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2020 / 2021 Edition

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Sustainable Use Of Resources For Aggregate Production In England

A summary of a WRAP aggregates project

By John C. Barritt, WRAP aggregates technical advisor

Aggregates are produced from primary, recycled and secondary material resources. The objective of this project was to provide WRAP with a better understanding of the market for aggregates and the opportunities for making the best use of these different resources. The project involved the development of an economic model that would allow consideration of how different factors influence the sustainable use of these different materials.

Although the amount of recycled and secondary aggregates being used in construction has been growing consistently, the majority of this use has been for lower-value applications. As primary aggregates have previously met this demand some quarries are no longer able to sell all their production. Many recycled and secondary materials currently used in these lower-value applications can be processed to meet higher-value specifications and WRAP wanted to understand how the production of these new products would develop and what impact this would have on primary aggregate producers.

The project team decided that the economic model could be developed from existing information on aggregate demand plus additional information on all materials, covering resource availability, production costs, haulage, waste disposal, and market prices. The model was designed to show how the supply of aggregates could change over a 10-year period, providing information that will help inform the direction of work to promote use of recycled and secondary aggregates and assist aggregate producers develop business plans.

Developing the model

To provide a practical scale for the project it was necessary to identify a representative market area in England, resourced from adjacent primary aggregates and with an established recycled aggregate infrastructure. The former West Midlands county geographical area was chosen, in consultation with the project’s participants, as it was considered sufficiently representative to help inform a national understanding.

In addition to the identification of a representative market area, it was also necessary to agree resource and product groupings that would ensure a consistent approach to data collection.

These key groupings, agreed by the project steering group, are outlined in tables 1 and 2:

To provide a broad framework for the data collection and model development it was necessary to consider the main elements and variables within the market. The following four key variables were identified:

  • supply (resource availability, including materials currently disposed of)
  • costs (aggregate production and haulage)
  • market price (product)
  • demand.

These headings provided a basic framework for considering how the market operates, but in order to develop a mathematical platform through which the various interrelationships between these key variables could be explored, it was necessary to make assumptions at the following levels:

Market assumptions: for example, on what basis will the model make decisions on which resource will be used to meet demand for a certain product?; and to what extent will acknowledged historic trends be assumed to continue into the future?

Model parameter assumptions: for example, what are the key components (model parameters) of each of the four variables?; and how will the model recognize the impact on the market of each of the model parameters?

The following section introduces the assumptions adopted by the model on market assumptions.

Market assumptions

Economic competition
The economic model works on the basis of economic competition between the different resources that could potentially be used for the production of aggregate products. Economic competition in the model is based on the notion of ‘net price’, which is defined as:

Net Price = Price – Costs

Since the market price for each product is assumed to be equal regardless of which resource it is produced from, only the difference in cost determines the competitive advantage/ disadvantage of one resource compared with the others.

Resource competition
Crushed rock and sand and gravel are the primary resources competing in the market with a variety of recycled and secondary resources. Demand for aggregate materials will be satisfied by those resources that can meet demand most cheaply. Over time, this will lead to an increase in the use of some resources to meet demand for specific types of aggregate product and a corresponding decrease in the use of others.

The use of secondary materials in the market is not calculated by the model but is assumed explicitly. The main reason for this is that the use of secondary material is not expected to change dramatically in terms of its size or the range of products produced over the timescales covered by the model. Because of this assumption, the market behaviour of secondary materials is not studied by the model and hence data for parameters that determine this behaviour, eg processing costs, were not required.

The use of recycled materials in the market is calculated by the model but trends in the availability of the resource over time have been set in line with WRAP projections. These take into account a range of factors that WRAP consider will influence the potential for growth in the recycling of CD&EW, including regulation, industry standards and technology (eg, DEFRA changes to waste-management licence-exempt site regulations – increasing costs and tightening regulation; the availability of competitive aggregate washing plant with water-recirculation systems; and the introduction of European Aggregate Standards that do not discriminate against recycled and secondary aggregates); and the WRAP Aggregates Programme (eg providing capital support for processing infrastructure; and providing training and information across the supply chain on specifications, standards, planning, waste regulations and procurement).

The projections have been used to provide a limit for the volumes of recycled aggregate that can be recovered from CD&EW for a given year. This limit increases year on year up to an absolute limit for aggregate recovery. Within these limitations recycled aggregate competes freely with the other resources across the entire product range.

Equilibrium
Equilibrium is one of the fundamental concepts of the model. The market is assumed to ensure that supply always meets demand. Since the supply of secondary and recycled resources available to be used in the market is limited, it is assumed that primary materials will meet any demand that cannot be met by these resources. National and regional guidelines for aggregates provision for England (ODPM, 2003) ensure the primary material will be available to meet aggregate demand up to 2016, ie the time period considered in this model. This ensures that the assumption of equilibrium is a realistic one.

Time
The model shows the state of the market for 12 years. The base year is 2004, which in the model is called year zero. The model will calculate the changes from year to year and does not take any changes within a specific year into account, ie time in the model is not continuous but discrete.

Data collection

Through discussion of each of the four market variables the project participants were able to identify the constituent components of each (model parameters). For example, the costs of production for primary materials can be broken down into fixed and variable processing costs, haulage costs, and the aggregates levy. These parameters, in conjunction with the agreed resource and product groupings, provided the framework for the data collection.

The primary objective of the data-collection process was to establish ‘representative’ input data for all model parameters. Efforts were made to gather the most accurate data available, with a range of sources utilized. However, owing to the nature of the modelling process, data was required for parameters which are not commonly recognized or recorded in the operational figures of aggregate producers. As a result it was necessary to draw upon the market experience of aggregate producers and the project steering group to develop appropriate estimates. The key data sources utilized by the project are summarized in table 3.

Results from the economic model

When running the model in line with the default settings the following shifts in resource use occurred between 2004 and 2016 (see graph below).

Conclusions

The following key observations were made by WRAP in response to the model results provided.

  • Recycled and secondary resources will increasingly be used to meet aggregate demand for a broader range of aggregate products with consequences for primary aggregate production.
  • Crushed rock producers will regain market share for low-grade fills and scalpings and will have to increase production of low-grade fills to meet market demand, changing the output profile of crushed rock quarries. It is possible that for some producers scalpings may remain uncompetitive due to distance from market.
  • Crushed rock producers will see a change in their product sales profile leading to a reduction in average selling price and, potentially, an increase in the production of crushed rock fines (dust) above market demand.
  • The growth in the use of recycled and secondary resources for aggregates is finite and expected to be reached within the period of this study.
  • The sustainable use of primary resources, specifically crushed rock, will require a change in the output profile of crushing processes through a combination of changes in practice and processing equipment to prevent an imbalance of production and sales. The production profile of crushed rock will also have to be capable of greater flexibility to be able to optimize average selling prices and minimize excess stocks.
  • As recycled resources increase their market share for sub-base, production of sub-base-type materials at crushed rock operations may exceed demand. If, as assumed in the model, this material is further processed into higher-value graded aggregates, stocks of dust will rise.
  • Capital support may be needed to support investment in washing plants for the processing of crushed rock fines (dust). In some locations similar support may be required to support the processing of scalpings.
  • There is a need to develop crushed rock processes that minimize the production of dust.
  • Where financially viable, the investment in washing plant for excavation waste can result in the production of a range of higher-value recycled aggregates.

Full report

WRAP’s project contractor for this report was CIRIA and the economic model was produced by their project partner Enviros. The full report is available for download from WRAP’s AggRegain website publications.

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