No Legal Certainty for Recyclers – No Fair Competition

Serbia needs help from EU. Environmental standards have to be improved.

„The main demand in the next years is to close thousands of illegal landfilling sites in Serbia, if there should be a real chance for an access to the EU,“ said Dr. Beate Kummer, Scholz Holding GmbH, in a presentation at the Eco Expo Fair during the international conference “Circular Economy and Waste Management” on March 19-20th. Scholz Holding invested Euro 20 million since 2001 to improve the environmental standards at the sites in Serbia. Right now there is no legal certainty for recyclers and no fair competition.

It is estimated that ten times more illegal operators than legal acting recyclers are working in grey zone. Approximately 3,000 small illegal scrap yards are operating in the metal scrap recycling industry, beside that there are more than 2000 illegal dumping sites for waste. It is a fact, that inspectors do not control that grey market, only legal operators are visited by authorities. Another major problem is that within ports that are used for exporting recycling material metal scrap trading companies started their illegal operations. Illegal acting companies use ports for storage and handling scrap which reduces their costs. High amount of scrap trading in Serbia is done with cash, in the grey zone with significant tax evasion.

End of life vehicles in Serbia (Photo: Kummer:Umweltkommunikation GmbH)

End of life vehicles in Serbia (Photo: Kummer:Umweltkommunikation GmbH)

Harmonized but not applied

The biggest problem in Serbia is that there are laws and other standards already harmonized with EU legislation but they are not applied. For example, the Ministry of Agriculture and Environmental Protection gives right now a financial support for all waste streams except for waste vehicles. As well as for other waste streams recovery of end of life vehicles is economically unprofitable. That problem exists already since 2012. Before 2012 importers of vehicles paid fees for the Fund for Environmental Protection which was later distributed for the recovery of end of life vehicles.

Since Serbia got a new Government in 2012, the responsibility for the environmental sector was integrated in the Ministry of Agriculture. Afterwards the market and regulatory conditions in the country worsened. Declining local scrap market combined with the integration of Environmental Protection Ministry into the Ministry of Agriculture a regulatory vacuum appeared which spurred entry of illegal competitors. Different measures are proposed by Scholz experts in the discussion during the conference: implementation and enforcement of waste management laws regarding EU standards especially the new EU waste framework directive, installation of an own ministry of environment or at least detailed responsibility for a task force within the Ministry of Agriculture or the Ministry of Economics, closing down of the illegal dumping sites and illegal operating companies in waste management.

German Scholz Group entered the Serbian market in 2001. Today, the company operates locally through Centar Group, the leading recycling company in Serbia. In 2013 the group processed over 200,000 tonnes of waste into secondary raw material with a turnover of Euro 66 million. Center for Recycling from Železnik, Serbia is part of the Scholz Group. This limited liability company for recycling metal was founded in 1980 as a public company which was privatized according to the law and registered. Currently the owners of the company are Scholz Holding GmbH with 15 per cent and CIOS Ltd. with 85 percent share.

Photos: Kummer:Umweltkommunikation GmbH