There is an old saying ‘there’s money in scrap’.The increasing price of metals like copper, gold and aluminium has brought good business to scrap metal merchants. Nowadays, this saying applies to waste too. Waste recycling firms have cropped up all over the world in the past decade or two. While recycling is good for the environment, much of the recycled material can be sold to either cover running costs or generate a profit. Whether or not profits are achievable depends on a number of factors, but waste volume and the price at which it can be sold on for are important. Take, for example, South African recycling company Resolution Recycling. According to a report in the Mail & Guardian, the company closed in 2009 after five years in operation. The reasons for the closure were two-fold. First, the local community, while wanting to be green, did not want to contribute towards the costs of recycling. Second, as a consequence of the low level of community buy-in, the volume of waste to be sold on was less. To make matters worse, variable costs like fuel were also on the rise. This combination of factors forced the business into liquidation.

Questions 

1 What fixed costs would a business like Resolution Recycling have to cover?

2 How might a recycling company ensure adequate waste volumes are available to generate enough revenue to cover costs and make a profit?