Good morning, and welcome to TOMRA's headquarters in Asker to our Capital Markets Day of 2018. We are very happy to see so many of you have traveled to come here and see us here in Asker, and also a warm welcome to our viewers on webcast. I am Elisabet Sandnes , and I will give you a quick introduction of what you will hear and see here in Asker today. We have divided the day into three sections, where the first section will be before lunch, where we will talk about the market opportunities for TOMRA, the opportunity picture, the trends we're seeing, and in particularly, address the topics that are for sensor-based sorting, or the attractiveness for sensor-based sorting, or sensor-based technologies. We will also address the topic of future of food before lunch.
During the lunch, we will run product demonstration. We will run some product demonstrations outside this room, where lunch will also be served, and we will also run product demonstrations inside the demo center in the first floor. We will divide you into groups, and you will get more information on that when we approaches lunch. After lunch, we will talk about how we would like to go to market, how we would like to do this, so our strategic direction and basically our road to success. We will run two Q&A sessions, one prior to lunchtime, about 15 minutes. Also, a second Q&A session at the end of the day, to wrap up the session. The session today will be webcast, but it will also be available in a recorded version.
To open our Capital Markets Day today, first speaker will be Head of the TOMRA Group , Stefan Ranstrand. Stefan has led TOMRA since 2009, and he has led the company on a transformational journey, bringing together loose entities of company together to build a strong brand under a unified name of TOMRA. Stefan leads TOMRA with the belief that it is possible to create economic value and also create a social impact. The vision and mission that he has set for TOMRA clearly states this. Stefan will tell you how we will take TOMRA to the next level. Please, welcome Stefan Ranstrand.
Thank you, Elisabet. Isn't it astounding that we can live in an economy where we continue to destroy our environment, generate waste that is ending up on landfills, in oceans, and at the same time, we can build high-speed trains, Internet, and data, big data corridors of information that is truly so transformative? For me, it is like we see it, but we don't want to see it. It's there, but if we don't talk about it, if we just close our eyes, maybe it goes away, but it doesn't. And you know all of that, that this is now happening. Just looking to the period between 2010 and 2025, the global waste volumes increases with about 70%. At the same time, we have a tremendous tendency to see how people moving to cities, the urbanization.
The urbanization leads to that a lot of waste is generated in a very small, confined area. The problem doesn't go away, it becomes more visible, and the world is running after this. We are not really ready. We don't have the infrastructure. We could see the big effect now when China stopped allowing the import of waste, and suddenly many countries are sitting in front of a waste dump. We see that happening. We want to show you a way today, how with technologies and the TOMRA smarter systems, there is opportunities here, not only for TOMRA, for the industry and for humanity. Another important industry, a very large industry, maybe the biggest in the world, we're going to talk about today, is the food industry.
You know, by 2050, we will have to produce something like 70% more food than we do today. We cannot expand the farmland by 70%, because then we will cut down the Amazonas and the Indonesian jungles, and we will have no oxygen to breathe. We have to do it differently. We need that in order to feed the planet by 2050. Knowing that already today, some 800 million people are under starvation, is another area where we really see we need to do something differently. An apple like this, in the modern world, this was grown in Norway, but in the modern world, this might also be consumed in, say, New York or in Shanghai. When you look at this apple, you will see, it looks delicious, you will see the color, you will see the size.
But with our technologies, we can do so much more. We can look at how ripe is this apple, meaning how long could it be stored, so that we send these apples to the market that are ripe for consumption at the time when they're called for, and hold back the other ones, and with that, we can reduce waste, because sending out an overripe apple will lead to that we are wasting food. We can also meet new consumer demands. An apple like this might be worth $5 in Tokyo, because we tell them, and it's guaranteed sweet. We can see that with our sensors. So doing things like this, we will be able to contribute to reducing waste. We will also be able to meet new consumer demands that was not possible in the past.
We will also use the data out of our systems to improve farming, because in order to feed the world by 2050, we will need to improve yields, and using the big data from our system will help that. We will need to reduce waste, and there are probably some other areas, but these are at least two areas where we want to show you how we, with our technologies, can create a better future. For me, what is alarming is that we see the problems with the environmental destruction, if I use that word, but it seems that only the people, the idealistic people, the NGOs, and these people who are most socially oriented, really do something about it. The industry seem to be passively looking into and rather be taking a reactive mode. We at TOMRA would like to change that.
We want to become proactive, and we want to show you what we can do out of that. Many world leaders, under the head of United Nations Environmental Program, have set out the path for the future. They have defined 17 Sustainable Development Goals . If we deliver on them, we will make the planet a better place. We at TOMRA take this to our heart. We are also zooming in on them, and we think that if every company were to embrace these targets better, and, and integrate them in their business, we can contribute to a better planet. We will show you how we do that today. Going from the eighteenth century, roughly, we can say, when the Industrial Revolution started, we have gone through a number of different, stages of the industrial, evolution.
But it has been following, we can say, a very linear business model, where we had unlimited access to resources. We just the model of just consuming, pushing products, and wasting the products has been working until now. But with the new situation, where we have some 10 billion people, you know, in the future, urbanized world, and a very rapid growing economy, we all know it doesn't work anymore. We need to go into a more greener stage of development. And if you look at some of the trends coming out of that, where we talk about urbanization, we talk about a global or climate change, we talk about smart cities, et cetera, there will be opportunities.
We have looked into that, and we see for TOMRA there's a lot of room to play, to create, economical opportunities and a better environment, and that is what we're going to show you today. Let me start talking briefly about one sector, which is the waste sector and how we can transform that one. You see, today, let's just take plastic waste. There is about 78 million tons of waste being generated every year. 32% of that waste is ending up in the nature with a social cost. We don't know how high it is, but I think we can all understand that if we kill our oceans and the marine life, there is a huge social cost linked to that. 40% of the waste today is going to some landfills.
We are just throwing it off, ignoring the fact that in the future, someone else have to clean it up, probably our children, but who cares? It's not our problem for today. We just throw it on landfills. Some 14% is being burnt, and at least we generate some heat value out of that, but the question is, what are the social costs? What are the effects of the toxic gases coming out of the system? Why don't we make a difference here? Why don't we recycle? And we can today, with the technologies of the smart TOMRA system, collect, connect the technology of collecting waste and sorting and then processing it, we can generate perfectly new materials.
A bottle can get a perfect new life, and not only bottles, we can take a lot of materials to transform it into that. By doing that, we can unlock a lot of values in the industries, and I will show you numbers of that very soon. But it requires the use of innovative technologies, it requires collaboration in the industry, and it requires support from the government to set the right regulations. We see that things are happening here, and we are ready to support that journey. So we really want to go away from this linear concept of consuming and wasting, to go from waste and transform that into a new product. That's what we call a circular economy, and that is what TOMRA has the technology and the ambition to drive.
If you look into the plastic sector alone, so think about all that plastic that has been ending in the nature today, in landfills, being burnt, and actually the recycling we do today, where we not even reap the full potential out of that. If we were to calculate the potential for the industry of doing it right, and we have only cut it by half here, there is a potential of an annual industry value of $50 billion-$80 billion. That's annual. So I tell you, I'm convinced that if we do it rightly, we can actually, thanks to that value, we can generate so much investment potential that it can pay for the infrastructure needed. So this is what we want to show the world, how that can be done, and we are ready to do that now.
We have the technologies. I talked about this apple before coming back to the food sector. You know, the consumers are getting more and more demanding. They want different tastes, different sensations. They want the blueberries every day, 365 days around the year, which is actually not natural for a market like Norway. We traditionally have blueberries for maybe a few months, or a couple of weeks every year, but now, we want it all the time. That drives a very large and complex supply chain in the food sector. In order to meet the demands for future food with increased yields, reducing waste, and meeting these ever-increasing consumer demands, you will need to use innovation.
You will need to automate the tech in the value chain, and you need to have much better monitoring tools to monitor what's happening and use the data to improve. And that's something we are definitely seeing as core of what we are doing. And, you know, there are a lot of new technologies emerging out there. Internet of Things might not be the newest, but blockchain, artificial intelligence, and machine learning, these are all core of how we develop our new systems, and I'm sure when Volker and Harald come to talk to you later, you will see exactly how we intend to do that. The journey for TOMRA so far has been that we have zoomed in on a couple of big strategies or big trends. We see a urbanized world.
By 2030 already, 60% of the global population will live in cities. 75% of the global GDP will be generated in cities, so there is the, economic power. That's a very, clear area for us to zoom into. We have also realized the transformation happening through the digital economy. For instance, e-commerce, how that will transform the way people buy and expect maybe not to buy a kilogram of apples, but one or two apples, and they want them perfectly according to their taste, which the technology will have to help them do. So while we have looked into these long trends and zoomed in on the areas where we want to be leader, which is circular economy and future food, we have worked on the, our portfolio.
So we have divested areas where we see that are not fit for supporting our strategic area, and we have made selective investments, in particular lately in the food sector, so that we are fit to meet these future demands. We have also started working on strategic partnerships, and hopefully, you will see today how important the strategic partnerships will be for us going forward. So actually, TOMRA will transform quite dramatically in the years to come. If I look into our strategic horizons, you can see on this graph we have two strategic horizons. Today, we'll most or firmly talk about the first five years, where we demonstrate to you how we will do it in the first five years, and that's important because we need that value generation in the first five years to help us invest into the future.
But we also want to show you that beyond these five years, we have ambitions in our second horizon of this strategy period. So that is really where we are, and I hope you will see that how TOMRA need to transform from a traditional supplier, or you can call it a box pusher, where we sell and service products into a more holistic business partner, where we generate value for the industry and not only focus on selling our machines. Where we need to be thought leaders to show the world it's possible to make this transformation, and where we need to become a business shaper, where we create the right set of partnerships in order for us to lead this transformation and create demand for our products.
So that's really what we are planning to do here. And while I feel confident that we are capable, we have a clear idea what we want to do. We have a clear understanding of the near-term future, the coming 5-10 years, I would say. We have a long-term vision, and we have a past which tells us we are capable of delivering. We have been delivering about 14% growth year-on-year, in the period behind us. Equivalent good earnings development, and we are organized, with a stable and capable organization built upon 2 business areas. One is collection, and one is sorting.
So with that, I hope that you will get an exciting day, where you will see where we want to take TOMRA into the future, how we can meet the future needs, and hopefully, you will also feel that-
... yeah, we have understood what we need to do, and we have at least a concept for how to get there. Thank you.
Thank you, Stefan. We have dedicated the first part of the CMD to talk about the market opportunities within the circular economy. The second speaker of today is the Head of Sorting Solutions, Volker Rehrmann, and Volker has been with the company since TOMRA's acquisition of Titech back in 2004. He was the Founder and Managing Director of, Real Vision Systems, again, acquired by Titech in 2002. In 2013, Volker was appointed the Head of TOMRA Sorting Solutions, and he's also the group's Chief Technology Officer. Please, the floor is yours.
Thank you, Elisabet. Good morning, everybody. So circular economy, let's start with a very simple statement, a rather obvious statement: resources are finite. That's probably not new to you. That's probably something you're totally aware of, but why are you not living like that? It's an obvious statement. You don't need to be a mathematician to know that the way we use our resources of this one earth that we have, the way we, you know, just produce and dispose our resources is not sustainable. It's. I mean, come on, it's obvious to everybody. Still, we live in a way, all of us, completely ignoring this simple fact. This is simply not sustainable. We cannot continue like that. We all know this. If we are honest to ourselves, we all know this.
Still, we try to say, "Yeah, maybe next time, next year," but we cannot do it like that. We need a paradigm shift in the way we produce and the way we dispose our materials, our resources. We are convinced that this new system, a system where you minimize the input and where you minimize the waste, that this is about to happen now. You could ask, why now? This statement, you know, was true also 20 years ago, Club of Rome in the 1960s. You know, it's, it's not new. Why now? This is something I will will try to tell you, we will try to tell you, why we are convinced that it will happen now.
It, you know, it again, has to do with a little bit, you know, how we, how we humans are and how we observe things in the world. There are two fundamental things happening right now. There is a clear legislative push happening. I'll give you two examples of that. The first one is Europe, and Europe is probably most progressive here. Europe has given, just recently, new targets in, in, in various directives, landfill directives, plastics packaging directive, various of them, new targets, recycling targets for the years to come. And one of this is, for example, regarding plastics, but it's not only plastics. It's for plastics, it's for, for wood, it's for paper, so it's for all type of materials.
But plastics is maybe one of the highlights here because they have increased the target to 70%, which simply means that by 2025, in Europe, we need to recycle 70% of our plastics packaging at least. This is dramatic. This is a dramatic increase. The infrastructure is not existing now, so we have to invest into that. That's a legislative push. There's no way around it. So we have to do this. And it goes even beyond the plastics. It goes to landfill. I mean, from 2025 on, you know, European countries are not allowed to landfill more than 10% of the waste. Some of the countries are far away from that. So from this legislative push, it's given that alone in Europe, something really has to happen.
A second legislative push, which is very important in our view, is that China stopped the import of waste. Maybe we shouldn't call it waste because it was called import of raw materials, but in fact, China has taken on all the, you know, the last 20 years, 25 years, the waste from Europe and the USA. It was pre-sorted, so it was not just household waste. It was pre-sorted, some kind of, you know, metals pre-sorted, it was plastics pre-sorted, it was paper pre-sorted, but it was for into a quality that is very difficult, really, to recycle it. But China took it all. China took it all because they were so resource hungry, they had to take it, and then they made something with it. Low environmental standards. They made recycling out of it happen, but with very low environmental standards.
China stopped it for two reasons, because they have, you know, really problems with the environment, pollution there, and they also want to take care of their own waste streams. They have a lot of waste themselves, so they stopped it more or less from one day to the other. It's called National Sword, the program there. Dramatic impact to the rest of the world because we were used to send all of our, you know, plastics and paper and all that kind of pre-sorted, still very dirty, you know... We didn't have to care what happens to it. We thought, "Yeah, it will all go away. We just send it all to China." This is over.
This is over, and what's happening now is that we are sitting in Europe and North America, in particular, we're sitting on a lot of material. We're sitting on a lot of paper and on a lot of plastics, and what do we do with it? And suddenly, we have to take care of our own material. We thought it was nice, sending it to China. And we, you know, on the sorting side, sorting and recycling part of it, we see a clear effect of that this year. Because in Europe and North America, people have to invest in own capabilities to deal with the plastics. What you have to do with it? I mean, you have to upgrade it to a good quality that you can do something useful with it.
Now I come to a third effect, why we think a change is happening now, and maybe that is even the most important one. For the first time ever, and I'm personally in this industry for more than 20 years, for the first time ever, there is a clear market pull. There is a clear market pull, and that is driven by consumers. Because consumers want from their brands, from where they buy from, that they use more recycled material. And because of this pressure from the consumer, from this demand from the consumer, lots of those companies, consumer goods companies, have clearly committed to use recycled raw materials in their packaging, and they've given them extremely ambitious targets. I mean, you can just, you know, search the web.
You will find all of them out there with targets like, if you believe this would happen, I mean, unbelievable what would then happen. This material is not available on the market right now, so I doubt that it will happen to that extent. But what is really important is that there is a clear commitment. For the first time ever, the market wants recycled material in a quality that it can be reused, and it can replace virgin material, and that's the first time ever. And we are. I will show you later that we have been working a lot with many of these companies to show them how they can do it. Because it's not easy. If you want to replace virgin material with recycled plastics, recyclates, they need to be of excellent quality.
That is, was something we needed to develop together with our partners in the value chain. We have been developing this for many years now, five years. We believe it's ready, and you will see later today some examples of material out there, products made out of 100% household waste, recycled, as an example. So these two things happening right now, legislative push, very high legislative push in Europe, China stopping taking the material, together with a market pull for the first time, demand for recycled material really makes this change. That... And we are absolutely convinced that it will happen in the next years. I will now zoom in a little bit more into plastics, because plastics is really the biggest problem. I mean, to establish a circular economy, of course, goes for all materials.
For some material, it works already quite well. For example, paper, there are good systems for paper in many markets, separate collection, making new paper out of it. In several countries, this already works quite well. Aluminum works quite well. 90% of all aluminum in the world is already recycled. The problem is, many of it is downcycled to lower qualities, so there's also, you know, a higher quality step needed, sorting needed in the future, but at least it is reused. But for plastics, we are far away from that. Let's take a first look at, on the right side of the picture, because it shows the production of plastics. Plastics is the workhorse material of the modern economy.
The use of plastics has increased 20-fold in the past 50 years, and all projections are, it will double again in the next 20 years. There are only, you know, nearly $200 billion investment only in the US into new plastics manufacturing plants. So it will increase tremendously, no doubt about that, because plastic has so many good functional properties. It is lightweight, you know, it's easy to produce. It's actually cheaper to produce than many other materials, so there's a reason for that. But then let's take a look what happens then to this plastic. Maybe we all know this, but what really happens? Then take a look to the left side. It's a study, a report from the Ellen MacArthur Foundation, and Stefan mentioned it already in this, in his introduction.
This is only an example for plastic packaging waste. More than 30% of it leaks into nature, and it eventually ends up in the ocean or in our food value chain, everywhere. And if you ask me, why there is now a change happening also with the, for the first time, there is a market pull, a demand for that material, based on this consumer pressure there, it is because of the plastics in the ocean. Because that's how we humans work. If you're honest to yourselves, you know this problem has been around forever. We have known this forever, but we tend to ignore things that we don't see. But we cannot ignore this anymore.
Wherever we go, celebrities make nice pictures, you know, when they're out there on some nice, beautiful, exotic beaches. They make pictures on Instagram and show, you know, on these nice, exotic beaches, there is plastics all over. We see this all over where we go, plastics is in the ocean. That is what we think, it's what really driving this. We cannot ignore the fact anymore that the plastics, we throw it all away. 95% of all plastics packaging material ends up eventually on waste, on all the plastics material. On various parts, as we saw, you know? 40% is landfilled. Think about this, 40% is still landfilled. It has the durability. One of the nice properties of plastics doesn't help here.
For several hundreds of years, it will stay there with potential toxic effects. We burn 14%, and incineration is better than, you know, leaking into nature, and better than bringing it to landfills, but again, it's not the best way to treat with it. What we really need is a circular economy. We need to recycle this, these plastics. And as of today, only 14% is recycled. And if you really think about what is recycled there, 14% is collected to end up in the recycling process, then you lose another 4% in the process, and the majority of it is down-cycled. Low quality. But that does not work because there's not enough demand for low-quality plastics. What we really need is a closed loop, where we only have 2% right now.
Right now, only 2% of plastics is in a closed-loop recycling, and that we need to change. And that is where we are to help to change this. Let's take a closer look into plastic. What kind of different plastics are out there? I've said it, you know, plastics has really revolutionized modern life. We have plastic all over. You find it on all types of products because of its good properties, cheap, lightweight, waterproof, durable, you know, less energy needed to produce it. That's why you find it all over. Majority of it is used in plastics packaging, 40%, and that's where we will focus on in the first step, on the plastics packaging side. It has good properties, though. Don't forget it.
It makes our food safe, you know, by protecting it. So the idea is not to completely replace plastics. Wouldn't work. And if you then look at the various different types of plastics, majority of it is polyethylene and polypropylene. 50% of it together is made, is those called polyolefins, PE and PP. PET is only 7%, and the PET drinking bottles that we deal with at the moment in our collection business only make up 2%, 2%-3% of all plastics. So it's a small part. The problem is much bigger. The circular economy needs to happen for many more types of plastics and also for many more materials. How will we achieve that? How do we think we will achieve that?
There are basically three strategies that we all need to follow in order to make this happen. The first one is we need a redesign of the products, of the packaging products, the plastic products. We need to design them in a way that they are easier to recycle. Right now, we have, you know, varieties of plastic objects, you know, with lots of different multi materials. You know, I'll give an example. You have a PET bottle with a PVC label and a PP cup, and you name it. This is not good for recycling. It's rather clear.
We need more uniform type of packaging objects, less different types of materials, less multi materials, and more uniform parts and shapes, not so much smaller plastic objects. So a redesign is an important part of it. Another important part is, of course, reuse. The single use of plastics, not a good idea. And there's another new legislative push that's not decided, concluded yet. You might have heard about it, and Harald will speak about it, that the EU will bring up, and a special directive on single-use plastics. The way we use plastics for every, you know, the example of straws and, you know, small things here and there, that is not a good idea. So, there, we also should replace it with different materials.
But we should also reuse more, not always throw it away, these single-use plastics. Use it, throw it away. No, we also need to work there, no question. Both of these steps, redesign, reuse, are important. But the most important step is the recycling part. We need to develop a closed loop for plastic materials out there. And we, as TOMRA, really are at the forefront of this development. I told you, we have worked a lot with some big brand owners who, who are working on lighthouse projects with very ambitious targets to replace their virgin plastics by, by recycled plastics. We worked for many years developing a process, how to make it happen, how to make it work. If you look at the value chain, here on the right side, you see the typical value chain of plastics. It starts on the right side with producing plastics.
You have multi-billion-dollar companies producing plastics, making kind of plastic pellets. Those then you send to the packaging manufacturers, who make the objects out of it, the plastic packaging objects, that they then, you know, they make them for the brand owners, and then it's sold to the consumer. And this part of the value chain works very well. This one works very well. A lot of, you know, every year growing, growing tremendously. But when it ends up at the consumer, I showed you what happens. Most of it is thrown away, ends up in waste, in nature, in landfill, in incineration plants, and that part is not working well right now, and there we need to work. We need to work on new ways of collecting it.
We need to work on new ways, recovering it out of waste streams. Just a simple idea, put in some of our sorters in front of an incineration plant, and we can take out all plastics there before it is burned. You know, very simple, easily doable, no problem. Put it in front of landfills, easily doable. Recover it, new collection solutions, how we can with our technologies collect new material. Then you collect the material at least so that it doesn't end up in nature, leaking in nature, or on landfills, or in incineration plants. The next step is make excellent quality out of this. How do you make excellent quality out of this? From a high-level point of view, the process is very simple: wash it and sort it. That's what it is.
devil is, of course, in the detail, you know, to wash it really good, no smell, nothing, absolutely clean, and sort it really good because you need a quality that is 99.999%. You want to replace virgin material. We have proven in various research project and field tests with some of big brand owners that this is possible, and I will tell you a little bit more about that in the afternoon when we talk about the TOMRA sorting strategy. So we are convinced it is doable, and it will happen now because of the legislative push and the real market demand. The world wants it, the consumers want it. Thank you.
Thank you, Volker. Next speaker on the topic of the circular economy is the Head of Collection Solutions, Harald Henriksen. Harald started his career in TOMRA in 2004 on the technology side, and he was working in technology until he was heading up the North American entity of TOMRA in 2011 to until 2016, when he has been the Head of Collection Solutions. Now Harald will tell you all about how well the deposit market opportunity fits under the circular economy umbrella. The floor is yours.
Thank you. Yeah, good morning. Yeah, I will talk about the deposit opportunity, and then I will talk about the regulatory environment, so cover both topics before lunch. In a way, I will talk about the same trends as Volker and Stefan has covered already, but through the lens of deposit. And I can say already that we see more opportunities now than we have ever seen before, so it's a, it's a very positive outlook. I'll just come with some facts first. Every minute, around the clock, for the whole year, 1 million plastic bottles are sold into the market. It's amazing to think about, 1 million bottles. Every year in total, 500 billion plastic bottles are put into the market, and that's also an amazing number.
What we know is that just less than half of that is actually collected for recycling. And less than 7% of what is collected is recycled in a way that you keep the quality at a high enough level so that you can make new bottles or new plastic packaging again. And that's what, that's the important part, to be actually able to keep the high level and reuse it in the best possible way, instead of downcycling it, as Volker talked about. If you look at all the bottles, which every year is put into the market, glass bottles, cans, plastic, we talk about 1,400 billion beverage containers. That number is so big, so it's difficult to understand. But every year, that's actually sold to consumers on the market. TOMRA collect 35 billion.
That's, that's a big number, but it's only 35 billion when you compare to, to this number. You know, we usually say that we have 75% market share when you, when you count the number of reverse vending machines we have, and that's still the case. We have around 75% market share, but that's not really the way to look at this. We rather look at how many bottles do we collect versus how many bottles is available out there, and we actually collect only 2.5% of all the bottles, and that shows the potential we have going forward. Because... I will come back to that after lunch. What we want to do is to look at a lot of different ways of collecting the bottles. This is our future.
We will count the number of bottles we collect and not the number of machines we put out there, and I'll come back to that. So, if you look at what's going on right now, we. Of course, all the bottles which is not collected, where do they go? Both Volker and Stefan covered that. You know, they go to incineration, they go to landfill, or they actually go to the nature. They go to beaches and rivers and so forth. There was in 2017, there was a. What's called International Coastal Cleanup Day, where more than 100 countries participated, and they counted everything they collected during that day. And if you add up caps, bottles, and straws, then everything related to beverages was actually the number one item.
So, what's happening is that we are throwing away a very valuable material and making it into waste, and we throw it out on the beaches. So, this is, you know, you could say that the bottles is the symbol of a resource-inefficient society. Because these—I like to say that the bottle is not waste, a bottle is value. It's a valuable material. And then it's back to what Stefan said about, you know, the size of the financial size of this. If you actually can pump all this back into the society and into the economy, that's the future way of doing it, and that's why so many countries now talk about setting up circular economy strategies and policies for countries. More and more governments are doing that right now.
So what's going on is that, of course, you have a lot of consumer awareness related to this now. It talks about whales and dolphins, and plastic going into our food chain. Actually, microplastics going into our drinking water, and into us, into our bodies. NGOs like Greenpeace is working a lot on introducing of deposit systems. United Nations, G20, European Union has recommended the use of deposit systems going forward, and I'll come back to that. And you have the beverage distributors, the brand owners, of course, also taking a stance on this now, and we see a big change also on that side. So you just saw this picture from from Wolfgang's... No, from Volker's presentation.
Our current economy is far from a circular economy, so we have a long, long way to go to get there. I wanted to show this picture together with a couple of other pictures because I would say it shows the drivers, some of the drivers for a deposit system. One is that when a country wants to introduce that one part is they want to enter the circular economy. They want to do something with also the social cost of the system they have. They want to increase their recycling rates. And then there are other countries who are even stronger on the littering. They want to reduce the littering. That's the case in Australia.
That's actually their target number one, is that they're, they have targets related to reduction of littering because of all their beaches and all their tourists and everything. Another one, which we haven't touched that much upon, is that in Asian countries, actually, there is quite, quite high recycling numbers in some countries and on some materials, due to the value of those materials, compared to the income of several of the people living there. So the recycling is being done, but it's being done in a very unstructured way. Not organized, not automated, and all these small companies use chemicals, and you get problems with that. You get what's called secondary pollution.
So even though recycling is being done, you get a lot of pollution also entered into rivers and into the oceans due to the process. So that's why it's also a lot of focus on that, to actually improve the recycling processes and, and how that is organized and structured in the, in these countries. We know that a well-designed and well-governed container deposit scheme is the way to go to, to increase the recycling rates and to reduce the littering. So if we just look into some of the countries we, we know, and what sort of the main drivers behind these. We see, as an example, in Germany, where the deposit value is EUR 0.25, the return rate is as high as 98%.
In most of the deposit countries, where you have a well-designed deposit scheme, the return rate is higher than 90%. There are just small differences. It's from 90, 92%-98%. What's the reason for this? Well, the actual reason, the deposit value is the main driver here. You know, you can think about doing something positive to the environment and so forth, but that will really not drive drive awareness. You know, it could drive awareness, but it will really not drive you to do what's right. You need a financial incentive. We saw Germany, 25 euro cents. Other countries with good enough deposit value, you have good enough return rates. But you can here compare Michigan and Massachusetts, two American states. In Michigan, the deposit value is 10 cents, US cents.
Massachusetts, on the East Coast, the deposit value is $0.05. That's the only difference between those two deposit schemes. That shows how important the deposit value is. So in Massachusetts, it's actually 66%, and it's declining, while in Michigan, it's still a very, very good deposit system. You have also heard about Lithuania. So Lithuania had a return rate of 34% before the deposit system was introduced, and then after two years, very rapid adoption rate. It's up to 92%. So it's fairly obvious that container deposit system is what's needed to make this work. And then it's many ways to solve this. You can do it manually. You can do it with different kind of systems. In Australia, a couple of states is doing that.
They have bag drop systems. It's fairly expensive systems. We think by using reverse vending machines and automating the solution, you actually get so many positive values generated for the different stakeholders that that is definitely the way to go. I like to say that we have solutions to stop the plastic before it enters the oceans. That is very, very, you know, effective, well-governed, as I said, well-designed deposit schemes. You stop it, at least for bottles. In the future, we have plans also to take more than bottles. We like to expand deposit system to take more than only bottles, and we will work on that in several countries. It's all about other type of packaging as well, including other types of plastic packaging.
So, a reverse vending system, as I said, is positive for all the stakeholders, and in a regular setup, like we're used to here in Europe, it's usually also retail, which is part of this. So it's automated system is positive for the consumer. It's fast, it's efficient, you get your rewards immediately. It's positive for the retailer. If a retailer really invests into the best solution, that will generate foot traffic. That will be a competitive advantage for that retailer. That retailer can really increase the revenue in the store. So this is not only a cost for a retailer, it's actually a profit center in countries where the deposit scheme is made in a way that the retailer also get a fee per bottle. And that's important. Not a lot of retailers see that.
Also, an automated system improves the integrity of a deposit system. In some systems, it's based on weight, and then you can have... You will not have that high integrity in the system, because you may have water in the bottles, you may have shrink. But in the systems where we participate with our machines, we count every bottle. We identify and count every bottle, so the integrity and security in the system is a lot higher. And that's important, because it's a lot of money going through a system like that. Only in Germany, it's more than EUR 5 billion being handled through our machines, and then it's important to have the right software and the right integrity in the whole system. And also, of course, for the environment, we collect, we sort in the machines, and we compact.
And that's also good for the environment, that you actually manage to take the air out of the bottles before you transport them. So it improves the logistics in the whole transportation chain. And there are trends, which is also typical for what, what we do, not only related to circular economy, but also, you know, on the, on the deposit part. And one is the consumer trends. We see that, of course, here, it's, it's different from country to country, but consumers like more and more to shop online, also to shop groceries online, and that will, according to the trends we see, also increase going forward. I think in Germany, it's like, maybe close to 2%, below 2% is doing that.
In the UK, it will, in the next couple of years, be around 7.5% of all the people living in the UK, then shopping online. London is, of course, a big driver for this. In South Korea, it's more than 10%. I meet people in China, they haven't bought groceries in a store in more than a year. They order online. They don't go to stores anymore. They shop online. And that's something we have to take into account. We have already developed solution to be able to handle bottles also in an e-commerce setting. And you will see that downstairs during lunch, for those of you going to the demo, this bottle collection solution we have. That's also developed to be able to have, to handle this channel, which will be growing going forward.
Also, on the retailer chain trends, there are changes going on all the time. You get larger and larger retailer chains. You know, you have consolidation. But at the same time, the size of the stores is becoming smaller. So the big hypermarkets, which was very, very popular many years ago, is about to disappear. I remember when I was in the U.S., we had a big customer called A&P, Atlantic and Pacific Tea Company. At one time, that was the biggest retailer in the U.S. They didn't manage that transition, so they had these really, really large supermarkets, hypermarkets, where they had a lot of inventory, and they went bankrupt in the end. So, you know, most companies manage it, but not all of them. Then you also see on the material trends, there's a lot of talk about biodegradable bottles.
Those have to be. If that happens, we don't really think there's a big big future for that, because it will also sort of destroy the quality in the recycling chain, but those will also have to be collected. And what's bad in a way with a biodegradable bottle is that you and I may look upon that as waste again, and the littering will increase. But we want to look at the bottle as value, and then collect it and recycle it. And then we have the stakeholder trends, which is very visible now, and I mention it, and I will also come back to it, with all the big big beverage companies that want to become, you know, they want to be proactive, they want to be in a leading position on what's going on.
So, a lot of trends. We know about the trends, we are prepared for the trends, but we also see that some of these trends are having an impact on what we're doing right now. TOMRA has always been used to selling reverse vending systems to retail, so that's been our customer. So we sell the machines, we sign a service agreement, or we do ad hoc service. But if you look at the latest three markets, Lithuania, New South Wales, and Queensland, those three markets are very different in the business model, because we do the investment of the whole infrastructure. We own the machines, and we own the infrastructure. We do the service, and we pay for all that, and then we get the fee per bottle we collect.
And that's a really, really good system, because that also brings TOMRA in a closer relationship with the consumer. Because more bottles through our machines will grow our top line, and it will also be a lot better for the environment. So instead of just pushing boxes to retail, we are part of the actual process, and we drive the process. And I will come back to that, how we like to do that in addition to, you know, the financial incentive, which is in place in a system like that. So, yeah, just to emphasize that, it. Closer contact with the consumer, more upfront investment, but it's a win-win thing, where more bottles collected is good for the top line. I think also related to that, we will be a stronger promoter of behavioral change, and we see that in these countries.
In Lithuania, it's a return to retail, so we, the retailers participate. They have our machines, the most of the machines are outside. We have built buildings for the machines, we also invested into that. While in Australia, the retailer does not participate, so that's a totally different system. I think that's probably it for this session. If we then go to the regulatory landscape. This you may have seen before, but this is the current setup. So, we have 10 states in the US, which has deposit. All states and all countries have deposit, have different deposit schemes. Every scheme is unique in a way. There are always some differences, and that's, of course, important learnings from us that we have along the way.
Most of these schemes started up in the 1980s and 1990s, some in the 1970s. As I said, 10 in the U.S., most provinces in Canada. Only one province, Quebec, has return to retail. All the other ones has return to depot, and they take back a lot of bottles. We have now, also with our newest technology a couple of years back, also installations in British Columbia, in Alberta, in New Brunswick, which we haven't had before, so we also entered those provinces now. You have 10 European EU states in Europe, and then 4 states in Australia. It's been a fairly slow adoption rate earlier. You know, as I said, the 1980s, 1990s, and then we had the national deposit on one-way containers in Germany in 2006.
It was slow again for 10 years until Lithuania, and then now it's starting really to ramp up. So we see a big change, and I'll come back to that. So Volker mentioned this, the European Commission in May this year, they came with a Single-Use Plastics Directive . It's a proposal. It will be discussed. The discussion is ongoing now between the Parliament and the Council. It's expected that this will be finally decided in April, at the latest May next year. But what it says is that the target is to achieve 90% collection. So it's not a recycling rate or anything like that, it's actually the collection rate, 90% of collection of plastic bottles before 2025, and they also recommend the container deposit scheme.
And we know, when you saw on the one of the previous pages, that the container deposit scheme is actually the only way you can achieve collection rates as high as 90%. So what this directive says in addition to that is that single-use plastic, you have some use of the plastic that you need, which is a bottle, as an example, and then you have other items which actually can be banned: cutlery, straws, other things which can be replaced with other materials. And it's really crazy, you know, as Volker said, plastic is a really amazing material. It's made to last for 300-500 years... Still, we make products, which is intended to be used five minutes or 30 minutes, and then be thrown away.
This is totally sort of misunderstanding of how what was the reason behind plastic. Yeah, so if we go to the next one, beverage producers, we have a good example here. Actually, before, just before European Union or the European Commission released their proposal, the European Federation of Bottled Water Producers, they came with their vision for the future and their targets for the future. And they say that, "Bottled water, we will have the target on all companies being part of this European federation to collect 90% of the bottles. In addition, before 2025, we want to have more than 25% rPET in our bottles, recycled PET." And that's the way to go. That's a very, very good target. And they also say: We want to collaborate.
We want to have partners in this. We want to innovate. That's exactly what Stefan talked about. That's the way to set up a, you know, a future sort of circular economy type of approach. You cannot do that alone. You need to put companies together, you need to partner up, you need to be bigger than what you are yourself, to be able to achieve this. And in addition, you need to make something which is engaging, and that, that's what we are talking about. Also, when we count the number of bottles we want to collect, of course, we have to bring awareness to the consumers, and we have to make it even more engaging than what it is today. So, a deposit scheme, how is that made up?
You know, it's usually a fairly long process to be able to get the deposit scheme in place. It starts with a decision from the government, a government in a country, and then usually there's a consulting period, where in some cases, the government or the EPA, a part of the government, Environmental Protection Agency, they design their scheme, their deposit scheme, and then they send it out, and then they ask for input on it. Some other countries may not have done that work or gone into that detail, and then they ask for input from the public or from different organizations, from different stakeholders. Then they make a draft legislation and draft regulations.
And then that is discussed, and then you get the final set up, a final legislation, final regulations, and usually in Europe, you also need... You're allowed 12 months to implement the scheme before the commencement date, and this is usually how it's done. It's a lot of stakeholders in a process like this. You have retailers, you have waste management companies, recyclers, technology providers, NGOs. All these participate and give input. And we also, in all these cases, give input, because we have the experience since 1972, and we know what works. A system is made up, and that's why these systems are different from countries to countries. You know, it's made up of what kind of materials you want to be, to have as part of this, what kind of products, what should the deposit value be?
That may, may be different from country to country, depending upon the, the income level in the country, depending upon the sales price of the bottles. Should the retailer participate? In Australia, as I said, they decided that that should not be the case. You have the financing of the whole scheme. How should the total financing be? You know, so it's, it's rolling out a, a whole infrastructure and then deciding on how to set up that scheme. Should it be penalties if the scheme coordinator, the, the organization running it all, is not delivering on the actual targets, which input, is put in place? So it's, it's many, many things which is, is being discussed.
So what we see is, you know, I said it's more opportunities than ever right now, and we know that all European countries are discussing this now. They are discussing how will we, in the future, before 2025, how can we—what can we do to be able to satisfy the new targets that will be agreed upon in May next year? What kind of system should we put in place to be able to actually increase the collection rates to 90%? We have decided to focus on the three most tangible opportunities right now. That's Western Australia. They have decided that they will introduce deposit in early 2020. They are currently looking at the implementation in New South Wales and in Queensland, taking the best out of those.
They've also been to Europe to look at, look at different setups in Europe, and that's what every country does. They, they travel around, and they, they try to get input from, from systems all over, and then pick the best. They all want to have the best system for that country. Western Australia has 2.5 million people, 75% lives in the Metro Perth area, and then you have very rural areas, and they have to take that into account to be able to make the best system for them. The consultation period has been, it's ended. We have given our input together with a lot of other organizations. And then you have Scotland, with 5.5 million people, more than 2 billion bottles. They have firmly decided to go for deposit. The consultation period ends next week.
They actually have come out with a fairly detailed scheme and asked for input on that scheme. So they have recommended four different solutions and asked for, you know, pros and cons related to each of those. And they aim, they have a lot of sort of focus areas in their system. They want to increase the recycling rates, reduce littering. They want to have a, an economic positive effect out of this, and they want to change behavior in the country. So they actually want to change behavior on their environmental focus in the country, based and that's why they also want to introduce a deposit scheme. We estimate that that startup will be a bit later than Western Australia, during the summer, 2020. And then we have England, where the environmental minister, Michael Gove, has stated that they want to introduce deposit.
55 million people, more than 20 billion bottles annually, so it's a huge market. We believe that Scotland and England will be return to retail markets, but it's not finally decided. You know, the rest about the markets will really be speculation, so it's a bit early to state, you know, how we believe it will look when the implementation is about to be done. The consultation period hasn't started yet. We expect that it will be started before end of the year, and we also expect then a start-up in 2021. Maybe not as early as we said here, but it could be that early. Could be earlier, it could be later. It's a bit hard to say. But these are the most tangible opportunities right now. Thank you. That's it from my end.
Thank you, Harald. So we have two topics before the lunch. So, we have discussed now the circular economy, and now we will discuss the future of food production or the food universe as such. Before I welcome Volker to the floor, we will run a Q&A session after this session, or after this presentation, and then after the Q&A section, we will have some lunch. So please, Volker, take us away.
Thank you. Yes, completely new topic. Away from circular economy to the future of food. Although there are some similarities when you think about sustainability of it. Let's start with some food for thought. Stefan mentioned it already, by 2050, we will be 10 billion people on this planet. And feeding this planet will become an increasingly more challenging task, no doubt. At the current yield levels, we will only be able to feed half of the world population by 2050. So it's clear that something has to happen here. So it's a good place to be. As long as the world population grows, there's more food needed. Still, 800 million people go hungry every day. And if you consider that 33% of all food produced is wasted, there is also something wrong in our food production system.
We waste 33% of all food produced, and still 800 million people go hungry, go hungry every day. Emerging markets are getting wealthier, so consumers will demand more food, they will demand different food, they will demand healthier food. We think that there is likely more change happening in the food industry in the next 10 years than there has been in the past 50 years, because of these challenges that are ahead of us. And a lot of this is driven by the consumer. Consumers today are more empowered than ever. They have new needs, new demands for foods, and these are just some examples of the new demands that are out there. They demand more local, more fresh food.
You see the examples here on the left side, more fresh, local salads, greens, but also fruits, apples, berries. More healthy food. Another. A good example of more healthy food is, you know, eat less fries and eat more nuts. Eat more nuts, eat more berries, so-called superfood, that is healthy food, for you. There's also a trend that will happen in the next years, that there will be healthy food in terms of food with a function, food that is somehow given an extra healthy function for you. Another new trend happening. It might be even personal diets. As I said, the consumer dictates everything here. You will get food specialized to your personal needs. There's a lot happening on demands from consumers on traceability. We want to know where our food is coming from, because it's all about trust.
Trust is one of the key purchasing drivers for us consumers. We want to know who has grown it. Would be nice to know. And those of you who prefer or like wine, good wine, I mean, you do it already. I mean, you know where to buy your wine. You buy your wine from your preferred producer, the preferred grape, maybe even down to preferred hill where it's grown.... Huh? Why not see similar things? Those things will also happen on the food side, that you buy your apple from a producer you know. Maybe you have visited him during your vacation in New Zealand, something like that. So, these trends also towards traceability and sustainability, will all happen, and a lot of this is driven by technology.
These trends will really push the traditional production towards innovation. Think about traditional ways of farming. I mean, we all probably know it from our young days. Small farms, very labor intensive. We see this way of farming still a lot in emerging countries, where you have really small farms, not very efficient, with a lot of, you know, labor. You achieve not the best output of your production in the end. And because we have to feed an ever-growing population, and as Stefan mentioned, our land cannot grow, we have to increase yields. And for that, we need technology. And there is so much happening right now in this field. You probably heard about the terms precision agriculture, about the terms AgT ech. So much money is going into this area, into this field.
Billions of dollars are invested into this. Newest technology in the way how we produce our food. We have to because we need to get higher yields, but it's also driven by, you know, a more and more difficult way to access people for this work. Nobody wants to do this work anymore. It's also, you know, understandable. Think about, you know, harvesting seasons for berries or apples. They sometimes are only or cherries. They are three weeks where you harvest, where you really pick them. In these three weeks, farmers need thousands of people, but only for those three weeks. It's difficult to get the labor, to convince them, "Come to me for those three weeks, and then go home again." Simply, the access to labor is getting more and more difficult. We have to automate in this whole industry.
It is happening now. The precision agriculture, that's where it starts right now. Putting in, you know, new digitalization solutions, sensors. Easiest way to think about putting sensors to your plants that measure, you know, the irrigation needed to optimize the irrigation system. Also, optimizing the fertilizer use, not just throwing it over everywhere, but just precisely where you need it and where you want it, using sensor technologies and digital, smart digital solutions. This is happening now. It will increase the yields by, it's estimated, by about 30%, and that's what we need. But we need more than that. We, as TOMRA, are not directly in the field of farming, but very close to it.
We have sorting solutions for harvesters, where when you, you know, there are mechanical harvester, for example, for potatoes or tomatoes, that you know, drive along the field and mechanically just pick and harvest the material, but you pick a lot of other stuff with it. And then we have sorting solutions on the harvesting machine as such, to sort all the things that don't belong there out. We have solutions very close to farmers that pick apples, for example, in packing houses, where you bring all the material there, and it needs to be sorted there. So we are close to this with our automating solutions and are helping this urgently needed high-tech development in the food industry.
There's also a lot of happening in the distribution and, and the retail of food, which also has an impact to, to us. Think about e-commerce. It was mentioned several times. Right now, it's on a low level in countries like Europe, for example, or the U.S., that you really order online your food. Think about yourself. Probably not many of you order their food already online, for reasons, because you want to touch it, you want to smell it, you want to feel it, you want to know what the quality of it is. There are other countries, if you talk to our colleagues in China, in Shanghai, as Harald said, they haven't seen a supermarket for some while. They order their apples online, everything. All the foods, they order online.
But if you think about what's then needed, if you do that, and there are no doubts that this will increase, you need the last quality mile inspection. Because you are not buying online right now, because you want to be sure that it's the right quality. And if you order it online, you would only do it if you can be sure that the quality is good. So these e-commerce giants, what they need is they need solutions to do the quality control before they ship the fresh food out. You don't, you don't need that on processed food, which is canned or frozen. This is done earlier in the processing stage, where we are also very active. But on the fresh food, you need several stages of quality control.
You need it when you grow it, before you pack it and ship it, maybe from New Zealand to China or to Europe. But then something happens with the food on its way, unfortunately. Food, you know, shelf life. Things can grow there, nasty things can grow there while they are shipped. So you need a second quality control when it arrives. And there will be good opportunities for us with our technologies, helping to do the final quality check going forward, the last mile before it's really shipped to the consumer who ordered online. We mentioned it several times, the global food value chain is getting more complex. Because of the consumer demands, you know, all varieties all year round, and we all know that all varieties don't grow all year round local.
So somehow we are a bit, you know, contradictory. We want more local and fresh, but at the same time, we want everything all year round. I mean, that doesn't work for sure. That is not possible. So we can have it local and fresh when it's season, but if the season is over, we have to get it somewhere else. But, you know, we don't want to live during winter without our fresh food. It has to come from the Southern Hemisphere. So it's a global food value chain. It's a simplified view that you see here of the value chain, yeah. It starts with the production of the food, and that is growing the food and processing it, and that's where we are very active with our solutions. Next is distribution, a global distribution.
That is where we want to move into when there is more global e-commerce happening, with the last quality mile, mile inspection. And then it's the consumer in the end. That's a simple, simple value chain. And throughout this value chain, what is really important is four things that we have, that we have mentioned here. Very important trends for the future that we need—we all need to work on. Food waste, first one. We need to decrease food waste. We cannot afford to throw away 33% of our waste. And technology can help a lot. Not only our solutions, but we have solutions here that help. But it can only be solved throughout the whole value chain, because food is wasted everywhere in the value chain. It also has to do a lot with education, educating you, consumers?
We throw away way too much good food because we think it's not good enough anymore. Also, there are opportunities in the future. If you have technology that you can check your food, how good it is, how good the shelf life is, how fresh it is, you would throw away less. So there are good opportunities there. And very important, food quality and safety. The most important for us as consumers, we want our food to be of utmost quality, and we want to better have it safe. And this is where we have solutions for. This is our main promise to our customers here. We help improving food quality and safety. And how do we do it? First, look at the world of the big, fast-moving consumer goods companies.
There's more and more consolidation happening there. You see all the brand names there, you recognize a few brand names, but it's more and more consolidation, just a few companies behind that. And protecting their brand name is so important at all cost. A recall, because food was not safe, is a real disaster of that. And we have seen this throughout the years, all the time. Just this week, you probably read it on the news or heard it on the news. These needles in the strawberries in Australia, you probably have read it or saw it in the news, came out this week. Some crazy guy putting needles into strawberries. And now the whole Australian strawberry industry is dead because nobody wants to buy Australian strawberries right now.
They better had invested into technologies because metal detectors would see it to make sure that this cannot happen. These are examples for it, and this is where really our solutions come into play. There are so many potential hazards to the food out there. There are, I think, up to 200 diseases that are spread by food. It starts with a very simple one. We call them physical hazards. That is, for example, if you do... You know, let's take nuts as an example, a very big segment from ours. Nuts, you know, are grown on trees, and the way you harvest them is you shake the trees, you know, mechanically, you know, and then, you know, they fall on the ground, and then you just get them all from the ground.
What you get then there from the ground is a lot of other stuff, as you can imagine, not only nuts. There are stones, you know, wood, there's everything in it. And then it comes in a processing plant, where it's automatically sorted. Several stages of sorting. The nuts are cracked to get the shells out, then you need to sort out the shells. So several stages of sorting happening there until the final end, where it's automatically packed. And you want your package of nuts definitely free of stones. That would be a physical hazard, no stone in your nuts. Microbiological hazards, an example of that would be aflatoxin. Again, in nuts, aflatoxin is a fungus that you find very often in nuts, especially in peanuts. You cannot see it. They are potentially toxic, can long-term create cancer.
It's a big problem for the world. You're just all not aware of it, because you find them a lot, those aflatoxins. We have solutions for that. We have developed solutions, highly sophisticated optical solutions with lasers that make those fungus fluoresce to detect them, to identify them. In the future, chemical hazards, something we will work on. An example would be pesticides. You buy organic food, and you are willing to pay two, three times more for organic food because you want to be sure that it has no pesticides. But do you know? No, you don't know. You—it's built upon trust. But if you knew it, because it's guaranteed by a technology that has measured it, that can measure pesticides, that would be good. These are things we are working on. Think about allergens, huh? This is for the future.
The ones I mentioned, the stone and the aflatoxin, that's what we are already doing now. But the future will be more to be seen about chemical hazards, allergens, make sure that all this is not food. To make food safe and of high quality. And as I've hopefully shown you, this food universe, the food production, is really ready for more and more automation. The food industry has difficulties with access to people when it comes to farming, but also to processing. This manual sorting is very difficult. You cannot keep the quality. That was, you know, years ago. But food has to be sorted. It has to be clean, free of any physical hazards or other foreign material, but you, as a consumer, also want it to look good.
That is kind of state-of-the-art today, that food looks good. Here's an example of an apple. It looks good, but if you look here, I mean, on the web, you will probably not see it. You know, here you will see it. It has a defect. That's something that needs to be sorted out. Those are things we then sort out. But it should not be wasted. If you don't have automatic sorting solution, people would probably throw it away. You know, with our automatic sorting solution, we see it, and we, you know, we can direct it towards apple juice. Make apple juice out of it. Consumers won't buy it, but make apple juice out of it. That's still good enough, good enough for that. So a lot of automation will happen.
You will, in the future, see harvesting robots. I mentioned the problem that to get people to do the picking of apples. You will see robots in 10 years, you know, going around. Those robots will potentially have sensors, you know, to do a first sort in when they do the harvest. So amazing technologies will happen in the food industry, and the food industry needs them to feed an ever-growing world with ever-growing demands for our food. And we, as TOMRA, are very well positioned for that. Thank you.
You can... No, you can just stay here with me for-
Yeah, okay.
We will run a Q&A session before we go to lunch. So please, Harald, also join on stage. There have been opportunities to ask questions during or on the webcast as well, and zero questions so far, so we're happy to take the questions from the audience. Do we have a mic? Lorraine, can you help with-
Hello. Yeah, I have a question for Volker. After the acquisition of BBC Technologies, how happy are you with your footprint in the value chain of sorting? Are you wide enough? Do you need more time to integrate, or is there, are there sweet spots that you wish you could also be in?
For the time being, I'm very happy. We are very happy with the acquisition of BBC. Performed very well, and really complements our offering. There are not many white spots left. I could see some geographical white spots, but for the time being, we are very happy.
Okay. Just one more question. Yeah, I have one more question. Expanding into Asia, how concerned are you about protecting your own intellectual property? Are there ways of duplicating this TOMRA technology, specifically in sorting, going into Asia? Will you have to launch lower-end machines in order to capture that part of the market? I'd like to hear some reflections on that, on that, please.
Yeah. That is a perfect question that will be answered in the afternoon when we talk about... This is more about market opportunities, when we talk about how do we want to take advantage of the, of the market and, and the changing trends in the market. And there will also—I will also particularly speak about a new product category for those markets.
Mikkel Nyholt, Carnegie. This is more of an overview or a broad-based question, and you have—you're talking about a greener perspective and how the world can enjoy a fresh Norwegian apple due to excellent sorting and effective infrastructure. But have you had any considerations to the CO2 emissions from transportation and how potential freight regulations may affect business growth? Said differently, critics of or critics of recycling proponents state that a household, a regular household, could be recycling all their waste for about 20 years and then take a weekend trip to London and emit more CO2 during that weekend than in the past 20 years.
I was just thinking, if all this is true, maybe you can elaborate a bit more on whether the push you see is coming from a definitive need for resource reuse and better recycling, or whether it, it is from a desire of feeling green and having clean streets? If so, one would maybe think that less fortunate economies would be slower at adopting a full recycling infrastructure.
... Long question, many topics, but you see where I'm getting?
Let's give it a go.
It should maybe, maybe I, I can start.
Please, join us on stage.
This is not about greenwashing. Because if it was about greenwashing, you know, we wouldn't say we think it's different now. If you ask me, the past 20 years in recycling have been a lot about greenwashing. But we are very confident, and you saw the examples. There are many reasons. The cost of all the plastics leaking into our nature are immense. We just don't take them into account, and somebody will have to take them into account. The costs of all the plastic in the ocean that end up in our food value chain, that end up in my and your body, and all our bodies, are immense, and the consequences cannot be foreseen. And I think the world has realized that you cannot continue like that. At the same...
And if you take those costs into account, which currently nobody does, you just say: You know, next generations can deal with it. But if you take them into account, it's already now a clear business case. And many have realized this, so you see this, you know, legislative push. I could also answer your question just with the legislative push. We have no choice. We have to do it. At least in Europe, clear targets, dramatic increases in recycling targets, we have to do it. So whether we want or not, we have to do it. But there's also a lot of value in it. If you set up a proper process, it can be economical. We have shown that we can produce recyclates currently at prices that are lower than virgin materials.
And of course, I mean, it depends on how you do the full calculation here, but if you take current market prices, what you have to pay for a ton of collected plastic material, and the cost it takes to upgrade it to virgin quality type of material, we can do it at costs that are lower and not higher. So it's... Many arguments and answers to your question, but simple answer: It's not about greenwashing, it's about business.
Anything to add, Stefan?
Yes. Microphone on. So I would like to add the following: The question is, is this only something we are going to do in the Western world, or is it also going to happen in the Asian world? Starting to think the following way: China, which has until now imported a lot of the waste from the Western world because they needed the resources, they will continue to need resources to fuel their industry. Since they cannot import waste anymore, they will be very interested in looking into tapping their local potential. The Chinese government have their five-year planning, circular economy, source separation, extended producer responsibilities, deposits, all these topics are up there. Clearly, they wanna go that way. And they're also, of course, extremely concerned about public opinion.
People in China are very concerned, I'm talking about the inhabitants now, about the soil contamination, the air pollution, et cetera, et cetera. They don't trust even their locally produced food, because the water is so contaminated, the soil is so contaminated, so what would be about the quality of the food? So these things are real, and they are acting on it. So that's also one of the reason we are so focused in zooming in on that. But it's not only China, also India. We were recently there, visiting them, and they also want to do a lot in this area, and they will do a lot in this area. And the thing is, they might even move quicker than we in the Western world.
If you take the analogy with mobile phones or fixed lines, they didn't go through the history of fixed lines. They went straight to the mobile communication. They don't have the burden of traditional infrastructures in the waste sector with a lot of contracts and alignments for how different players have kind of sliced out their share. They will also jump over here. So I'm convinced that this is no greenwashing, this is gonna happen. There's a demand for it, and there's a need for it.
Thank you, Stefan. Martin, go ahead.
Just a short from me as well-
Okay, yeah
...on that one, that one, because, I think a big change some time ago was actually when we started to call this circular economy. Before that, environmentalists had been fighting, you know, they had seen it and tried to fight to get the change. But immediately when, when that system was called circular economy, then people started to calculate the economic, social cost of the current systems and the economic value of making the change. We're talking about that. And then, suddenly, you know, governments and the financial departments, and all that, have started to look into it. And that's why, you know, as an example, last week, the government in Denmark agreed upon a new circular economy package based on a year of advisory group input, and they have agreed upon that right now.
You know, it's a lot going on in Asia. It's a lot going on in Eastern Europe, but of course, also in the countries close to us.
Thank you, Harald. Martin, please go ahead.
Yes. Thank you first, thank you very much for your insights so far. I have a question for all three of you. Seeing the demand for consumers and the real commitment from politicians to do something about the circular economy, it creates a lot of market opportunities, and I assume that other industrial companies are also seeing market opportunities. Could you please comment on what you see in the competitive landscape, in the markets you're operating in?
Martin, it's a very good question. We will answer that this afternoon.
Okay, Philip?
Could I please have another one?
Okay. Second, okay.
It's a question to Harald. These three, let's say, recent new markets, have been leasing markets in some kind of form. But I think you commented that you might believe that the potential opportunities in Scotland and England might be return to retail. Why is that? And the other question is, then the risk relating to the fee we're seeing in leasing markets. You know, I remember back when you were present in California, a decade back, there was a number of issues regarding, you know, let's say, being tied to a fee, and how you're kind of minimizing the risk tied to a fee with a leasing model. Thank you.
So, yeah, we believe that UK will be return to retail, because retailers are fairly positive to, to setting up a scheme like this and participate. But that doesn't mean that it's either a sales or service or, a leasing deal. You know, that's, that's not decided yet, and that's something that will probably be discussed going forward. You know, some markets decide to have a, throughput deal, some, it's a regular sale and service, so it depends on, as I said in my, in my presentation, you know, the actual regulations and the legislation and the financial setup of the scheme. So that remains to, you know, to be seen. We, we can handle both, areas, and Espen will come back to sort of the financial exposure related to solutions like that. Just one more, comment.
California was a challenge because of the ownership of the material and the volatility related to commodity pricing. So it was not necessarily the fee related to it, but more the ownership of the material.
Okay. We'll take one more question from the audience, then we will go to the web questions, and then we'll come back to the audience. Philip, go ahead.
Hi. Thanks very much, and thanks for your nice presentation so far. I have two questions. I'm Philip Kwitserloot from PGGM in the Netherlands, by the way. First question is for Harald. You described these three, let's say, what you call the clear opportunities, like Scotland and the UK. There's also a second circle of opportunities which are, let's say, not really for today. Like in the Netherlands, they are looking at expanding the deposit system to smaller plastic bottles, but that will only happen in 2020 or 2021. Could you elaborate a bit more on this second circle of opportunities? And the second question is related to this business model that you mentioned of not selling machines, but counting bottles and getting a fee.
Could you elaborate a bit more on this model and what sort of fees you have in mind? Thank you.
Well, on the first question, as I said in my presentation, we... Well, we are fairly close to all the countries in Europe. So, so we follow the processes in all these countries, and, we expect, you know, with the, with the new regulations and the new targets, that, there will be a, you know, a lot of, a lot of decisions made, along the way towards 2025. I don't know really how to, to answer that better. You know, it's, it's most, most European countries need to find a way of satisfying the targets. We don't know of any other solution than, an efficient container deposit, scheme to be able to satisfy 90% collection.
We know that some countries are looking into, you know, regional solutions, starting with some regions, maybe running a pilot and so forth. Some other countries, they may want to go all in and, and have a national setup. There may be some countries that will not be able to deliver on this before, before 2025, and then there will probably be some penalties related to that. So, you know, it's... But it's hard to say. We the three countries I mentioned is the most tangible right now, where we're most focused, but we also have things going on in the other countries. Yeah.
When it comes to the fee and that model, actually, Espen will address that this afternoon. So if you please, can allow us to take that later.
Okay, we will turn to the web. We have some questions coming in online.
Yes, you hear me? Okay, I think this question goes to Volker. It's from Nicolas Splitek in the Erste Asset Management . You mentioned we need more uniform packaging objects to make recycling easier. Do you really think this is possible, like brands giving up their differentiation in packaging? Do you see something like that already happening? Some examples.
It is certainly a challenge-
... because it needs to happen on a voluntary basis. But there are various initiatives happening now. This is part of this initiative that is driven by the Ellen MacArthur Foundation, which is called New Plastics Economy. They push a lot of projects towards that direction. And to make it clear, the most important step is more uniform in terms of number of materials you use, and there are certainly many ways to achieve that. Very often, we use different types of material, which is completely unnecessary, and it would not take a special effort to do that.
Thank you, Volker. So next question is from Stuart Winchester in Allianz Global Investors. This is more like a general question: Your presentation should suggest there are long periods required before you can commercialize opportunities in front of you, but are you seeing even greater number of queries into your technology and the solutions you can provide?
I think I take that one because I guess the question actually relates to all of our offering. And you have hopefully seen in the recent quarters that we are experiencing a good momentum in the industry, which is higher than we have had in the historical, you know, horizon. So definitely we see much more momentum right now. If you go into the recycling industry of sorters, of course, that's also presently driven by, as Volker said, by the China National Sword. But there are, of course, an increasing development on also the demand side. But no doubt there will be...
Before we see the big change, and we'll talk a little bit about that, how the business will grow in the years to come, there will be a time horizon to make that happen.
Thank you. I think we leave it with that, with questions for this session in order to keep our timeline. Remember, the management is available during the break as well for your questions. A piece of information, as we will be doing product demonstrations, on your badge, you will see that you have been divided into group A and B. And unfortunately, for the webcast viewers, this will not be webcast due to practical reasons. We will still webcast the main stage presentation, but obviously, we will be traveling around the headquarters to see the product demonstrations. Group A will be the first group to go down in the demo center. And Sarah, hello, Sarah? Sarah will be guiding you down right after the end of this presentation.
Group B will be invited to join us outside the room. The lunch is also served outside the room. And don't worry, Group A, there will be something for you along the way, and you will come back also to have the lunch. But Group B will be approximately 30 minutes outside here, watching the sorting solutions demonstrations, and then the group will switch places. So please enjoy your lunch.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach, because almost inevitably wherever I go, there's something out there that should not be there.
Here at Taronga, we see huge issues from marine debris, and particularly plastic pollution.
A lot of bird species are being vastly affected by especially plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
So if we wanna solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of a city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state, and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material, because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items?
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, if you're not part of the solution, you're part of the problem. Well, I'm still part of the problem, too, but I'm gonna do what I can to be part of the solution at the same time.
Welcome to this second TOMRA Leads Global Conference.
Since 36 hours, I feel that I belong, at least for a while, to a big family, the TOMRA family, and I'm very happy and privileged to be invited in this TOMRA Leads event.
I think it's a very good initiative of TOMRA to bring together people who are active, let's say, in the circular economy and who are, most of the time, themselves involved in really collecting and sorting our valuable resources. Interesting conversations, interesting presentations, I would say.
We can prove it is cheaper. We can prove, we have the quality they need, but then we need to invest in recycling facilities.
Technologies and processes keep on evolving, they keep on developing, and we must make sure that these applications are fit for purpose.
All of the effort that we've created, you know, to make, to create economic value, we now let dissipate from the system.
Clearly impressive, in my opinion, thanks to good job from the TOMRA guys.
We feel as we are being number one in this business, we have a certain duty to do these things, to gather people, friends, partners, and to have these discussions.
There's a future need in our company for sorting machines. There are some business cases in which we can imagine that we need to sort different aluminum scraps into a higher grade in order to serve new markets and produce better aluminum products.
Well, I work in the plastic industry and packaging industry, and yeah, we are basically trying to learn how the recycling of the packaging works and how we can contribute to proper recycling, yeah, of the containers of our customers. So that's how we got in touch with TOMRA, and yeah, we find this conference very interesting to join.
I think what is important now is that we are able to create the markets for those recycled fractions.
We had TOMRA here. You know which is the best way to collect it, and it should be standardized everywhere.
New technologies can really make a difference. Of course, we need people to invest in it. We need the waste management chain being more aware of all the possibilities which are out there. And then they have to see the value of it, the return on investment, and that is, I think, our biggest challenge for the coming years.
This green planet and having our planet in the future more green and better, this is the goal that we want to definitely achieve.
For me, being a technologist, the most surprising was the first day. I mean, we visited the TOMRA laboratories, which are really fascinating, especially the new techniques, because that's something motivates to think about really a future, which is important, not just only for me, but for friends which are operators of the plants. They look, "Oh, yeah, it's something really extraordinary. We going step aheads.
Now we need to work on and install more machines, more recycling capacity to work in Europe.
Yeah, a very nice and broad group of people and companies. Yeah, it makes it very interesting to see how we can all work together and try to achieve, yeah, a good recycling.
Informative, very friendly, and, just excellent.
Fantastic. Great.
Great. Networking. Interesting. These are, in my view, the characteristics of this excellent conference.
[Foreign Language] 我们北京凯达工业公司，2016年呢，投资CNY 800 million，在内蒙、湖南、河北和在北京，分别建了两个新的休闲薯条加工厂。一年呢，可以加工马铃薯达到160,000吨。我们的目标呢，就是成为在这个行业里边的世界佼佼者。其中在生产线上，我们也选用了世界上非常先进的TOMRA的设备，作为我们实现一个自动化的重要组成部分。使用过程中呢，效果也非常好，对我们这个产品的效率和质量起到很好的保证和推动作用。
[Foreign Language] 北京工厂是2016年9月份开始投产，内蒙古的工厂是在2017年9月份开始投产。我们两条生产线主要是以马铃薯生产为主，做的先切真空低温油浴的VF技术的马铃薯生产线。以前我们是物理的机械磨皮，薯条上会有一部分的皮去不干净，然后引进了陶朗的去皮设备以后呢，土豆的得率方面提高了8%左右。我们采用了整组筛选的技术，就是烂组通过机械的打出来，然后人工筛选。在我们的薯条的筛选方面，又用了筛选机，把黑头的、烂头的是一些带青皮的不合格的品，第二次再去剔除，然后更加地保证了我们的薯条的品质。我们引用的真空低温油浴脱水技术，它是通过90度到110度之间，用油作为介质，把薯条里边的水分给带走，其他的营养物质全部保留。陶朗的本地技术团队，包括欧洲的技术团队，对我们的技术人员进行了详细的技术指导和支持，并且陶朗提供24小时的热线服务支持。在使用过程中有任何问题，他们会第一时间响应解决。凯达的战略定位是成为世界果蔬行业的佼佼者，所以我们选择与同样是佼佼者的陶朗合作。
Wolfram Bergbau und Hütten AG is a producer of tungsten carbide powder, and this mine is now in operation for 39 years, and as in every mine, at the beginning, we start to mine the better grades. So you can imagine, after 39 years, we are sitting here with only the low grade left.
We are standing here under the ore bins. We extract 130 tons per hour, which goes straight to the sorting plant.
We always had the idea there must be a way to separate the good ore from the waste rock. We had the idea a machine must be able to do that. We talked to TOMRA, and they did the trials for us, and we found out, oh, it's possible! The next step was actually to build a batch plant, and we built that here on site, and we tried it for quite a while with some batches, and that was very successful, because X-ray can look into the rock.
Here we take a photo of the actually sorting process. Every rock should be isolated on the belt. Now we see the rocks and the belt in different colors. The red parts of the rock are tungsten.
For us, there are three ways to utilize this machine. The first one would be to increase the productivity of the mill. By taking our material out, we can increase the productivity by 25%, which is quite dramatic. The second plus of this machine is that as we take out material, we don't have to dispose it in our tailings pond areas. The third positive point is that we can mine low grade, which we couldn't mine in the past, and that increases the life of the mine. ... When we decided to go for the second sorter, of course, we had to talk about money, and we looked into the total volume, and the necessary investment was in the range of EUR 1-1.5 million.
We calculated the different ways, and we found out that the payback is actually in the range of only one year. With this machine, we will be here a lot longer.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach because almost inevitably, wherever I go, there's something out there that should not be there.
So here at Taronga, we see huge issues from marine debris and particularly plastic pollution.
A lot of bird species are being vastly affected by especially plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
So if we want to solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of a city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So, for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items.
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that a rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, if you're not part of the solution, you're part of the problem. Well, I'm still part of the problem, too, but I'm going to do what I can to be part of the solution at the same time.
Welcome to this second TOMRA Leads Global Conference.
Since 36 hours, I feel that I belong, at least for a while, to a big family, the TOMRA family, and I'm very happy and privileged to be invited in this TOMRA event.
I think it's a very good initiative of TOMRA to bring together people who are active, let's say, in the circular economy and who are, most of the time, themselves involved in really collecting and sorting our valuable resources. Interesting conversations, interesting presentations, I would say.
We can prove it is cheaper. We can prove we have the quality they need, but then we need to invest in recycling facilities.
Technologies and processes keep on evolving, they keep on developing, and we must make sure that these applications are fit for purpose.
So all of the effort that we've created, you know, to make, to create economic value, we now let dissipate from the system.
Fairly impressive, in my opinion.
... Thanks to the good job from the TOMRA guys.
We feel, as we are number one in this business, we have a certain duty to do these things, to gather people, friends, partners, and to have these discussions.
There is a future need in our company for sorting machines. There are some business cases in which we can imagine that we need to sort different aluminum scraps into a higher grade in order to serve new markets and produce better aluminum products.
Well, I work in the plastic industry and packaging industry. And yeah, we are basically trying to learn how the recycling of the packaging works and how we can contribute to proper recycling, yeah, of the containers of our customers. So that's how we got in touch with TOMRA, and yeah, we find this conference very interesting to join.
I think what is important now is that we are able to create a market for those recycled fractions.
We at TOMRA here, we, you know, which is the best way to collect it, and it should be standardized everywhere.
New technologies can really make a difference. Of course, we need people to invest in it. We need the waste management chain being more aware of all the possibilities, which are out there. And then they have to see the value of it, the return on investment, and that is, I think, our biggest challenge, for the coming years.
This green planet and having our planet in the future more green and better, this is the goal that we need to achieve.
For me, being a technologist, the most surprising was the first day. I mean, visited the TOMRA laboratories, which are really fascinating, especially the new techniques, because that's something motivates to think about really a future, which is important. Not just only for me, but for friends which are operators of the plants, they look, "Oh, yeah, it's something really extraordinary. We going step aheads.
Now we need to work on and install more machines, more recycling capacity to work on Europe.
Yeah, a very nice and broad group of people and companies. Yeah, it makes it very interesting to see how we can all work together and try to achieve, yeah, a good recycling.
Informative, very friendly, and, just excellent.
Fantastic. Great!
Great, networking, interesting. These are, in my view, the characteristics of this, excellent, conference.
... Canada's strategic position is to become a world leader in the fruit industry. Therefore, we have chosen to partner with TOMRA, another world leader.
Wolfram Bergbau und Hütten AG is a producer of tungsten carbide powder, and this mine is now in operation for 39 years. As in every mine, at the beginning, you start to mine the better grade. You can imagine, after 39 years, we are sitting here with only the low grade left.
We are standing here under the ore bins. We extract 130 tons per hour, which goes straight to the sorting plant.
We always had the idea there must be a way to separate the good ore from the waste rock, and we had the idea a machine must be able to do that. And we talked to TOMRA, and they did the trials for us, and we found out, oh, it's possible. So the next step was actually to build a batch plant, and we built that here on site. And we tried it for quite a while with some batches, and that was very successful because X-ray can look into the rock.
Here we take a photo of the actually sorting process. Every rock should be isolated on the belt. Now we see the rocks and the belt in different colors. The red parts of the rock are tungsten.
For us, there are three ways to utilize this machine. The first one would be to increase the productivity of the mill. By taking our material out, we can increase the productivity by 25%, which is quite dramatic. The second plus of this machine is that, as we take out material, we don't have to dispose it in our tailings pond areas. The third positive point is that we can mine low grade, which we couldn't mine in the past, and that increases the life of the mine. When we decided to go for the second sorter, of course, we had to talk about money, and we looked into the total volume, and the necessary investment was in the range of EUR 1 million-EUR 1.5 million.
And we calculated the different ways, and we found out that the payback is actually in the range of only one year, and with this machine, we will be here a lot longer.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates that there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach because almost inevitably, wherever I go, there's something out there that should not be there.
Here at Taronga, we see huge issues from marine debris and particularly plastic pollution.
A lot of bird species are being vastly affected by especially plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
So if we want to solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of the city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
... The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state, and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So, for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material, because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items.
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that a rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, "If you're not part of the solution, you're part of the problem." Well, I'm still part of the problem, too, but I'm gonna do what I can to be part of the solution at the same time.
Welcome to this second TOMRA Leads Global Conference.
Since 36 hours, I feel that I belong, at least for a while, to a big family, the TOMRA family, and I'm very happy and privileged to be invited in this TOMRA event.
I think it's a very good initiative of TOMRA to bring together people who are active, let's say, in the circular economy, and who are, most of the time, themselves involved in really collecting and sorting our valuable resources. Interesting conversations, interesting presentations, I would say.
We can prove it is cheaper. We can prove, we have the quality they need, but then we need to invest in recycling facilities.
Technologies and processes keep on evolving, they keep on developing, and we must make sure that these applications are fit for purpose.
So all of the effort that we've created, you know, to make, to create economic value, we now let dissipate from the system.
Clearly impressive, in my opinion, thanks to the good job from the TOMRA guys.
We feel as we are being number one in this business, we have a certain duty to do these things, to gather people, friends, partners, and to have these discussions.
There's a future need in our company for sorting machines. There are some business cases in which we can imagine that we need to sort different aluminum scraps into a higher grade in order to serve, new markets and produce better aluminum products.
Well, I work in the plastic industry and packaging industry, and yeah, we are basically trying to learn how the recycling of the packaging works, and how we can contribute to proper recycling, yeah, of the containers of our customers. So that's how we got in touch with TOMRA, and yeah, we find this conference very interesting to join.
I think what is important now is that we are able to create a market for those recycled fractions.
We at TOMRA here. You know which is the best way to collect it, and it should be standardized everywhere.
New technologies can really make a difference. Of course, we need people to invest in it. We need the waste management chain being more aware of all the possibilities which are out there. And then they have to see the value of it, the return on investment, and that is, I think, our biggest challenge for the coming years.
This green planet and having our planet in the future, more green and better, this is the goal that we need to achieve.
For me, being a technologist, the most surprising was the first day. I mean, I visited, visited the TOMRA, the TOMRA laboratories, which are really fascinating, especially the new techniques, because that's something motivates to think about really a future, which is important. Not just only for me, for friends, which are operators of the plants, they look, "Oh, yeah, it's something really extraordinary. We're going step ahead.
Now we need to work on and install more machines, more recycling capacity to work with Europe.
Yeah, a very nice and broad group of people and companies. Yeah, it makes it very interesting to see how we can all work together and try to achieve, yeah, a good recycling.
Very friendly and just excellent.
Fantastic.
Great.
Great, networking, interesting. These are, in my view, the characteristics of this, excellent, conference.
Wolfram Bergbau und Hütten AG is a producer of tungsten carbide powder, and this mine is now in operation for 39 years. And as in every mine, at the beginning, we start to mine the better grade. So as you can imagine, after 39 years, we are sitting here with only the low grade left.
We are standing here under the ore bins. We extract 130 tons per hour, which goes straight to the sorting plant.
We always had the idea there must be a way to separate the good ore from the waste rock. We had the idea a machine must be able to do that. We talked to TOMRA, and they did the trials for us, and we found out, oh, it's possible. The next step was actually to build a batch plant, and we built that here on site, and we tried it for quite a while with some batches, and that was very successful because X-ray can look into the rock.
Here we take a photo of the actual sorting process. Every rock should be isolated on the belt. Now we see the rocks and the belt in different colors. The red parts of the rock are tungsten.
For us, there are three ways to utilize this machine. The first one would be to increase the productivity of the mill. By taking our material out, we can increase the productivity by 25%, which is quite dramatic. The second plus of this machine is that, as we take out material, we don't have to dispose it in our tailings pond areas. The third positive point is that we can mine low grade, which we couldn't mine in the past, and that increases the life of the mine. When we decided to go for the second sorter, of course, we had to talk about money, and we looked into the total volume, and the necessary investment was in the range of EUR 1.5 million.
We calculated the different ways, and we found out that the payback is actually in the range of only one year. With this machine, we will be here a lot longer.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach, because almost inevitably, wherever I go, there is something out there that should not be there.
Here at Taronga, we see huge issues from marine debris and particularly plastic pollution.
A lot of bird species are being vastly affected by, especially, plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
If we want to solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of a city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state, and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So, for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material, because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items.
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, if you're not part of the solution, you're part of the problem. Well, I'm still part of the problem, too, but I'm gonna do what I can to be part of the solution at the same time.
Welcome to this second TOMRA Leads Global Conference.
Since 36 hours, I feel that I belong, at least for a while, to a big family, the TOMRA family, and I'm very happy and privileged to be invited in this TOMRA Leads event.
... I think it's a very, good initiative of TOMRA to bring together, people who are active, let's say, in the circular economy, and who are, most of the time, themselves involved in really collecting and sorting our valuable, resources. Interesting conversations, interesting presentations, I would say.
We can prove it is cheaper. We can prove, we have the quality they need, but then we need to invest in recycling facilities.
Technologies and processes keep on evolving, they keep on developing, and we must make sure that these applications are fit for purpose.
So all of the effort that we've created, you know, to make, to create economic value, we now let dissipate from the system.
Fairly impressive, in my opinion, thanks to the good job from the TOMRA guys.
We feel, as we are being number one in this business, we have a certain duty to do these things, to gather people, friends, partners, and to have these discussions.
There is a future need in our company for sorting machines. There are some business cases in which we can imagine that we need to sort different aluminum scraps into a higher grade in order to serve new markets and produce better aluminum products.
Well, I work in the plastic industry and packaging industry, and yeah, we are basically trying to learn how the recycling of the packaging works and how we can contribute to proper recycling, yeah, of the containers of our customers. So that's how we got in touch with TOMRA, and yeah, we find this conference very interesting to join.
I think what is important now is that we are able to create a market for those recycled fractions.
We had TOMRA here. You know which is the best way to collect it, and it should be standardized everywhere.
New technologies can really make a difference. Of course, we need people to invest in it. We need the waste management chain being more aware of all the possibilities which are out there. And then they have to see the value of it, the return on investment, and that is, I think, our biggest challenge for the coming years.
This green planet and having our planet in the future more green and better, this is the goal that we want to definitely achieve. For me, being a technologist, the most surprising was the first day. I mean, visited the TOMRA, the TOMRA laboratories, which are really fascinating, especially the new techniques, because that's something motivates to think about really a future, which is important. Not just only for me, for friends which are operators of the plants, they look, "Oh, yeah, it's something really extraordinary. We're going step aheads.
Now we need to work on and install more machines, more recycling capacity to work in Europe.
Yeah, a very nice and broad group of people and companies. Yeah, it makes it very interesting to see how we can all work together and try to achieve, yeah, a good recycling.
Informative, very friendly, and, just excellent.
Fantastic. Great!
Great, networking, interesting. These are, in my view, the characteristics of this, excellent conference.
...In our main production line, we also used X-ray machines to sort out black heads, rotten heads, and some contaminated, unqualified products for a second screening, further ensuring the quality of our raw materials. We adopt vacuum low-temperature oil dehydration technology. It uses oil as a medium between 90 and 110 degrees Celsius to remove the moisture from the raw materials while preserving all other nutrients. TOMRA's local technical team, including the European technical team, provided detailed technical guidance and support to our technical personnel. Moreover, TOMRA offers 24-hour online service support. If there are any issues during use, they will respond and resolve them promptly. Kaida's strategic positioning is to become a leading player in the global fruit industry , so we chose to partner with TOMRA, which is also a leader in the field.
Wolfram Bergbau und Hütten AG is a producer of tungsten carbide powder, and this mine is now in operation for 39 years. As in every mine, at the beginning, you start to mine the better grades. You can imagine, after 39 years, we are sitting here with only the low grades left. We are standing here under the ore bins. We extract 130 tons per hour, which goes straight to the sorting plant. We always had the idea there must be a way to separate the good ore from the waste rock. We had the idea a machine must be able to do that.
We talked to TOMRA, and they did the trials for us, and we found out, "Oh, it's possible." So the next step was actually to build a batch plant, and we built that here on site. We tried it for quite a while with some batches, and that was very successful because X-ray can look into the rock. Here we take a photo of the actual sorting process. Every rock should be isolated on the belt. Now we see the rocks and the belt in different colors. The red parts of the rock are tungsten. For us, there are three ways to utilize this machine. The first one would be to increase the productivity of the mill. By taking our material out, we can increase the productivity by 25%, which is quite dramatic.
The second plus of this machine is that, as we take out material, we don't have to dispose it in our tailings pond areas. The third positive point is that we can mine low grade, which we couldn't mine in the past, and that increases the life of the mine. When we decided to go for the second sorter, of course, we had to talk about money. We looked into the total volume, and the necessary investment was in the range of EUR 1.5 million. We calculated the different ways, and we found out that the payback is actually in the range of only one year. With this machine, we will be here a lot longer.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates that there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach because almost inevitably, wherever I go, there's something out there that should not be there.
Here at Taronga, we see huge issues from marine debris and particularly plastic pollution.
A lot of bird species are being vastly affected by especially plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
If we want to solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of a city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state, and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So, for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material, because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items.
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that a rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, "If you're not part of the solution, you're part of the problem." Well, I'm still part of the problem, too, but I'm gonna do what I can to be part of the solution at the same time.
Welcome back, everyone. I hope you have seen some interesting things during lunchtime and had some good food for thought for the next, next session. This session will be all about the strategic direction for TOMRA. The first speaker to set the scene, please welcome Stefan Ranstrand.
Thank you, Elisabet. I will actually start with a question to you. We think that we are doing something meaningful here, but I'll start with a question. I will make a statement, I wanna see if you agree with me, and the question will be: I think the world needs TOMRA. I want to listen to you. What do you say?
Yes, of course.
The world needs TOMRA, and I think our ambition would be, this afternoon, to show you why the world needs TOMRA. So we will talk a bit about the elements we need in order to, you know, release the potential we have and capitalize on the market opportunities, which we heard about this morning. So I will start with this page here. And, you know, if you look at the base in which we are now, I dare to say that we have never been stronger than we are now. That's in part because we have now developed in the different areas, collection solutions, a clear number one position with a market share of estimated 75%.
Food sorting, a clear position where we have especially built now a very powerful portfolio of application solutions, of mechanical platforms, of the sensor side, so very broad sensor technology, a global footprint, and on top of that, all the smart algorithms and software belonging to that, which is unrivaled in the industry today. In the recycling solutions, where we have been developing our technologies to be of laser accuracy when it comes to what they can do in terms of sorting to very, very high degrees of accuracy, and here, an estimated market share of 60% globally. Food, 25, I should have said that, recycling, 60%. And with the mining, which we are not actually covering so much in this presentation today, but which is still a very important element.
Also, if you think of sustainable cities for the future and sustainable society, we will need a sustainable way to bring the resources out of the mining industry into our new infrastructure to be built. And on top of that, just might be interesting for you to know, we have now successfully been able to serve the market of producing lithium, which is needed for smart power solutions, and then we are actually active in sorting that kind of ore as well. So I hope that it gives you a good feel. So we have been working on developing our technologies and our position and bringing the teams behind that. We see that the market is moving much more than it's ever done before.
So in a way, if you wanna put it in a simple way, you could say that until now, you have seen the lab version of TOMRA, the laboratory version, where we have worked on doing things in a very nice manner to bring it up to a high level. And what we are aiming on now is the real TOMRA. That is where we will see where we connect the dots, where we bring the collection and sorting solutions to an integrated system, where we support that with a digital platform, add services, enabling the industry to transform, and we help the farmers in a remote location to connect with the consumer in an urban setting. That's what it's all about.
So from a laboratory, TOMRA, which, by the way, I think has been a nice laboratory, we have delivered results and growth, but we are looking for something more. We are hungry here. And when we look into the future, we are zooming in on some areas, so we want to be champions in the food sorting. We want to work on the new plastics economy and developing the circular economy. We want to be the leader here as well. And we want to support that with the TOMRA Digital, Digital Solutions, and we are zooming in on the smart city landscape. That's really, in a nutshell, what we are aiming to do, and I hope we will give you some answers or most of the answers on these topics today.
But important, I think, for anyone driving a company, an enterprise, is to not only live on dreams. So, if you look at this Ansoff picture here, you will see for the first 5-6 years that the main growth will come from our core business. 60% of the growth will come from there. That gives us confidence in that we are in a good track here. Then about 25% will be in expanding markets, so meaning that we use the existing technologies, taking them into new geographies or into new applications, a rather safe way. That is the way TOMRA has traditionally have been growing, so that's something we are pretty good at. Then we will have some new products and services, a little bit higher uncertainty.
For instance, you know, how do we deal with capitalizing on the digital services? That would be something we have to learn to part, but it's part of our journey, and we have we should have ambitions around it, as you see. And last but not least, you see up there, the future, where I talk about the real TOMRA, is in this very early period, only 1%. So it will take more time for us to deliver on that. I would not be surprised if we will see more than 1% in the period, but that's at least what we are aiming for in our target setting here. And you see, as I repeat from what I said before, we are talking about horizons.
So in the first horizon, we really capitalize on what we have in the house today, the opportunities we can see, with our, existing, products and services and customer base, and then going forward, we really try to connect TOMRA and, and, deliver new services to the industry, where we think that we can really transform building a circular economy, and capitalizing for the industry on the big values we talked about there, some in only the plastic, some $50 billion-$80 billion annually, which our customers, by using our technology, should be able to, to harvest, and, and then also how we can serve the ever-growing population, every growing need and demand for, nutritious, safe, and, and delicious food. As we do this, we do not want to forget our ethical responsibility.
We want to contribute with what we do to a better world, a more sustainable world. And we think that we can have an impact on, ending hunger by reducing waste in food, by improving yields, and also connecting the demand and supply. Don't forget, this is also a very important area. There's a demand out there for consumers. There's supply hidden in many places, by being able to tell what is the supply situation, you can connect the dots here, and that we can do with our digital platform for the future. Further to that, I think we have a good story when it comes to doing a good contribution to reducing plastic in the ocean, and, and, working for, life below sea levels.
We will do that while we focus on some specific work streams, so we want to take a commitment working on the SDGs number 8, 9, 11, and 12. So it will be our, a part of our plan, and this, so to say, is part of our corporate social strategy. We think it's important that we have that. When we move ahead, as I have said before, there will be quite some changes for TOMRA. We will need to learn how we set the right priorities and make the right choices, because when we go from a supply service situation in towards a relationship with one customer, that's a pretty defined model.
When we now start connecting the dots here and bringing the consumer goods companies in touch with our recycling customers, making sure that we can deliver that specific quality needed for use recycled plastic in the consumer business, then we have to start working differently. Building alliances in the industry to make this happen, becoming with that a stronger voice to the, towards the government, that's in part new for us. So there would be a lot of new areas, but we have time for that, and we have understood that this is something we have to improve our capabilities on. So we will need new people for the future, and we will also need some different people. So it's important for us to build on the strong people base we have today.
We have excellent people, I would say, in TOMRA today, and we will need to add selectively where we need new skill sets, as I have tried to identify here. We will also need to selectively build good relationships with right partners. Such a journey starts with a good story. I feel we have that good story, and I talk to a lot of industry partners and governments nowadays, and they're all quite fascinated what we do. So it's not a difficult sell, but ultimately, the industry is in it because they want to have the value for their operations. So we need to understand how can we serve them and generate this win-win. For the consumer goods companies or the retail, think of a e-commerce company, I think it's a must.
If they don't change, if they continue the linear economy, they will not be able to sustain their growth. So they need to go on this, but we need still to make the story and show the way for them. So we want to be that architect. We have been working very much on culture in TOMRA. We believe that a unique company culture is a must, and, you know, we do need a specific set of people in our company, people who, first of all, burn for the cause, who are willing to go the extra mile for doing something good to the society, not only printing money. Printing money is part of it, but also we want to connect that to something bigger. So continue to cultivate the TOMRA way of doing things, bringing the right type of people will be a requirement.
So we will need to invest in both, educating our people and bringing the right people on board. And I would say if we are not successful with that, we will also not be successful in driving this going forward. So that's a very key element, in, in our strategy. And my last page will be about... We have talked about these big industry trends now, and I want also to, in this, context, take the opportunity to say TOMRA actually hangs together very well. In the past, you might have asked, you know, is some sorting and collection well connected? Do we need these two? Does it belong together?
I would say the biggest mistake we could do today would be to split up sorting and recycling and collection solutions, because these are very logical parts, making us unique in the industry. Nobody else has this in the industry, and that's exactly what's needed to transform the industry. We will work with companies in the e-commerce and the retail sector. We can serve them both ways, both from a supply side with food, recycled material, packaging material, and we can work with them, helping them handling the waste that is generated through their linear type of business model. That makes us more relevant, so the combination of TOMRA also makes us much stronger.
So, before I take away the content of my next presentations, I better make a stop here, and I hope this just served as a headline for where we are going. Thank you.
Thank you, Stefan. So how are we doing it in Collection Solutions? Harald, the stage is yours.
Thank you. Yeah, so we talked about all the positive trends. In a way, it's we have really never seen anything like it, so we need to prepare for that, and it's not necessarily business as usual going forward. So, how do we do that? And I will try to do this without going into too much detail, but just sort of give you a picture of what our plans are going forward. On the competitive side, things have not really changed a lot the last 10-15 years. We have the same competitors. They have changed some names and so forth, but we are still the undisputed leader.
We, we are in most markets, we have the most installations, and... But, of course, we're all developing. Also, we have always seen smaller competitors, like, very local, you know, a couple of small ones in Canada, one in the U.S., you know, which are names you usually never hear about, which is very sort of local, family-owned type of businesses. So, what is about to change, though, is what I briefly mentioned in the previous presentation, which is the landscape and where we're working, where the deposit schemes are different in a way. You know, there are several different type of schemes in different markets. We will grow geographically. We will enter more markets and more different schemes, and then we have to take that into account.
That means that we have to also work in a different way, and this also comes back to what we said on the circular economy. I think this is a good way of illustrating it, that, that we, today, we are selling machines, doing service, we are the innovation leader. The industry is a niche still, so, so, you know, it's, it's not a very big business, but we believe with, with the changes and the trends now, we see now, that that will, that will really grow going forward. Then we have to take... We just have to take, another position. We, we want to, to build partner networks. We want to be more, a thought leader.
We want to have a global impact on what's going on, and we can never do that alone. We will do it together with partners. We will do it together with recyclers, together with the waste management companies, together with the other technology providers, and so forth, if we need to. Of course, we like to make a lot of the technology ourselves, but, you know, it's always good to cooperate, and that's the only way to really grow in this business, the way it looks going forward. And we want to shape it. We want to shape the circular economy going forward because we believe we have the experience, we have the expertise, and we have the competence and the people to do that going forward. So, yeah, it's—we talked about the closed-loop system.
We are, you know, in our, our forward-looking, sort of minds, we, we, we talk about Clean Loop Recycling, so that's, so that's the way we want to, want to treat it going forward. We want to have the material into a clean loop, meaning that we aim to, to get high level, especially on the plastic, high enough level to be able to, to make a new bottle many, many times. Instead of making carpets, instead of making, making textiles or, or, you know, fleece jackets, because the way we see it, that's more like downcycling. You do it once, and then after you've used it, it becomes waste.
But if you manage to keep it at a high level by having what we call Clean Loop Recycling, then you can really achieve something going forward, and that's the true circular economy. So how do we add value going forward to our customers? And this also links to what we believe is our competitive advantages going forward. It's our products. It's our hardware products, the machines, and it's also our digital solutions, which we perceive as products, you know, in a system, and also our service. So those three elements will be extremely important going forward to win the market and also to add value towards all the stakeholders we cooperate with. The next one, of course, is that we need to be able to deliver.
Well, like in Germany in 2006, we won the first contract based on actually the two first ones here, that we had the best products, but we were also able to deliver, in this contract, 2,000 machines in a fairly short time because we had a very efficient supply chain and a very efficient production setup. Now, we are actually preparing for, we are preparing our production, we are preparing our supply chain to be able to produce more than 25,000 machines per year. I'm not saying that that's going to happen, but that's what we are preparing for. So our supply network knows about this. They are preparing for it. We have invested in more robots in our own production. We have production partners in Eastern Europe. We have also started production in China, so we produce modules in China.
We get also several 40-foot containers, 2 containers per week to our production sites from China, because we do more sourcing there. So not only electronics and cables, but also modules, which we, which we produce there. And that's, of course, important for us to be able to deliver ... when we win contracts, in as short time as possible. And some years back, and for those of you that, that, you know, looked at the demonstrations during the launch. A few years back, we started a completely new strategy on the product development, and that was to make a very modularized product portfolio. Meaning that, that, our products is assembled together by standardized modules, and these modules are reused in the whole product portfolio.
And this, of course, makes it possible for us, we can start production today without knowing the market share we will get in England, because what we produce can be used in any product, in any country. So it will, it will not be, it will not something we need to throw away. And that makes it extremely flexible for us to, to adapt to the market needs going forward. Also, efficient new market entry. We have entered, well, it's a long time ago, Germany, but now also lately, the last 2 years, 3 markets, and we have quite a lot of learnings from that.
And I will show a video at the end of my presentation, showing the rollout in New South Wales, where we had four months from winning the contract before the whole infrastructure in the country, and the state should be up and running. And we started with one person, now we have 100 persons, but during those four months, we added a lot of people, and we built two organizations. We built a long-term organization, you know, a regular one with management, with IT structure, with policies, HR, everything like you should have in a corporation. And then we built a task force to be able to do the rollout. So this is extremely important for us, and valuable learnings when we enter new markets.
How we can enter a new market, build a TOMRA corporation in that market, at the same time as we roll out the infrastructure in that country. Then, of course, we also have the financial strength, and Espen will come back to that, to go for throughput models, where you have to invest in everything up front, and then get paid along the way from a fee structure. And that's also important. That's also a competitive advantage for us. And the fifth one on this slide is human resources, and our competence, and our capacity. And of course, we have a lot of plans, but we also have people now.
So when we go into a new market, we always, in that organization, make a mix of our own people, which is then expats, they are moving to the market, and then we add on local people. And then, you know, there's always sort of a balance of what kind of capacity you need to put together. Sometimes the TOMRA person is the one on the top, sometimes it's the financial guy and one more. So, it's different decisions on the different countries. It's important for us going forward not to focus only on separate products, but we like what you see here to be a tool for us. And we like to see the boxes, the reverse vending machines, and the service, and our digital solution as one system.
The reason for that is that we think this system in total is what will bring the most value to our customers and to our stakeholders. This is the approach we will have going forward. We are developing ourselves and our products within all these three areas, not separately, but together, to have, you know, a powerful solution. So if we look at the product portfolio, as I said, this portfolio is based on modules, and one of the advantages is that you get the advantages related to production and supply chain. Another one is that when we start to produce, you know, we don't really know what kind of product that's going to be, and we don't need to make that decision until later.
So it's, call it late customization, as late as possible before it goes into the market. What's this- what this shows is, the volume, the number of containers you collect per year, starting on the left-hand side, going to right, and then also showing what kind of stores we can enter with the different products. And with this portfolio, we, we can go into... I said in the beginning that also the retail market is about to change. There will be more and more smaller stores. Like in Japan, it's fifty-five thousand convenience stores. People are living in cities in Japan. There is really not a lot of supermarkets. It's mostly small stores. We have products for those stores.
Then in depots, redemption centers in the U.S. and in Queensland, which we are rolling out now, there will be big depots taking 10-15 million containers. We will use our industrialized solution, or industry solutions, the bulk collection solution. So we use that in counting centers, we use it in depots and redemption centers, and really high volume solutions where we have control over it ourselves, in Canada and also in the U.S. And this solution also use some of the similar modules, which is a very good setup. So it gives us the flexibility, definitely. When you look at the digital portfolio, we believe we have a portfolio which really sets us apart.
We started TOMRA Digital four years ago from scratch to develop, digital solutions together with, with, the other, you know, products and, and services that we have. It's a highly skilled team. We are hiring people. You may have seen, if you travel around here, all the ads we have had on, on, railway stations and in newspapers during the weekend and so forth, because we really need to add people within this area and also other areas. But the, but the whole, the whole story here is to be able to, in addition to, the deposit value, also have solutions which brings awareness to the consumer, but also makes it more efficient for a customer to own the reverse vending solution or for ourselves when we own the solution.
So this is apps on telephones to be able to connect with the consumer. It's apps or PC-based solutions for retail stores, and also solutions to be able to actually run the whole fleet of machines. I briefly touched upon this, but in addition to deposit value, it's extremely important for us to also bring awareness on towards the consumer, because in throughput markets, that will also drive the top line for us. Not only adding people or competence, but also adapting the organization in a good way for more markets and for higher growth. So, yeah, this is probably mostly details, and I've covered part of it, so I think we have talked about supply chain, we've talked about production.
Just a couple of more slides, just to show that the new market entries we're doing, we are organizing all of those as projects. And it's organized according to a, you know, project roadmap and in different phases. So this just shows in more detail what I said before launch on the different markets and the entry of the different markets. So as an intro to the video on New South Wales, it went live December 1 last year. We have now collected 700 million containers already. The goal in New South Wales was to have 40% litter reduction before 2020. We have already, together with our partner, Cleanaway, achieved 37% litter reduction. And we have close to 150,000 users of myTOMRA app, and that increases with 3,000-4,000 new users every week.
We will run the video. I think we'll do that now. This will show the rollout in Australia from before December one, which was the go live date. Enjoy.
TOMRA is an international technology company. We specialize in sensor-based solutions, and it's all about optimizing the use of the world's resources.
There's an increasing population, increasing urbanization, and increasing production of waste, increasing need of food, and all this puts strain on the resources on the planet, and we are exactly in the middle of those mega trends.
They provide the technology to make it easier and extremely cost efficient for people to participate in a way that renders the best quality material at the best price. There is nothing like it. TOMRA provides the link between what we have today and moving to that circular economy that we need to get to.
We make it easy for people to recycle.
Australia is a country with 25 million people. I believe they consume more than 10 billion containers. A lot of these are littered. A lot of them ends up in the oceans, and we have solutions to prevent that.
We have been contracted by New South Wales to provide collection points across the state. So we are installing reverse vending machines, mostly, adjacent to retail locations. And we're also installing bulk sortation equipment, which is used for higher volume redemption facilities.
This facility is the first of its kind in New South Wales, and it was purpose built for the Return and Ear n scheme.
This bulk system is pretty impressive. You dump everything. It's not cans here, PET plastic here, just everything goes in.
This site eventually will be taking somewhere between 2 and 3 million bottles per day in through the doors.
Effectively diverting from landfill, a great outcome for Australia.
We have one team that's dedicated to sites and partnerships. We have a team that's dedicated to the actual fabrication of the shipping containers. We also have a production group. They are assembling the reverse vending machines into the shipping containers.
We plan to outsource the assembly to some kind of sub-supplier, but that didn't work out, so we had to do it ourselves.
We had to start our own production, really. This was just a totally empty building. In two weeks, we went from a warehouse into an improvised production facility.
Then we have a team that is dedicated specifically to the installation of the kiosk on site at retail locations. Close to 1,000 machines will be installed initially, and that'll be across 300 sites. We have a large number of RVMs to mobilize in a short period of time. We've assembled a team from all over the world to ramp up quickly and install across a state that has massive geography.
We drive to Broken Hill with a car. It was a great trip.
We went to install a bulk system, the same system you see here at Eastern Creek.
We need 13 hours to arrive there. We have seen, for 6 or 7 hours, no cars, nothing. 17,000 people live there in Broken Hill. And all these people that have bottles go to this bottle yard and leave the bottles there, and yeah, the machine will now accept all these bottles and store it. It was a great trip.
This project is not only about placing physical technology in the marketplace, it's also about developing a state-of-the-art IT infrastructure to operate and monitor these systems remotely.
The vision for New South Wales has been to create the first-ever digital ecosystem for reverse vending machines.
TOMRA have created the world's first recycling app, and this connects consumers to TOMRA in a way that we haven't been able to do in the past. The customers really appreciate the live status update feature. This gives them a chance to plan their trip, and this leads to a better experience for them.
The consumer will receive a refund immediately. It takes approximately between 3 seconds to 1 minute. That's pretty fast.
We actually are pioneering technology that's not used anywhere else.
The main benefits for having a connected ecosystem like this is that you can have world-class uptime. With all the data we get, we can also start to be predictive. So that means that we can do proactive maintenance.
From TOMRA's head office in New South Wales, we can see every machine across a state the size of Germany and France combined. Our digital technology benefits the consumer. It benefits the stakeholders, and it also benefits the environment.
What we're doing in New South Wales is, it's a big, big project.
The New South Wales government has posed a quite ambitious target of a 40% litter reduction.
It's also a recycling target, which, if I remember correctly, is 80% or 85%. It's usually our experience that it's possible to achieve that when you put a system like this in place.
The volume isn't an issue for us because we've handled large rollouts across the world, but the volume in the short amount of time that we have to deploy it is a challenge unlike any that we've seen before.
Well, it's definitely a very tight timeline, but I think that would be challenging for all companies that were participating in this. Perhaps it's actually a strength for TOMRA, that we have the size that we have, and we are also have experience from other large-scale rollouts.
TOMRA is a solution provider, so we see solutions where others see challenges.
We've partnered with a few companies here in Australia, but our key partner is Cleanaway.
Cleanaway is Australia's largest waste management company, and what that fundamentally means is that we are the largest player in solid waste collection, largest in liquid waste collection, largest in industrial services, and largest in hydrocarbons.
Obviously, the partnership is actually very complementary. TOMRA bring world-leading technology, and Cleanaway bring Australia's best collections and waste disposal capability. When there's a shared vision with clear goals and expectations aligned to values of both the corporation and the individuals, you can really achieve some amazing things.
When countries introduce a container deposit scheme, you typically drive the return rates from the 30s up to the 80s and 90s, but that you prevent littering and you enable recycling.
There are a couple of benefits which take place after the implementation of a container deposit scheme. Container litter, beverage container litter is disappearing.
We have the next speaker will be Volker Rehrmann, and he will be presenting to you how to win in food-
Food area. Driven by and driven also by new enabling technologies, we think there is a good growth for us in our field happening. That we've you know think it's about 6%-8% going forward in the next years to come. Our own ambition here would be to grow a little bit higher than that, which simply means we want to you know increase some market share there. There is some room left to increase market share on the food side, we think. Looking on the left side and again, maybe I should highlight the way we define the market is really the areas we are in, sensor-based sorting and recycling. It exclude any peripherals, any you know mechanics around that, any turnkey around that. Recycling, there are some good things happening.
I explained to you this morning about the change towards an, you know, closed loop economy, circular economy happening in plastics. And yes, it is right, it will take a bit longer until we see the full effect on that, but maybe I should also, you know, emphasize here that it is already starting now. And there are some very good momentum currently in the market, and maybe it started with China closing the door. So we see some very good momentum in the market for the next years to come. The big change will take some time, but you know, the early adopters start now, and we see that. They have to do something with the material, and the early adopters don't want to find another China, sending it to Vietnam or so.
They have realized, okay, we are sitting on the material now, China doesn't take it anymore, we will invest into this. So there's good momentum happening on the recycling side, and the way we see it, the market growth is in the range of 10%-12%. We are modest here. We think, you know, with our market share of 60%, we expect our market share to be stable. Could be some ups and downs, but we already have a very high market share. As Stefan has said, we have not talked so much about mining here, but simply because it's a bit smaller. The share of mining revenue of the total TOMRA sorting revenue is maybe around 7%-8%, so we're not emphasizing this so much here.
But if I would hint into a direction, then mining, the growth we see in mining is actually very good also right now. So it would be also more on the recycling side of it, to just give you kind of a ballpark figure that we see on the mining side. As you're all aware, TOMRA Sorting is active in three different businesses. We're active in food, we are active in recycling, and we are active in mining. What you see on the left side, I mean, we have given these, I hope you identify these pictograms there. You know, the fork and knife stands for food. We have the closed loop for recycling, and we have these hammers, cross hammers, that is our pictogram for mining.
We are the only one, and the left part of this slide shows you a kind of high-level overview of the competitive situation. We are the only one who is present in all these areas. We are, in terms of size, by far the biggest in the sorting universe. We consider ourselves to be the, you know, powerhouse in sorting. The next one is probably, you know, only one-fourth of our size. And some of them are in food and recycling. Some of them are in recycling and mining. They all have their kind of core area they play in, but nobody has this breadth than we have. And then you could ask, why? Why do you do that? Why are you in such different markets?
And there are some obvious arguments for that, because the products are actually very, very similar. The sorting product, whether you sort a potato, whether you sort a diamond, or whether you sort plastic bottles, have very, very high similarities. In terms of technologies we use, sensors we use, in terms of software algorithms, we use, in terms of, you know, modules we use in the sorters, a lot of similarities, and that is a strategic rationale for being together here. Together, we are much stronger than if we were individually in the market. We can share developments, we can share the technologies, and we have many great examples of where we share, cross-utilize our technologies in the different business streams. Just one example, latest being introducing the laser technology in the recycling business. Laser is coming from the food business.
It's used heavily in the food business, but never in the recycling. We're now using our own used product. With laser systems, you can excellently, very nicely see glass, which you cannot do with other technologies. So we have introduced a new product into the recycling business, where we can sort out all glass of a household waste stream. It's something you need to have if you want to sort household waste. You need to do something with glass to bring it also back into closed loop. This sorted glass is then brought back to a glass processing facility that makes new bottles out of that. Another example of a closed loop. And without this technology experience and knowledge from the food business, this would not have worked.
I can give you many, many more examples, maybe one later when you, when we talk about spectroscopy, spectroscopy solutions. We have developed a, a Common Sorting Platform , very similar to what, Harald presented to you. Modules, a modular system, that you can, you, you know, reuse and build up your products on, like a toolbox, huh? When you have a new problem, want to develop a new product, you look into your toolbox. What is in there? There are lots of modules in there, different types of sensors, different types of ejection systems, different type of software algorithms. The Common Sorting Platform is also a software architecture, very sophisticated AI algorithms in there, learning algorithms in there, statistical classification algorithms in there. They are all the same. They are all used everywhere.
So there are a lot of good reasons to be together there. We can simply invest more than our competitors can do. And once you have this modular system, and you use those modules everywhere, I mean, the obvious effect is that you have higher purchasing power because you use them all across your products, and you have much more purchasing power, and you can work on your operational efficiency nicely there. And there are many other, you know, benefits of being together here. Let's take a little bit back into history and the rationale for our historic investments. On the right side, you see a little bit the history of TOMRA Sorting back to the times when it was Titech. That was a pure...
At that time, we were purely in sorting recyclables, and TOMRA decided in 2004 to acquire Titech. In those days, Titech was size of approximately EUR 25 million, around that. Today, we are approaching $500 million, at least, and we are really a second leg for TOMRA. When TOMRA decided in 2004 to acquire Titech, it was with a strategic target and rationale to build up a second leg, a second leg also for, you know, deposit business. It has taken many years, but now it's fair to say we are on the same size. Revenue-wise, this year, for the first time ever, we are pretty much the same size, 50/50 share between sorting and collections.
During the years, there has been a lot of organic growth in sorting, but also quite some big investments. The first and most important one was a decision in 2011 to move into the food business. Why did we move into the food business? First of all, it was the biggest market for sorting, and we wanted to be there. Biggest opportunities for growth. At the same time, we saw the potential to use our technology that we developed in the recycling business, in the food business, and I will give you a few examples for that, on the following slides, because it has proven to be the right thing, there.
Once we took the decision to play in the food sorting space, of course, we want to be the number one in the food sorting space, and we decided last year to move into the fresh area. Again, why? I told you this morning about the market trends and market developments. People want more fresh food, so we wanted to be in the fresh food area, and that's where Compac and BBC, our latest two acquisitions last year and this year, are present. Compac is sorting all types of fruits. Kiwis, starting kiwi as a New Zealand-based company, but also very big in citrus fruits, in apples, in pears, all types of fruits you can think about. BBC is a very specialized company, focusing on small fruits, especially berries. Market leader in blueberries, very important, a highly growing segment.
So now we have, you know, coming back to the question that we had this morning, we have a nice portfolio of solutions that cover, you know, from, from berries to potatoes, a, a wide range. Nobody else in the world has that. And as the food companies, the big food-producing companies, are consolidating more and more, it's also important that we consolidate. These companies want strong partners that can offer them all solutions. We can now do that. This is a slide about our strategic position. Our strategic position is, is always a question, who do you want to be? And one thing is clear, and this will not change, TOMRA has always been the technology leader, and that is true for collection, that is true for sorting. Whatever we have been doing, we have been the pioneer.
When we develop new solutions, new technologies, it has always been TOMRA, and that is, you know, that is part of the culture of TOMRA, like Stefan said it before. We are a technology innovation company. We always want to be the first ones bringing out new technologies that help our customers in solving new problems out there. And that will continue like that, no question. We will bring up some very new, exciting products in the years to come in this period we are currently looking at. Maybe I can mention a few on the recycling side. I talked this morning about aluminum that aluminum is recycled, but it's downcycled. So what is needed in the aluminum world is a solution that can distinguish between different alloys of aluminum. That's very...
It's a very cool technology. I get easily excited about that, called laser-induced breakdown spectroscopy, but, you know, it's a technology that will allow you to see the elemental composition, so that allows you to sort between different alloys. You know, examples like that, those things you will see. In the food side, you will see a lot of new solutions coming out on with spectroscopy based on spectroscopy technology. Spectroscopy technology, for those who are following us a longer time, is really the core technology we have been using for more than 20 years in recycling. That's the basic core technology. Nobody in the world has the experience we have in this area, and this will be the new trend on the food side, and I will show you on the next slide.
But that is maybe historically where TOMRA is coming from, technology leader, but we will combine it. That is not good enough if we want to win. We will combine it also with the best customer experience out there. And that is maybe a little bit new, a new trend for us as TOMRA, TOMRA Sorting. We will not only sell our technology products, but we will much more help our customers develop solutions and help them connecting with people in the value chain. At the end of my presentation, I will give you an example. We call it consultative selling. We are out there. We are the market leader. We see so many solutions, and we know so many other players in the market.
We also know players who will take material, so when we sell a product to our customers, we also help them, you know, selling their material because we know all the players. So we take a much bigger role, and as you will also see at the end of my presentation, when, you know, the process where we develop the new plastics economy, we work with people across the whole value chain, to make this happen. This is much more than just selling products. Not to talk about service. In our history, the share of service was historically slow. It was on a rather low level. We were selling machines, machines, and in the recycling industry, the acceptance for service was not so high.
You know, it was rather, you know, how should I, should I say, sometimes immature industry, and they were fixing things themselves. They preferred it. But as our customers are professionalizing, they see the value of good service. Think about the example of blueberry customers who make all their money for a year in three weeks of a harvesting period. And it's true. I mean, the blueberry customers, they grow it for a year, they harvest in three weeks, and nothing must go wrong in those three weeks. So we better make sure that our units work flawlessly during those three weeks. And they are, of course, also willing to pay for the service, so we are there then. We offer kind of 24/7 support, being close with them. In mining, we now have the... They also have, the customers, they have high standards in regards of service.
We have now the first installations where we offer 24/7 support on-site, all year round. Mining now has achieved share revenue for service of 40%, the tendency to grow. So less, a lot less depending on selling, selling the machines, a much higher share. Food is approaching 25%, so we are in a good way there. So it's this combination from a strategic position, leading technology, but being very close with our, to our customer, positioning ourselves as a true business partner here. This combination, we think, will make us unbeatable. We say a few words about the leading technology, and this is, you know, with a focus on the food side, because I mentioned one reason why we moved into the food business was that we saw the opportunity to apply our technologies in the food space.
State-of-the-art for food sorting technologies is using color cameras for visual appearance. You go into the supermarket, and your food looks good, and that is not why, because it was grown like that, but it is because it was sorted like that. Visual appearance, nice color, nice shape, that is state-of-the-art. In the future, you will see a new trend here. It's more than just the visual appearance. We will work on internal defects, seeing inside of an apple. Is it brown from inside? You don't want to buy an apple that is brown inside. Is it, does it have a hollow heart, which simply is kind of a hole inside? You find this very often in potatoes. It's about taste. We already have solutions, and it was shown to you in our introductory movie, where we can measure the sweetness.
In the future, we will be able, using these type of technologies, to measure more properties, fat content, shelf life, very important, measuring the shelf life. You can imagine when you ship stuff through weeks from the Southern Hemisphere to the Northern Hemisphere, it's very important what is the shelf life of your food that is around there. Freshness. And I talked about food hazards, that is, you know, talked about the opportunities we see going forward, that there are interesting opportunities from the enabling sensor technology side. I won't repeat it here now. Artificial intelligence, you know, it's a kind of word you hear everywhere. The world will change. This, of course, also true for us.
But to be honest, we have been using technologies from artificial intelligence and machine learning for decades, when we even didn't know that it was called artificial intelligence. But at the same time, I have to admit, the progress that is out there on the special part of this technology, the so-called deep learning networks, is amazing, and nobody would have ever believed this. You can have much, you nowadays have much more processing power and much more data available to train those deep learning networks, and they make a huge difference. And we are investing also heavily into that because we see a lot of opportunities. Just imagine, those neural networks are very good on object recognition. And what are we doing in sorting? Part of it is object recognition. A lot of part of this.
If you combine it with other sensors, you don't only need to use artificial intelligence technologies on cameras, you can also use them, of course, with different types of sensors. It becomes even more powerful. The vision we have is, you know, self-learning systems. The problem for our food customers is that their food changes every day. It's not so much on the recycling side, where the bottles are made of a chemical composition, and the molecular structure doesn't change, but the food changes every day. It changes every day, and the systems need to be adjusted every day. It's a challenge for our customers. Artificial intelligence will allow in the future that you have self-learning systems. They just see the input coming and adjust themselves automatically to come to the best sorting performance ever.
It's a few years ahead, but no question, it will come, and we're investing into these technologies and are quite excited about that. This is a, you know, the question we had in the morning about how do we see China, new markets in Asia? I would say traditionally, in terms of sorting, our customers were coming from Europe and North America, majority of our customers. It's the strongest markets, and it will continue for many years to be probably our strongest markets. The customers there have very high demands and requirements in terms of performance of the machine.
They want the best performing machines, and if you can increase the yield by 0.2%, they want this, and they want us to make a machine for that, and they are willing to pay for it. So historically, we have, you know, yeah, quite sophisticated, expensive machines in the market. Looking into the future, looking ahead in other markets, let's talk about China. China is the biggest food producer in the world. China has the biggest waste streams in the world. So for us, it's no question that this will become the biggest market in the world. It is not now, for various reasons. The food industry is very fragmented, it's not professionalized, it's not consolidated, it's not industrialized, but it will happen. They are the biggest producer of potatoes. Would you have believed that, that China is the biggest producer of potatoes?
The biggest producer of tomatoes? It's just the scale is immense. They just don't have the food infrastructure, that, that other markets have. But the question is not if, the question is only when, and we want to be there. So we entered into, into the Chinese market, but it's difficult with our high-end products to make traction into the market right now. And that. Now I'm coming back to your question from this morning. Yes, we have decided to develop localized products for this market. We call it mid-market, about two years ago, and we have set up our own R&D organization there. Our Chinese R&D organization that is developing products for the local markets, mid-markets.
Products that do a good job, it's a combination of the knowledge of making machines very cost efficient, but also, you know, kind of infused with high tech from Europe, coming there. We are protecting our IP because all the high tech is produced in Europe. It's not produced in China, so it's shielded from there. But we see good opportunities there. We start with two products. We have launched two products, one for the food business and one for the recycling business. You see them on the picture there. The orange one is always recycling. They stand out in waste sorting plants because of the orange. But guess what? You know, besides the color, they are the same, the same machines.
So another example, we have developed 1 machine, and we use them for both recycling and food. We talked about digitalization. Digitalization is, of course, a big future trend, and it is also for us. We are a bit early, or you could say, a bit late in this compared to our colleagues from collections, who started 4 years ago. We started maybe around 1 year ago. But the simple reason is that the industries we operate in are probably also a bit less mature there and, you know, have not really asked for that earlier. But now, they clearly asked for it, so we are in a good timing here, and we are ahead of our competition there.
What we visualize there are the different, you know, phases, what we will do, what we will offer our customers, on the digitalization front. We will start with, you know, monitoring the performance of our machines and what our machine sees. Think about our machine, our sorter sees all the material going into the plants of our customer, whether it's recycling or food. It's a data production machine. Every second, it generates megabytes of data. It sees everything that is happening there. So we will start with offering our customers information about the material composition that comes into their plant, about uptime, about maybe variations in throughput, all on the app, together with some smart alarms. That's the first step, you know, the rather obvious step.
Next step will be, we will help our customers optimize their production by having, because we have typically various machines in various parts of the processing line, and the machines see what is happening there, and the machines on the later side, they see if something in the process was not going well before. So we can use all this collected data and do some smart data analytics to help our customers optimizing their complete process. That will be the next step there. And the third and ultimate wave will be new business model, and that's when we connect our data with the outside world... connecting it, for example, with farmers who, who ship the material, and we see the quality that is coming in, and it can give them feedback. You know, how good is your material?
Maybe you should use a little bit more water compared with others in the world. You know, are you doing better or worse than others in the world? You know, what about utilization of fertilizers, water, all that. Our customers would like to pay their suppliers based on the quality of the input material. Rather obvious, huh? Zespri, the big kiwi, global kiwi brand from New Zealand, have the clear target to pay their growers by the dry matter content of kiwis, and the dry matter content of kiwis is a synonym for the quality of kiwis. You can measure the dry matter content of kiwis using near-infrared spectroscopy technology. Technology we have been using for 20 years in the recycling business.
And that's another area, you know, helping our customers, you know, assessing the quality that comes into there, and pay their suppliers by that. All this is a part of the digital journey, and ultimately connecting supply and demand. When we think about circular economy, when we make the circular economy happen for plastics, what is of utmost importance for the guys using the recyclates is, of course, that they have enough material. So you need to connect this supply and demand. You need to have the total transparency. That is always what digitalization gives you, the total transparency of the full supply chain. So this is what we are trying to do. You know, we want to shape the markets we are in.
Stefan called it from being a pure box pusher to becoming a true partner, business partner, up to position TOMRA as a thought leader. This is the journey we are on, and this is my final slide, and this is where, how I want to... No, not my final, the final before final. This is how I want to illustrate, and that's about, again, you, you might recognize, again, the value chain for plastics, as, as, as I mentioned before, and how we have positioned ourselves here, really. A little bit of history. Approximately five years ago, a big global brand came to us, I'm just not allowed to mention their name, came to us and said, "Look, we want to replace our plastics that we have in our, in, in our special products." It was made of polypropylene.
We want to replace it by 100% recycled material, but we have been going around in the world, and everybody told us it is not possible." And they came to us five years ago. "We heard you are doing good things here. Do you think it is possible?" And we said, "Yeah, we think it is possible. It will require some work, but we think it is possible." We need to develop a process to clean up the material up to a stage that it really can replace virgin material. So five years ago, we, you know, together invested into it, went on a journey. As I told you, several steps were necessary in this process. How to wash it, how to sort it.
You know, in the end, we, we had developed a special product that can sort very small pieces, because in the end, to get the cleanliness, you can imagine when you have multi material, you need to shred all the material into small pieces in order to liberate everything, and then you do the final sort on all those small pieces. We developed a special product just for that, to get the purity up to the level. We, we experimented with lots of different types of washing lines and washing things. And this is well beyond being a sorting provider. Hopefully, you can see that. We work with many players in, in the field there. And now we are talking, what we are really trying to do here is creating a demand for recycled plastic material. In the end, the whole industry will benefit from it.
Not only us, also our competitors. But that's okay, because the opportunity is so big. And we have, through this journey, of course, gained a lot of competitive knowledge about how to make this process work. It's not so easy. Sooner or later, others will also find it out, and will see it, but we clearly have an advantage here. We know how this process work. It's not easy to make the quality to this, to this highest level. And now we cooperate with many companies. We cooperate with big plastic producers, multibillion-dollar companies. And to be honest, those are the guys we need. Why are they interested in recycling, technology? Because they see that this will happen.
They see that we will soon have more recyclable plastics coming into the value chain, and if they, if they are not with it, they lose, lose growth opportunities because it will be taken away from their business. Less virgin material. They clearly see it. Their head of strategies do their work. And if you Google a little bit around, without mentioning names, several of them have started to invest into recycling companies. And we work with several of them. They are extremely important for us. They have the money to invest into this, they have the clear strategic rationale to invest into this, and they have the professional knowledge how to run this on an industrial scale at high qualities. This is also what's needed in the plastics recycling industry. Plastic recycling right now is a very fragmented, lots of small players, not really high volume.
We need those big guys here to make a change, and they are coming, and we work with several of them. This is illustrated here by those boxes there. Some names we were allowed to show, we have signed NDAs with all of them. So what you see there is, it's not just some boxes, they all stand for one name, which we can simply not disclose. So we work with partners in the value chain, with the plastic producers, with several plastic packaging producers, with many brand owners, that's where it started, who have committed to the world that they want to, you know, replace their plastic by recyclable plastics, and they need solutions. They want it, they have committed to it, to the world....
We are producing now, you know, every week, tons and tons of material. You saw it outside, the recycled material that we showed there. We are now investing into our own washing line, just to be able to produce more test material, because these guys, of course, need tons and tons of material. They use it to make their own products, just to prove. They send it to laboratories, to their product designers, so that everybody involved is happy with it. And this is what we mean, position ourselves as a thought leader. Without us and this one global company, who, in all fairness, came first to us, this would not have happened. We are clearly a thought leader here, bringing all the players in the value chain together to make it happen.
This is my final slide. It's a kind of summary slide. And I'm not going into the details here, but if I summarize, how, how do we want to win in sorting? It is by staying, continuing to invest in technology, enabling technology, to be the technology leader, but at the same time, working much more closer with our customers, invest more into service, offer more into service, help them developing solutions that go well beyond just our sorters. Simply because we have the knowledge, because we are the clear market leader in these areas, and we see so many good developments. We can help our customers. We can help our customers sell their material. So we are, you know, clearly, you know, bringing both together, and that's a very good, good position to have.
We're investing into digital solutions for the future, and by that, we think we are very well positioned to win in the sorting space here. If I may finish with a kind of vision, if you think about a vision, where we want TOMRA Sorting to be, imagine it's 2030, you know, when would we be happy? Yeah, if the plastic closed loop on plastics would be more like 50% instead of 14%. If the label, TOMRA Sorting, has become a quality label for food. Examples like this orange or mandarin, you know, has a certain sweetness, certain shelf life. It has. It's guaranteed, no seeds inside. It's guaranteed, no pesticides on it. Our sorters are more, yeah, like a quality lab, bringing broad online.
And all of that is, you know, data of that is all shared. Your consumer can see it on your app, trace it back to the region, and have all the guaranteed information about this. This is the kind of vision that we have for how we want to develop in the years to come. And with that, we've come to the end. And we will show you a video now about sorting, especially sorting about food, which gives you a lot of examples of the solutions we offer to make our food high quality and safe. Thank you.
Food processors often face uncertainties outside their control. Weather, labor, and transport costs can make the difference between profit or loss. But there is a way to reduce the impact of these uncertainties: with automated sorting machines that deliver the highest level of performance and reliability. At TOMRA Food, we design and build innovative optical sorters, as well as peeling and analytical solutions for a wide variety of fresh and processed foods. As part of the TOMRA Group, we provide our customers with the latest, most effective solutions. Our acquisition of lane sorting business Compac has completed our range of food processing solutions. Our sorting machines separate contaminants and defective products at speed and with pinpoint accuracy. This ensures the highest quality produce, a maximized yield, and optimized levels of food safety. Our technologies help reduce waste by removing lower grade produce, which can be reworked for another purpose.
Our machines sustainably improve food quality and safety to ensure enhanced brand protection for our customers. We have the industry's widest range of technologies, providing our customers with bespoke solutions to meet their individual needs. Our technologies, combined with a variety of mechanical solutions, provide a one-stop shop for every food sorting challenge. All data is recorded and presented via easy-to-interpret statistics and graphs using TOMRA ACT, our intuitive graphical user interface. Today, there are over 7,000 TOMRA Sorting food machines installed around the world, backed by our dedicated service and support experts, 24/7, all year round. With sales channels in 80 countries on 5 continents and 8 sorting solution centers across the globe, we are always nearby. Our state-of-the-art production facility in Slovakia is equipped with the most modern manufacturing technologies. It meets strict environmental standards and offers sustainable production and distribution.
Our employees keep an eye on every detail.
... delivering high quality sorting and peeling solutions. Together, we help producers, processors, and packers deliver quality and safety at every step in the food processing journey, from farm to fork.
So as we are a bit ahead of schedule, I think, I know we have some travelers coming in, and they will also leave from Gardermoen. So what we'll do, we'll take a break until 2:00 P.M., and then after the break, we will do the financial section with Espen, and then we will also do the Q&A. So it will be a bit of a shorter session, but I think that would also accommodate for the ones that are traveling out from Gardermoen today. So please, we'll have some refill our cups, have something to drink, and see you back here at 2:00 P.M. Thank you.
Unfortunately, the world has embraced single-use packaging. When we can't manage that waste appropriately, we end up with huge implications in terms of litter in the environment and in our estuaries and our waterways. The ocean is downhill from everywhere.
The EPA estimates that there's 25,000 tons of litter thrown on our ground every year in New South Wales. 50% of that litter is drink containers.
These days, it's very hard for me to just enjoy the beauty of the beach because almost inevitably, wherever I go, there's something out there that should not be there.
Here at Taronga, we see huge issues from marine debris and particularly plastic pollution.
A lot of bird species are being vastly affected by especially plastic pollution. Fish, for sure, whales, dolphins, turtles.
Our oceans are inherent to our being healthy, and if we don't have healthy oceans, we don't have healthy humans. So by cleaning up our oceans and keeping plastic from getting into it in the first place, that's something that we really need to create a healthy future.
Well, of course, marine litter, ultimately, most of it comes from land-based sources.
If we want to solve the problems in the sea, we have to start on land.
Litter harms our marine environment, but it also affects our communities. It harms us.
Land-based litter is a problem because it affects many different aspects of the city.
We know from studies in other parts of the world that litter has a real impact on house prices, on tourism, on mental health, even. So there's a lot more indirect costs of litter that are just hidden to us, but are absolutely there every day.
The New South Wales Return and Earn Container Deposit Scheme represents a remarkable opportunity to tackle this problem of litter and plastic pollution across the state and obviously to influence other states and jurisdictions.
Well, the benefits of this system is that we're collecting significantly higher amount of material, and it's also a significantly better quality. So, for example, you can take plastic and put it back into a new bottle. You can take glass, put it back into a new bottle, and that is probably the best way of preserving that material because you can continue those cycles over and over and over again. So we have some, quantifiable data before and after a container deposit system. We've seen that beverage container litter can be reduced as much as 80%, but the additional benefit is that it usually sends the signal for people to behave better in terms of discard. So we've also seen a reduction in total litter.
This is an opportunity to really put a value on single-use items.
I think for the children, it's wonderful, and I think it's probably the most perfect, perfect way of getting kids to think about that a rubbish is actually a resource.
Well, obviously, reducing litter is beneficial to everything, the ocean, the landfills. We're filling up space faster than there is... The common saying is, if you're not part of the solution, you're part of the problem. Well, I'm still part of the problem, too, but I'm gonna do what I can to be part of the solution at the same time.
Welcome to the second TOMRA Leads Global Conference.
Since 36 hours, I feel that I belong, at least for a while, to a big family, the TOMRA family, and I'm very happy and privileged to be invited in this TOMRA event.
I think it's a very good initiative of TOMRA to bring together people who are active, let's say, in the circular economy and who are, most of the time, themselves involved in really collecting and sorting our valuable resources. Interesting conversations, interesting presentations, I would say.
We can prove it is cheaper. We can prove we have the quality they need.
... But then we need to invest in recycling facilities.
Technologies and processes keep on evolving, they keep on developing, and we must make sure that these applications are fit for purpose.
So all of the effort that we've created, you know, to make, to create economic value, we now let dissipate from the system.
Fairly impressive, in my opinion, thanks to the good job from the TOMRA guys.
We feel as we are being number one in this business, we have a certain duty to do these things, to gather people, friends, partners, and to have these discussions.
There is a future need in our company for sorting machines. There are some business cases in which we can imagine that we need to sort different aluminum scraps into a higher grade in order to serve new markets and produce better aluminum products.
Well, I work in the plastic industry and packaging industry. Yeah, we are basically trying to learn how the recycling of the packaging works and how we can contribute to proper recycling, yeah, of the containers of our customers. So that's how we got in touch with TOMRA, and yeah, we find this conference very interesting to join.
I think what is important now is that we are able to create a market for those recycled fractions.
We at TOMRA here, we, you know, which is the best way to collect it, and it should be standardized everywhere.
New technologies can really make a difference. Of course, we need people to invest in it. We need the waste management chain being more aware of all the possibilities which are out there. And then they have to see the value of it, the return on investment, and that is, I think, our biggest challenge for the coming years.
This green planet and having our planet in the future more green and better, this is the goal that we want to definitely achieve.
For me, being a technologist, the most surprising was the first day. I mean, visited the TOMRA laboratories, which are really fascinating, especially the new techniques, because that's something motivates to think about really a future, which is important. Not just only for me, for friends which are operators of the plants, they look, "Oh, yeah, it's something really extraordinary. We going step aheads.
Now we need to work on and install more machines, more recycling capacity to working Europe.
Yeah, a very nice and broad group of people and companies. Yeah, makes it very interesting to see how we can all work together and try to achieve, yeah, a good recycling.
Informative, very friendly, and, just excellent.
Fantastic. Great!
Great, networking, interesting. These are, in my view, the characteristics of this, excellent, conference.
...TOMRA's local technical team, including our European technical team, provided our technical staff with detailed technical guidance and support. TOMRA also offers 24-hour hotline support. If there are any issues during use, they will resolve them promptly. Kaida's strategic position is to become a leader in the global fruit sorting industry. That's why we chose to partner with TOMRA, another industry leader.
Wolfram Bergbau und Hütten AG is a producer of tungsten carbide powder, and this mine is now in operation for 39 years, and as in every mine, at the beginning, you start to mine the better grades. So you can imagine, after 39 years, we are sitting here with only the low grade left.
We are standing here under the ore bench. We extract 130 tons per hour, which goes straight to the sorting plant.
We always had the idea there must be a way to separate the good ore from the waste rock. And we had the idea a machine must be able to do that. And we talked to TOMRA, and they did the trials for us, and we found out, oh, it's possible. So the next step was actually to build a batch plant, and we built that here on site. And we tried it for quite a while with some batches, and that was very successful because X-ray can look into the rock.
Here we take a photo of the actual sorting process. Every rock should be isolated on the belt. Now we see the rocks and the belt in different colors. The red parts of the rock-
Camilla, are we all in? Yeah. Yeah? Okay. Welcome back. So what we'll try to do, we'll try to end the day at 2:45 P.M. I know we have visitors all the way from Australia that would like to get home, well, possibly not to this weekend, but, well, possibly to the next weekend. And also some that is coming from, from London as well. So if we manage to end around 2:45 P.M., that would be a good thing. We're saving the best for last. We have the financial section in the end. We will also run a Q&A and some concluding remarks from Stefan. Mr. Espen Gundersen has been the CFO of TOMRA since 2002, but he joined the company already back in 1999, so a man that needs no further introduction. Please, Espen, the floor is yours.
Thank you, Elisabet. Yes, today's absolute highlights. Good to see so many staying with us for this part of the session. We will look a little backwards, back to the last four, five years, since last time we had the Capital Markets Day. Looking a little bit at gearing, leverage opportunities, and then looking forward, based upon what you learned today, where do we go from here? And then put some financial targets around this. But first, looking back. From 2013 to 2017, we have increased our revenues with 68%. This is on average, around 14% per year. We don't have the 2018 figures yet, of course. If I understand consensus right, the market expects us to be close to 14%, also for 2018. This is by no way a guidance, but just a reference point.
So there's a rather good growth during the period. It's mainly organic, a few acquisitions of smaller redemption centers in the northern Upstate New York, which in this context, doesn't mean much. And we have 11 months of Compac in 2017 in here. The rest is organic. As Volker said, we are now 50/50 in revenues, more or less between the two units. During this period, collection has grown with 10% and sorting with 19%, so now we are equal. Looking at each year, the growth has been rather stable, maybe save for 2014-2015, and this is actually a good illustration that TOMRA sometimes might be event-driven. In the bottom, in particular, in collection, we have a lot of recurring revenue.
50% of revenue is coming from service, which, per definition, is recurring. The other 50% is coming from sales, but after 10 years, you need a new machine. So much of the sales is actually replacement sales. So going back, looking at 2009, which was a problematic year for many industries, there was no sign of recession in collection. We sold the same number of machines. Because we're selling, at least historically, to retailers, they know that after the checkout system, the reverse vending machine is the most important machine you have in your store. So don't investing, don't maintaining in your reverse solution is a short-sighted strategy. And for that reason, you see recurring revenue coming out of this, and in bottom, a very stable business. On top of this stability, you can, however, see events.
The biggest event we have had so far was 2006, where Germany introduced deposits. Big thing for TOMRA. And now, after 10 years, you saw that the old machines installed in Germany were due for replacement. And this, combined with the new launching the T9, the new platform of machines, to a large extent, or to some extent, tailor-made for the German market, you start to see the replacement race started. It started in 2015 and was expected to go on for 4 years. So in 2015, the revenue and collection actually increased with 35% compared to 2014. That explains a lot of the growth this year. Looking at gross contribution and margin, it's been very stable during this period.
Both looking at the group and also down on the business area, sorting and collection, it's been fluctuating within one percentage point, more or less. In collection, we have had some headwind on pricing, but it's to a large extent been offset by ongoing cost reduction programs to improve or reduce cost of goods sold. In sorting, also stable, save for 2017, where Compac came in, and on margin side, was, to some extent, a diluter. Going down to EBITDA, bottom line, it has, to a large extent, followed top line. Actually, for the first part of the period, up until 2016, the top line, the bottom line growth was 17% per year on average, significantly more than the top line.
2017, however, was influenced by significant investments. The biggest one was New South Wales. We booked AUD 68 million of expenses related to the ramp-up of the New South Wales deposit scheme. That will have a commencement date, first of December, 2017. Again, Compac had a negative influence on the margins. Compac was, to some extent, a distressed company when we bought it, it did not make money. Already, during 2017, we were back in black, but not with the same margins that Tomra overall managed to produce. Return on capital employed has been also rather stable, around 20% throughout the period.
A little lower in 2017, back again, explained by mainly New South Wales, where you got the AUD 68 million of cost with no profit or revenue attached to it, and also the investment in the fixed assets. So, both the numerator and the denominator in the return on capital employed calculation was negatively influenced by this. Going into 2018, and particularly second half of 2018, we'll, of course, see this reverse as we start to make money in New South Wales. We have done historically significant investments. More than 40% of TOMRA's balance sheet is intangibles, mainly goodwill. And, of course, as management, we should deliver return on this, and we can be kept accountable for these investments, and we do.
But in the day-to-day operations, TOMRA is usually not very capital intensive. Historically, we have had a very high return on, on the invested capital. So if you allow us to just take out the intangibles for a moment, you will see that we today report 35% return on capital employed, ex intangibles. Somewhat lower than historically, but still a very high level. Quick look at what we promised, or at least was trying to achieve, when we stood here, in 2013. Collection, 4%-8% top line growth. We delivered 10%, growth. Somewhat influenced by, currencies, but not very much influenced by new markets.
Back to the point that in the bottom collection is rather stable, it's very hard to grow revenue in existing markets when you have a machine in all stores. So managed to deliver significant growth on this space is something we are proud of. The only market that really has influenced in this context has been Lithuania, that introduced deposit during the period. New South Wales only accounts for 1 month, because what we're doing here is showing the 2017 figures. The targets was for 2018, so there's still some months left before we can conclude on this. EBITDA margin 2017 was low in the range 18%-23%, but during the period, we have reported 20% and 21%, all years.
The 18% is again back to the investment we did in New South Wales, the AUD 68 million. On sorting, we had a target of 10%-15% growth. We delivered almost 19%, growth. Currency has had some positive impact. Compac acquisition has some power, positive impact. But again, I think it's fair to say that the three first of these targets, collection revenue, collection margin, sorting revenue, we have delivered on. On the EBITDA margin for sorting, we are below the target of 18%. Again, Compac acquisition has had a negative impact. We will deliver a higher margin in 2018 than the 12% here, but we will still have a way to go to get up to 18.
It's about the food margins, which is being addressed, and we have higher ambitions going forward. Then, looking at the balance sheet and cash flow. TOMRA has always had a very stable and predictable cash flow. Looking at the monthly development, it has for the last two years, and actually the last 10 years, been rather stable. Slow in the beginning of the year, high at the end of the year. It mirrors to a large extent the drinking consumption in the U.S., where we have a material recovery business, and we have higher working capital during the summer months when the activity is high because of the drinking consumption is higher. So also this year, we expect a development which is not very different from what we have seen the previous years also.
Looking at the last three years, we have generated around figures NOK 1 billion of cash flow from operations. The replacement CapEx has been around 250,000, so NOK 250 million per year, leaving a yearly free cash flow of NOK 750 million. So leaving room for dividend and for further, investments in expansions. The solidity is good. We have more than 50% equity. The gearing is low. It was all the way down to 0.3 at the end of 2016. Then it has increased today, at least at the end of second quarter, it's at 1.2-1.3, because we have done the BBC acquisition, we have done the Compac acquisition, we have invested in New South Wales, and we also paid dividend two times.
Still, but still, it's a low level. And from now and going the next three quarters, it will, the leverage will reduce significantly because there are no significant investments in pipeline during this period. So with a good cash flow, with a solid balance sheet, with a low gearing, it's meaningful to have a decent dividend policy, and we have had for several years, 40%-60% of earnings per share should be distributed back to the owners. And we have done with a steady increase, on average, 15% increase of dividend year-over-year, the last seven years. And last year, we paid out 57% of the earnings per share to our owners. Now, looking forward and looking at our gearing capabilities, our ability to absorb debts.
I know this is a topic we have partially addressed it. As you understand, it's hard to be precise of the needs because a lot of this is related to projects which we are not certain that they materialize, and particularly on the timing of the different projects. On top of that, we don't know what type of project we will experience. Typically, in collection, we could see the traditional sales and service model or the throughput model. Historically, we had the throughput model, the sales and service model . It served us well. It's not capital intensive at all. You sell the machines, the owners have service on it, and it's little capital tied up to those models.
On the other hand, you see the last three markets opening up, being Queensland, being New South Wales, being Lithuania, all three, maybe by coincidence, has been throughput models, where we or other take the responsibility owning the machines and operating the machines. This is a model that we probably will see more of going forward, but it will also probably be a mix, with some of our governments choose to implement laws where you have more traditional sales and service model s, and some will be throughput models. It has pros and cons. Of course, there is a negative related to throughput models because it's capital intensive. You have to invest a lot upfront without being certain about exactly what cash flow that will hit you in the future, what volume that will go through your infrastructure.
But at the same time, the net present value of this project will usually be higher, sometimes significantly higher than the traditional sales and service model , also for obvious reason. It's partly about the risk, but it's partly also about we taking a bigger responsibility. We are a full service provider. We operate the system, not only doing service on machines that's installed out there. And, it's to some extent, also a little bit about the circular economy thinking. I think in the circular economy, you will see much more rent models. You will rent model, you will buy the product as a service, because by that, you will place the responsibility on the one that produced the product.
You have incentive to make efficient system that doesn't need much service, that are sustainable and lasting, instead of the other way around in traditional model, where maybe the cynical incentive is the other way around. So I think also that will be an argument when you're going forward, see what models that we will see. And it's not unique for our business. If you look at copy machine industry, you will see that if you go to a Staples, and want to buy a copy machine, they'll probably try to sell you a throughput lease instead, only costing a few cents per copy. But at the end of the day, you probably pay that more than the machine costs. And it's really to some extent we are doing here also, pays for usage.
But knowing this, knowing that the timing and the type, and the number of models are uncertain, it's very hard to be precise on the need on when it comes to financing. Today, we have close to NOK 1.8 billion of interest-bearing debt, at least what we had at the end of second quarter. Our total available credit facilities is close to NOK 2 billion. As I said, the next three months-three quarters, we will have a significant positive cash flow. Next maturity date is a loan of EUR 60 million, that matures in April 2019. Time will see whether we will manage to be below at that time or not, but then in May, we have the dividend, and then we probably need some financing to have sufficient funding for that one.
After that, it's very depending upon the projects that will materialize. But it's natural to believe that we will have a higher gearing in the future to finance some of these opportunities that we see out there. And maybe the best way to communicate around this is looking at S&P credit rating model. We're looking at the business risk. Personally, we think we are strong on the business profile because of all the recurring revenue, because of the predictability in our business. But maybe because of size, some would argue we are closer to satisfactory. So let's, as a compromise, say we are somewhere between strong and satisfactory on the business side. Today, we are on the minimal risk profile on the financing dimension.
We are below 1.5x interest-bearing debt. We have agreed upon a strategy that we don't want to go to subprime or below investment grade when it comes to gearing, meaning BBB- is the absolute most extreme we are willing to accept when it comes to risk in this model. So you think that's that is this part, or is about having both hands on the steering wheel and having room to maneuver. And consequently, we could go easily to 3x interest-bearing debt on EBITDA within this model. We maybe can go as high as 4x for limited periods, in ramp-up periods, and so on. But in the long run, I think 3x is the limit, so to say.
With that said, we are now on the start on a new five-year period. It's time to communicate new financial targets, indicating what we think is possible to do based upon the opportunities we have used today to tell you about. On the revenue side, we think, during this five-year period, we should deliver, on average, at least 10% growth per year. There will be fluctuations on this. Remember that, in some areas, we are master in our own house, but, but also in other areas, as you see, we are dependent upon legislation, and the timing of this is always uncertain, and also what type of model you will see is uncertain. So, but adding up the opportunities we see in pipeline, we, we feel that this is a, is a natural commitment to make.
But as I said, each year could be different. Maybe 2019 will be somewhat harder to make this. There is no significant market that seems to open up with new deposit system in 2019. But then going into 2020 and 2021, it will be upside down. Looking at the five-year period in total, this is what we commit to. EBITDA margin, we maintain an 18% margin target. This is absolutely above where we are today, and it will take some time to get there. We need to invest to manage to deal with the opportunities we have out there. And looking at all deposit initiatives, all the opportunities within sorting, we need to employ people also.
So to deliver on the top-down target, we probably need between 1,000 and 2,000 employees the next 5 years here, just to manage to deliver on these expectations. And for that reason, one have to need to invest before we can start to harvest here. So the target will-
... probably take some time to get, but in a normalized situation with opportunities, 18% margin should absolutely be achievable. Dividends, we want to continue to, to provide, a decent, cash flow also to our owners, so the 40%-60% stays, unchanged. Capital structure, we have talked about BBB-, maintaining investment grade, and then return on capital employed. Rest assured that we will not take marginal projects. When we invest, we want to make, a decent return on those investments, and 20% on new project is also what we are, accounting for, and you should accounting for, looking at Tomra going forward. With that said, I think I conclude, presentation on finance. And Elisabet, you tell us what to do next.
So we're over to the Q&A session. I would like to invite all speakers to join us on the floor. As we're lining up, just a piece of information, there will be a bus coming. It will be coming. I feel very small. I'll stand between you.
Stand next to me, then it's okay.
There will be a bus coming, and that bus will be driving down to Asker Station in order to get people onto the airport express train for the ones that needs that. Then afterwards, the bus will go to Tjuvholmen for a final stop. So it will be relatively smoothly in the collective lane if someone is looking for environmentally friendly transport as well. So we are ready for any questions that you might have. Glenn?
Thank you. Glenn Kringstad with ABG. You highlight that you have a pretty high headroom for more gearing, but you focus a lot on investments in new market opportunities. Can you talk a bit more about M&A opportunities and how you look at that? Obviously, you have a broad footprint now, but do you have a focus on it at all, or is it geographical? And, yeah, what are your thoughts on that? Thanks.
Yeah, I'll take that question. So we have done a number of M&As. We do have a traditionally, like it or not, but we really like to keep the house in order. So whenever we do M&As, we make sure we can deliver on them. So that is kind of our guidance for how we work. So obviously, we have done a couple of very recent M&As, Compac and BBC, meaning that we still have a little bit of work to do there to feel that we are fully leveraging and benefiting on the opportunities in there. We should not rule out. I can say openly there's nothing significant in the pipeline right now, also because of the reason I just mentioned. We do not rule out.
I think if we look into M&A in the future, we will look into the complementary M&As, predominantly in technology, in geographies, or in application areas. So this would be the guidance. So we try always to build on what we have so we can enlarge, but strictly in line with our strategy. So that would be number one. I think also, but that will be a little bit longer term when we go into the circular economy, future food, I think we will also come into new landscapes. I have the experience when you do business development, you come into a door, you choose to go through a door, and you see a set of new doors, and that will always be.
As for the more you progress, there would be more opportunities, so, but that is more long term.
Thanks.
We'll take one question from the web.
Okay. So this question comes from Ingmar Schaefer in APG. Thank you very much for your presentation so far. However, in sorting, you also provide machines that sort items which do not really fit into the circular economy and food safety image, which you have presented so far. How do these products fit in the longer term strategy of TOMRA?
Yeah, maybe this is... I'm not quite sure where this is referring to, but mining is an area where you could argue it doesn't fit. I mean, but we have mentioned several times, if you think about circular economy, it would be stupid to think that the economy would be completely circular. So we will always have new materials coming in, and if the world stopped doing mining, we would have a big problem. So mining is, in our view, a good part of a circular economy. You will always have new materials to come into the loop. So we are very confident that this mining activities we have, but what we should probably also mention, we save a lot of energy and water with our solutions.
We think it perfectly fits into what we're doing.
Mikkel and then Martin.
Mikkel Nyholt, Carnegie. First question, you say that 60% of business contribution in the future will come from core business and then 40% from new initiatives. Do you plan to report or update the market on this, for instance, in annual reports? Or how can we be able to track the development?
... Not in a systematic way, but I think from time to time, we can give you a little insight on how this develop. Not always it's so easy to distinguish between them also. But assume that we will regularly can touch upon it and tell where the growth is coming from. Hopefully being sufficient for your needs in this respect is.
Further on the sorting side, you touched briefly upon this, but how has your product offering changed over the past five years? And what do you see as your main competitive advantage? As in, why are customers coming to you instead of cheaper alternatives? Thank you.
It starts with what I've mentioned, and it's still the driving factor. We have the best machines, and that is still driving it. But we are, you know, as in every industry, of course, competition doesn't sleep, and they're getting closer. That's why I said it's important to also work on your customer intimacy. Working with your customers on developing solutions, being a business partner, help doing them more business. So it's a combination that really makes sense. In the future, technology alone will not be sufficient, but rest assured, we will always keep our nose a little bit ahead of the others.
Martin?
Thank you. I think it's a question to Stefan. It was very inspiring to hear your plans to connect the dots between, for example, food producers and recyclers. And it sounded to me like there's a great opportunity in actually creating business models around this. But could you please discuss a bit how you see the business model in that, and how the, let's say, revenue stream could develop?
Martin, if you don't mind, I will make a closing there, and then maybe I try to come back because it's easier if you have a graph showing it, so how do we connect in the business? Allow me to try there.
Yes, of course, Stefan, but maybe then I can follow up on the question on how in the last round about the competitive environment, both on the collection side and sorting. Volker, you just mentioned something about competition, but maybe you, Harald. Do you see any other attempts, for example, from Siemens or any large industrials, trying to prepare for, let's say, the EU legislation that we might see years coming?
No, we haven't seen anything from any others. We see, as I said, that, beverage, industry wants, wants to take a stance on this and, you know, be more proactive. But not any other big, big companies. You know, it's, it's still a niche, niche industry, but of course, I would expect others to come in at some point if it really grows. We still think, you know, after being, doing this business in 1972, that we have a considerable advantage. And also with what we're doing on, on digital now, our expectations is to, is to make our, let's say, product offerings more sticky for the customers.
Could I have one last one to Volker? About the service part of your business. It has been growing, I believe, but it's still below, let's say, what collection is experiencing. What are your thoughts about the share of service revenues going forward?
Yeah, I, first of all, I don't think we can really compare, what, what's the kind of service that is done for the retailers. They really have, kind of regular, high frequent service. It's also the population of machines is very close and very dense, whereas our machines are all around the world. But, our increase, our share of revenue in service increases year by year, and we have certain expectation. I mentioned, you know, in mining, 40%. I can see this in mining, smaller part, getting to 50%. On the food side, I think something like 30-35% is something that, is achievable and doable in the future with the new services we do. Yep.
Thank you, Volker. We'll take one more question from Philippe, and then we'll go to the web for two questions, and then we'll come back if any more. Please go ahead, Philippe.
Yeah, thanks. Another question regarding to this throughput model. You've often seen some resistance by big retailers to make the CapEx investment to install the machines. If you are going to do that yourself, can you then drive more penetration of your new business model in collection? And the second question is, could you come back to this throughput model and talk a bit about the sort of fees you would have in mind per bottle when you start to be part of the system, as you say?
Yeah, I think, you know, I also mentioned that, that when, when a deposit system is put in place, it's, it's always a lot of stakeholders, which is part of the consultation and, you know, part of, sort of making the, making the structure. Usually, in the beginning, retailers are negative, because they see that they will need to invest into this. And I would say that since we, since we can, both offer and, probably also, you know, promote that kind of solution, that will make it easier for retailers to participate. So it's also, you know, it's not only per retailer in a way, but it can also be a model which actually helps to promote the deposit scheme. And, I, I,
... Yeah, I see the positive side of that, definitely. But when you come to the fee structure, it's then we're also back to how the scheme is designed and how the sort of financial, total financial model is. We always look into the financial setup of a scheme like that, and if the fee, if there are risks related to the fee structure, you know, whether it is from the beginning or whether development on inflation and so forth is putting a risk into the whole system. We have in our project model, we have go, no-go along the way on the risk structure. So maybe in some countries, we will say, "No," we will not prioritize it because the risk, the financial risk is too high.
So it's always important for us that the fee is sufficient to have a sustainable model, and it has to be sustainable for TOMRA as well. I don't know if that's answered your question. It's difficult to say, you know-
I know.
exactly what the fee has to be.
Yeah, I know, it's early days, and it's
Yeah.
New also. Thanks a lot.
Thank you. We will go to the web for two questions. Yeah, there are two questions on the financial targets. So the first one is from Stuart Winchester in Allianz Global Investors: How much priority are you giving to improve returns on capital on the overall business, rather than just the target you set for the new projects?
As long as we are at 20%, more or less today, the difference is not very big. I can give a lower answer to that also, because return on capital employed is a little difficult. It's so much about accounting principles. You can have two identical projects, and you invest an amount, and if you capitalize it, you get low return on capital. If you don't capitalize it, you get a high return on capital also. So there are some aspects with that, which makes that a little hard to monitor also. But I think the signal is that we do not do marginal project. We pay attention to return on the capital. Today, we have sufficient funding opportunities.
Going forward, we might be more stretched, and also for that reason, we have to pay significant attention to this, because we could have several projects coming in simultaneously that needs funding, so to say, and we will pay attention to this. And I think the 20% signal sets the stage in that respect.
Thank you, Espen. So the next question is from Jacob Munk in Kirkbi: Given the dynamics with the new EU regulations potentially impacting collection in the coming five years, can you separate revenue and margin guidance on sorting and collection?
We can separate the revenue, but also recognize that when we go forward, we might have projects where we are combining the collection and sorting, very likely so in the circular economy. So we have decided that we will have a target on a group level, but we will not discontinue our reporting structure as we have done until now. So by that, at least the transparency will be in how we operate.
Thank you. That concludes our Q&A, and we'll leave the stage for Stefan to do his final or concluding remarks for the day.
So before I come to trying to summarize what we have tried to convey to you today, I would like to first express gratitude for you all coming all the way from different locations to us today and showing such a high activity in the participation, both here and on the web. So thank you for that, all of you. Secondly, we have had a team that has worked quite a lot on this here, people in this room and also outside. I'm very proud of what you all have done, so thank you so much. I think this is an important milestone in communicating where TOMRA is heading, so I just want to express gratitude to everybody who has been involved in that. Please convey that.
So the question really is, as I mentioned before, we now want to take TOMRA to a newer level. It is, of course, in the reflection of what is happening out there, and also in where we stand, where what we have developed. We see opportunities based on our portfolio. If we look into the circular economy side of the business, until now, you can say the main flow of what is being recycled is coming through traditional waste streams, collected in bulk, collected in through the waste management cycle, then being processed and sorted out there. That will continue to be a very important part of our business, to be important part of the infrastructure for the future.
But in order to accelerate the circular economy, what you really want to do here is to lift the quality of the material. So if the material comes from a waste management, it is by nature more contaminated. It's also more uncertain about the quality. What comes through a collection device, and today we take back bottles and cans, in the future, we envisage to take further plastic types. And I think also, if you want to be serious about, you know, circular economy and e-commerce supporting that, we will probably look into packaging types, like cardboards and so on, try to find a standardized solution for that. And the best thing is we have a lot of engineers, so if we can just give them the problem, I'm sure they will solve it to us.
So as long as we see there's a rationale in the business behind it, we will embark on that. So then you will actually accelerate, because you will be able to bring in with, number one, higher quality into the process. So high quality in enables high quality out also, I hope you can see that. And you will also have much more precision in what's happening, because, you know, all our collection machines are connected today, or 60%. In the future, all will be connected. We see instantly what's happening. So you have a stock of the material coming in, and this is very important, maybe not so obvious, but when you come to a smart city, and you know we are zooming into smart cities, what is unique for a smart city? Well, space is the constraint, right?
Every smart city, space become very tight. So we need to develop solutions that are tight and compressed. So if we can now, through our collection solutions, make sure it's stored in or collected in a smart way, you know, think of you have some waste solutions where you have the storage underneath, you know, an outdoor solution, we have storage underneath. We need to explore all these kind of things so that you free up the space. Transporting with high efficiency, you know, compacted from point to point, not going through different stages in the value chain. So, cutting cost in every step here, and then coming into, think of a recycling plant. Today, they buy material from all over the places, and by that, they have a little bit uncertainty of what do they have.
They also have, by that, problem, a recycler has a problem to commit to a steady supply, to someone downstream. So by knowing what's coming in, they can plan it. They can also reduce their storage space. They can go more just in time in the production. So these are all things that we can enable when we connect the dots. I hope, Martin, that gives you an idea about what the connecting the dots means here. So the data infrastructure, the connected system of collection and sorting, will enable us to work and unleash or release the values in the value chain for our customers. And our job is to make our customers, the recyclers, the industry, as successful, as profitable as possible. If we can do that better than anyone else, they will use our services.
This is as simple as that. We are not going into trading material. We want to stay focused on what we are good at, that is supplying and developing, supplying, and servicing collection machines, sorting machines, but we will just connect it to make the market so much bigger. So if you think of the market of today, for collection machines, we have the RVMs with the bottles and cans. I'd like to say, you know, we have kind of been pressing the ketchup, and it seems that the ketchup is coming out now because we see all this new deposit market opportunities opening up. So that's a positive.
You know, when we go down and look 10 years from now or 5 years from now, hopefully, we will be able to show that market is actually much bigger because we will take many more objects. We cannot start calculating on that now, but that's exactly the opportunities we would like to look into. So we are here to grow the business and do that smartly in generating values for the industry. I hope this explains a bit connecting the dots and what we want to do in this industry.
So we will stay close to the roads, but we will still with smarter and better collection solutions and with even more precise sorting solutions, they are, they are astronomically precise today, as Volker said, you know, it's amazing the volume and the precision we do here, but we will continue to do that and do more, and being able to help the industry to go from a linear to green and creating a better economy and also doing a good contribution to the environment. With that, I want to move over to the food side. Also here, it's very important. We talked about the complexity of the supply network. Ultimately, you might now see one more thing that TOMRA has not been so focused on in the past. We will be much more of a consumer-oriented company in the future.
The consumers will buy the apple. We need to understand how—what do they want to have? So for instance, $5 for a sweet apple. When I met a customer last year in the orange industry, after they installed our grader, they told us they could increase their grade one, so their top quality, by 30% instantly. So we make sure that every apple is being to use, and those apples that are a little bit with a worm inside or whatever, it will be used to something like apple juice or something processed. So we want to help them to use every product that comes in. We want to use the data we extract out of this to go back to the farm, to improve the farming.
We want to use that data to tell them, like Volker said about, you know, this is coming from this farm. Actually, it was robot-picked from that branch, so you know exactly from where you got it, and that was without pesticides, they were organic or whatever qualities you're looking for. There would be so many customer desires and, or consumer desires. Important is we can satisfy them, and we can help our customers in the food processing to be more successful, but we can also, minimize waste and connect the dots here with the supply and demand, and again, connecting the dots. And when it comes to relevance, we will kind of meet up for, with...
Think of an e-commerce company, an Amazon, Alibaba, just using names now, not saying that we are deeply working with them, but we are zooming in on that, obviously. They will need, to be successful, they will need someone to help them handle the packaging waste they will generate, because that will grow much with that business. They will also need someone helping them to show how can they sell a fresh apple and guarantee it's also fresh, because that takes the sorting of the last mile. These are the two paths we are working on with our technology. And clearly, the way to win, we have talked about the technology, we have talked about the service.
The better we understand how we can deliver values to our customer, and the better we can team up with them in delivering these values, the more successful we will be. With that, I hope that you got a snapshot of what we intend to do. We think that we are taking TOMRA to a new generation here, where we are connecting the different pieces we have in the portfolio, and with that, being able to enter markets that are actually opening up as we speak. And I think, I dare to say, in the circular economy side, there is no one out there that is as good position as we. No one has the collection, the sorting, the integrated digital platform, and hopefully, also not that name in the industry like we have, because TOMRA is becoming a strong brand, I might tell you that.
In the food industry, we are also predestined to do quite a significant work since we have now built this portfolio and are able to do so much in a concentrated way. But think of that, we will still be in the orchards out there to sort there, but when you come into the e-commerce, where the consumer might buy two apples instead of one kilogram, and a bottle of Coca-Cola, and so they buy smaller quantities. By the way, that's also good for the sustainability, provided we can solve this delivery process, but they will not buy so much in bulk. There will be less thrown away because of end of date.
It will all contribute, and I think by doing that, we also contribute to a better economy, a better environment, and a healthier planet. Thank you, all of you. We will be after this seminar, of course, more than happy to answer any questions you have. Thank you so much. Have a good weekend.