Wall Street’s Next Big Play Is Garbage | Kanebridge News
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Wall Street’s Next Big Play Is Garbage

Landfill firms are investing in trash-gas production and recycling technology

By RYAN DEZEMBER
Mon, May 29, 2023 9:12amGrey Clock 4 min

The green push by the U.S. and state governments is turning trash into treasure and boosting the firms that handle America’s garbage.

Shares of the biggest players in the U.S. trash business, Waste Management and Republic Services, have traded at record highs since President Biden signed the climate, tax and healthcare bill in August. A recent decline notwithstanding, the stocks are popular picks on Wall Street to ride the sustainability boom higher.

“They’re sitting in this extraordinary position,” said Michael Hoffman, an analyst at investment bank Stifel. “Garbage will be on the forefront.”

Efforts to reduce greenhouse-gas emissions and to reuse materials are making it more profitable to mine landfills for energy and sift through refuse for the hot commodities of the green economy, such as detergent bottles and cardboard boxes.

WM and Republic are building plants to isolate methane from the fumes emitted by rotting garbage and pipe it into the natural-gas grid to be burned in power plants, furnaces and kitchens. They are also equipping recycling facilities with the latest in automation to better sort and process materials for the consumer-goods companies that are under pressure to keep their packaging out of landfills and the ocean.

Landfill owners are forecasting hundreds of millions of dollars in additional profit from rising demand for recycled materials and tax incentives for making energy from emissions that would otherwise seep into the atmosphere.

“We’re blessed to be sitting right in the middle of a megatrend,” Republic Chief Executive Jon Vander Ark said. “We used to think about getting 5% top-line growth a year; now we’re in double-digit top-line growth mode.”

Republic, which has 206 active landfills, has a joint venture with a unit of BP to install gasworks at 43 of its dumps. The Phoenix firm has 65 landfill-gas plants. Some feed utility pipelines. Others generate electricity on site.

Republic is also spending about $275 million to build four polymer-processing facilities that will sort the plastic it collects kerbside and turn it into flakes for new bottles and jugs.

Vander Ark said consumer-product companies face minimum post-consumer-content mandates in California, Washington and other states, as well as their own sustainability goals. Republic’s first plastics plant is scheduled to open later this year in Las Vegas. Customers lined up.

“There’s fighting among customers about who gets what,” Vander Ark said.

Analysts say one risk is that adding exposure to volatile markets for commodities and renewable-fuel credits might spook investors interested in the steady and predictable profits involved in dumping garbage into landfills. Executives say the sustainability businesses are supplementary and moneymakers even when commodity prices are low, like now.

“Yes, there’s a year-over-year impact, but recycling is still profitable,” said Tara Hemmer, WM’s chief sustainability officer. “It still is one of our highest return-on-capital investments.”

WM, which operates more than 250 landfills, is in the second year of a four-year plan to spend $1.2 billion adding 20 trash-gas plants as well as $1 billion expanding and automating its recycling business.

The Houston company expects new and upgraded facilities to increase its recovery of reusable materials 25% by 2025. Having machines do the dirty work also cuts labor costs, executives say.

A lot of hard-to-fill jobs will be replaced by optical sorters, which use infrared cameras to spot valuable materials in the jumble and blow the desirable bits into separate bins with pinpoint puffs of air, Hemmer said.

“In the past we might have had mixed-paper bales that had cardboard embedded in them,” she said. “Now we’re able to pull more of that cardboard out, it goes in the cardboard bale, and the price point on cardboard is much higher than mixed paper.”

WM says the blended commodity value from its automated material recovery facilities is about 15% higher per ton. Not only do the machines amass more of the valuable stuff, the company says the material emerges cleaner and can fetch more than messy bales.

The recycling investments will add $240 million to its bottom line over the next four years, WM says. It has higher expectations for its gas business.

WM says it will boost landfill-gas output eightfold and generate more than $500 million in additional earnings before interest, taxes, depreciation and amortisation through 2026.

That profit forecast assumes two prices associated with every million British thermal units of gas. WM is counting on the actual fuel selling for $2.50, which is lately about the price of gas from geologic wells. Another $23.50 is anticipated from renewable-fuel credits, which is in line with recent trading, according to energy-information firm Platts.

The outlook doesn’t count the $250 million or more of tax credits WM expects for building new gas plants.

Last year’s climate bill sweetened the economics of trash gas. A federal proposal to offer additional credits for biogas projects that produce power for electric vehicles could make the incentives even stronger.

Waste-company executives and analysts say that many are worth building anyway and that the incentives make it economical to install gasworks at smaller, less-gassy landfills.

“Landfill gas is essentially the only scalable biofuel that doesn’t have a food-for-fuel trade-off,” said Goldman Sachs analyst Jerry Revich. “These projects don’t need any subsidies, but they will take the free money.”



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Preparatory Work for UAE to Oman Hafeet Rail Project Commences at Full Speed

Preparations have begun on the transformative UAE to Oman Hafeet Rail network, revealing significant construction details during a site visit.

Thu, May 16, 2024 3 min

The $3bn Hafeet Rail project between the UAE and Oman will feature 60 bridges and a 2.5km tunnel, making it an “architectural and engineering marvel,” according to CEO Ahmed Al Musawa Al Hashemi.

Hafeet Rail has announced that preparatory work is moving full speed ahead for constructing the transformative railway link between the UAE and Oman. This announcement was made during a site visit attended by key officials, members of the Asyad and Hafeet Rail executive management teams, project contractors, and consultants.

Key Highlights

During the visit, attendees were introduced to the main components of the project, including passenger, repair, and shipping stations, as well as major bridges and tunnel sites.

The Hafeet Rail project is set to play a very important role in enhancing local and regional trade, unlocking new opportunities in the infrastructure, transportation, and logistics sectors, and fostering economic diversification. It will also strengthen bilateral relations between the UAE and Oman.

The project will involve constructing 60 bridges, some reaching heights of up to 34 meters, and tunnels extending 2.5 kilometres. The Hafeet Rail team showcased the latest rail technologies and innovative engineering and architectural solutions designed to navigate the challenging geographical terrain and weather conditions while maintaining high standards of efficiency and safety.

The rail network will boost various industrial sectors and economic activities and significantly impact the tourism industry by facilitating easier and faster travel between the two countries.

Ahmed Al Bulushi, Asyad Group Chief Executive Asset, noted that the project’s rapid progress reflects the commitment of the UAE and Oman to developing and realizing the project’s multifaceted benefits.

Investment and Future Impact

Al Bulushi added that investments in developing local capabilities and expertise in rail-related disciplines over recent years have enabled the project to reach the implementation phase successfully under the leadership of highly efficient and professional national talent.

Hafeet Rail’s CEO Ahmed Al Musawa Al Hashemi emphasized, “The commencement of preparatory works for construction is a testament to the robust synergy between all parties involved in both nations, achieving this milestone in record time. We are confidently laying down the right tracks thanks to the shareholders of Hafeet Rail and the expertise of local companies in Oman and the UAE, alongside international partners.”

During the site visit, the visitors explored some of the key preparatory sites, including Wadi Al Jizi, where a 700-meter-long bridge towering 34 meters will be constructed. This ambitious project is envisioned as an architectural and engineering marvel in a complex geographical landscape.

Future phases will require more collaboration, with a continued focus on quality, safety, and environmental considerations in line with the international industry best practices.

The Hafeet Rail project represents the first-of-its-kind railway network linking two Gulf nations, marking a significant shift in regional goods transportation. This efficient and reliable transportation option will reduce dependence on slower and less sustainable road transport.

Hafeet Rail promises a 40% reduction in shipping costs and a 50% in transit times compared to traditional land transportation methods, as it will be connecting five major ports and several industrial and free zones in both countries.

This shift will reduce reliance on road transport by cars and trucks and promote more sustainable shipping practices. The establishment of the railway network will also create significant opportunities for SMEs in construction, engineering, and logistics support, acting as a catalyst for economic growth and innovation within the domestic economy.

By linking major ports, the Hafeet Rail project will enable local SMEs to import, export, and distribute their products more effectively, enhancing their market reach and global competitiveness.

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