How can a sustainable construction industry rise to meet the growing demand for recycled aggregates?

Article submitted by Ross Lindley, Head of Business Development, Siemens Financial Services

The construction sector, quite understandably, seeks growth following years of somewhat lacklustre performance. It is also true, however, that the sector (like many others) relies on finite natural resources. The raw materials mined from the ground for use in the construction and civil engineering sectors are inescapably finite. How, therefore, can the sector seek growth when it relies heavily on finite resources?

The answer is multifaceted but a key component of a sustainable construction sector is recycling.

The role of recycled aggregates in construction

Residential, commercial and infrastructural building all rely on aggregates– hard granular materials like crushed stone, sand and gravel. Transforming building waste into resources allows previously used materials to become viable for new construction.

This kind of recycling diverts building waste from landfills and forgoes much of the greenhouse gas emissions associated with the extraction and processing of new aggregates. It may also reduce emissions from haulage as recycling locations may be closer to construction activities than the original site of aggregate extraction.

In an era where sustainable construction is no longer a novelty but a necessity, the demand for recycled aggregates is at an all-time high. A 2022 report by the Mineral Products Association (MPA), an organisation that represents firms supplying over 90% of the UK’s aggregates, found the total volume of recycled and secondary materials had reached a record 73.5 million tonnes per annum. This represents over 30% of the industry’s overall aggregate demand.

Pressures on plant investment

While used aggregates are a promising wellspring of secondary materials, they nonetheless need to be processed to become fit for purpose. Different processing methodologies yield different recovery and reusability rates.

CDE Group, for instance, is a leading wet processing plant provider, and a valued partner of Siemens Financial Services (SFS). It leverages the latest washplant solutions to deliver greatly enhanced recovery and re-usability rates when compared to dry processing. Indeed, recovery rates are often between 80 and 100%^. compared with dry processing. Moreover, the group’s investment in sludge dewatering systems allows more than 95% of process water to be recycled.

Such companies, and the technologies at their disposal, play a pivotal role in perpetuating a sustainable construction sector. However, the demands of the present economy place increased pressure on companies seeking to invest in new or improved plant.

While inflation rates have come down, falling to target levels of 2% in May 2024, prices continue to rise, albeit with reduced velocity. Moreover, the construction industry has seen a substantial uptick in input costs, driven primarily by labour costs. The Bank of England base rate remains elevated and shows no sign of falling to former levels in the near future.

The net result of this is that companies are understandably reticent about investing much-needed working capital in depreciating equipment and potentially compromising their liquidity

Fortunately, the specialist finance sector is positioned to ease investment in highly productive recycling plants, offering flexible financing solutions.

Enabling next-generation plants 

The partnership between SFS and CDE Group is a useful case study of how the specialist finance sector can rise to meet the demands of an innovative, sustainable construction sector. Even when the economic landscape seems perilous. Siemens technology and components are used globally in various construction and recycling assets including those used by CDE Group products. These include wash plants, crushers, screeners, conveyor systems and concrete batching plants. This provides the financial services sector of Siemens an insider view into how the equipment works and how it will deliver in the field. This insight simply will not be available to most prospective lenders.

This in-depth knowledge enables Siemens Financial Services to provide tailored financing solutions that best fit the end clients’ needs whether that entails meeting their specific payment terms or minimising demands on cash flow.

This is critical in the company’s role as an intelligent financing partner, allowing CDE to concentrate on the required plant specification, knowing they have a turnkey financing solution available. This makes Siemens uniquely positioned to support CDE in their vision to “Empower our customers to transform waste into valuable resources through innovative co-creation, laying the foundations for the circular economy”.

William Melanophy, Head of Business Development – UK and Ireland, reflects on the partnership and how it empowers them to focus on delivering operational quality without endangering cash flow:

“The strength of CDE’s reputation in the market and our successful delivery of these solutions over decades, has allowed Siemens to confidently put financing structures in place.

“These financing arrangements mean minimal upfront payment from the customer. SFS has also managed to tailor arrangements so that the repayments don’t start on the equipment until the plant is operational. So, from a customer perspective, that’s great. They’re not making repayments until the equipment is generating revenue.

“Ultimately, the strength of the partnership between SFS and CDE builds hugely on our track record – 32 years of successful installations. And the icing on the cake is that we actually incorporate Siemens equipment in our solutions. Mutual advantage – mutual success – and most of all, a joint contribution to the customer’s success.”

Partnerships like this demonstrate the opportunities that abound in the field of aggregate recycling. As the 2050 target for nationwide decarbonisation approaches, companies that deal in aggregate recycling can expect to see a substantial uptick in demand. Specialist finance partners are therefore poised to leverage their industry knowledge to provide the structures that make new generation plants easy to acquire, supporting the growth of the sustainable construction sector.