatar and Saudi Arabia. According to Shabir Haideri, group general manager of M.A.H.Y. Khoory, the parent company of Union Paper Mill, the Dubai Municipality has banned the export of waste paper, but it still occurs regularly. Most of their waste paper is sourced from companies such as municipalities, banks and shopping malls.

"When we started there was no value to the waste paper and people were happy to pay money for us to take away the paper. Then people started realising there was some value to this. Now we have to pay for the waste paper we take away from shopping malls. Recently, other waste paper trading companies are also bidding for the waste paper generated by malls and the highest bidder gets the paper. The market is becoming saturated," Khoory said.

In the case of electronic waste, costs depends on whether the life-span is extended or items are shipped directly for scrapping, in which case fees apply on a weight basis. The demand in the market changes constantly which regulates prices as well, says Hadjitodorova. The amount of waste received has also changed as technology develops. "As older technologies are pushed out of the tradable spectrum, new and more environmentally-friendly technologies get devised. However, the usage of heavy metals and flame retardants is still rather high," Hadjitodorova said.

Profit margins vary drastically within the recycling industry and are dependent on a number of factors. In the scrap metal industry for example these include: the metal category, the country source of the metal or the activity source of the metal.

Margins fluctuated

"Over time, profit margins have fluctuated. Margins have increased as the recycling industry steadily flourishes in the region. However, increased activity in this region is also attracting more competitors, forcing profit margins lower in order to maintain competitiveness in the market. Despite these factors and others, profit margins in the recycling industry remain relatively healthy," said Shaban.

Lucky Group deals in a range of metals, including copper, aluminium, brass, nickel, stainless steel and butyl rubber tube waste. Certain metals are associated with different activities and have varying demand. Copper for example is used in construction activity and the telecommunications industry, while aluminium has strong association with the auto industry. A higher presence of certain industries and activities promote the recycling of specific metals in that country.

The company handles in excess of 300,000 metric tonnes of ferrous and non-ferrous metal scrap annually. From this, about 100,000 tonnes are handled within the UAE. The recent economic recession has meant that these levels have seen an almost 30 per cent drop which has since been steadily increasing.

"The scrap metal industry is at a very interesting peak just after recovering from the global crisis that dipped metal prices significantly in the last two years. For example, copper prices on the London Metal Exchange (LME) are at an all-time high, while aluminium and nickel LME prices are also very strong in the metals market. Back at its rise, the prices of metals are generally supported by a multitude of factors, all based on simple demand and supply economics.

The scrap metal prices in the recycling industry are largely based on the market prices for their primary counterparts (that is, metals manufactured from mined ores)," said Shaban.

In the case of mobile phones, as a commodity, the market goes up and down depending on which phone. The demand now is centred around BlackBerrys and smart phone technology. "In regard to profit margins, ours is a volume game. We need to be in a certain amount of stores and certain number of companies. We aim to be in 420 stores by the end of this year. We see ourselves as being at the bottom of the curve. We didn't make money last year, we're probably going to break even this year and make money next year," said Dominic Gothard, CEO and Chairman of the Green Foundation.