Why Bingo and Cleanaway shares could clean up on recycling ban news

The Federal Government’s recently proposed ban on exporting recyclable materials could be a boon for the ASX’s biggest waste management companies Bingo Industries Ltd (ASX: BIN) and Cleanaway Waste Management Ltd (ASX: CWY).

What’s driving the proposed recycling ban?

According to the Australian Financial Review (AFR), Australia spent $2.8 billion last financial year sending nearly 4.5 million tonnes of waste to other countries. Although the article reports that almost all recycling of masonry materials, organics, glass and hazardous waste was done locally, 43% of recycled metal, 70% of recycled plastic and 43% of recycled paper and cardboard were exported for processing overseas.

If Prime Minister Scott Morrison gets his way, this situation is poised to change dramatically. At a recent meeting, the Council of Australian Governments (COAG) agreed to work towards “setting a date to ban all domestic waste exports like paper, plastics, glass and tyres” with Mr Morrison declaring “It’s our waste and it’s our responsibility.”

How will this impact Bingo and Cleanaway?

If a ban on waste and recyclables is implemented, it will be a boon for Cleanaway and Bingo, Australia’s two largest ASX-listed waste management companies. Cleanaway and Bingo both rely on state and local government contracts for waste collection and disposal. Therefore, if governments or other waste-producing entities can’t rely on sending waste overseas, they are likely to turn to Bingo or Cleanaway.

Unsurprisingly, management from both Cleanaway and Bingo voiced their strong support for the proposed ban.

Bingo Chief Executive Daniel Tartak stated that “Bingo is supportive of any initiative that helps promote a robust recycling industry in this country… we think it’s a great move.”

Bingo, with a market capitalisation of $1.69 billion, is well-known for the Dial-a-Dump service it acquired in 2018.

Cleanaway CEO Vik Bansal also welcomed the COAG commitment. “We believe it is essential that we as a community work towards the development of a circular economy in which products are designed, produced, sold and consumed in ways that minimise waste and environmental impact,” he said.

Cleanaway, with a market capitalisation of $4.89 billion, is among the world’s top 15 waste companies by size.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019

Source link Finance News Australia

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