Hi Ash,
looked back to find an article l read which covered some of TPI's now CWY issues
Some good info but bear in mind that its a couple of years old so much probably has changed.
Certainly seeing improvement in share price and the company.
cheers mb
Bit from the article in Fairfax
FEB 22 2015
"Trying times with Transpacific turnaround"
Brian Robbins
"Owning landfills plays a key role in lifting wafer-thin margins at a time of ongoing government pressure to lift recycling levels, which will boost capital intensity as the focus shifts over time to waste recovery investments.
In the December half, Transpacific paid Boral $165 million for the Western Landfill in Melbourne, which will help to offset the looming closure of the Clayton landfill late in fiscal 2016. That acquisition will be critical in lifting the so-called "internalisation rate" to around 65 per cent from 25 per cent at present.
In other markets such as Brisbane, South Australia and Western Australia, there are no such pressures, since its landfills there have a minimum of 10 years and up to over 50 years of life left. Speaking with analysts on Friday, Transpacific made it clear it is pushing its line managers hard to lift the internalisation rate given the impact this will have in boosting margins.
But the big question is what will happen in Sydney, where Transpacific's Erskine Park landfill is approaching the end of its life. It is estimated it has just three years left before it will close.
All waste groups in NSW have been hurt by the decision of the Queensland government in early 2013, not long after the previous Newman government came to office, to remove the $35 a tonne waste levy, which prompted a flow of waste from NSW into Queensland, to avoid paying the NSW waste levy.
With the largest volumes in the Sydney market, Transpacific will see margins shredded once Erskine Park is closed, in the view of many in the market. The pushback from Transpacific supporters is that it is increasingly placed to play both Sita and Veolia off against each other to squeeze prices. Sita has the Lucas Heights landfill in southern Sydney while Veolia has the giant pit at the former Woodlawn mine south of Goulburn. Veolia, too, is building a new transfer station at Banksmeadow, and will be in the hunt for extra volume to get a return on this outlay.
So closing Erskine Park, while a loss – and the focus of much near-term investor attention – is not a simple equation, given the ability to partly offset the impact by squeezing margins of both Sita and Veolia on the volumes going to their landfill.
"Bolt-on acquisitions" forms part of the revitalisation plan at Transpacific, but investor focus is narrowly on fixing the Sydney problem, which may chew up another chunk of capital.
Despite the complaints, the waste levy in NSW reflects the fact that there is an ongoing environmental cost to landfill, while it is also a lever to drive the industry to lift recycling. There are already some alternative processing centres in operation – none operated by Transpacific – that are not viewed as being uneconomic, although that may change in the future ."
(20min delay)