Prefeasibility Study Establish Solid Waste Recycling Plant.DOC 25 Septemmber 1995

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Our reference: PreFeasibility Study Establish Solid Waste Recycling Plant.DOC 25 Septemmber 1995

PRIVATE & CONFIDENTIAL

FINAL REPORT PRE-FEASIBILITY STUDY FOR THE ESTABLISHMENT OF A RECYCLING PLANT PETEMIC TECHNOLOGY PTY LTD

"PETEMIC TECHNOLOGY PTY LTD "1

PREFACE

This Pre-feasibility Study Final Report sets out, inter alia, an assessment of the proposed establishment of a recycling plant (" the Project ") to be carried out in the vicinity of Caboolture Shire, south-east Queensland, under the auspices of Petemic Technology Pty Ltd (" the Company "2) - an organisation incorporated in the State of Queensland.

This Project, initiated by Mr Michael Walsh, General Manager of Petemic Technology Pty Ltd (" the Client ") has been carried out utilising the services of Gary O Garner & Associates (" the Consultant ") 3 as a Regional Economic Development (" RED ") Program Feasibility Study, as arranged through the Sunshine Coast (Mooloolabah) Regional Office of the Department of Business, Industry and Regional Development (" DBIRD ").

1 A.C.N. 064 320 314 2 The term " Company " as used throughout this document is a generic term used to describe the organisation "Petemic Technology Pty Ltd" 3 Gary O Garner & Associates are the “lead consultants” for the Project. Input has also been provided by Mr John Mackenzie of Sloane, Cook & King Pty Ltd (market analysis and environmental considerations); Mr Peter Stone of Chemquip Pty Ltd (various input in relation to technical engineering matters); Ms Helen Gibson (various sections of this Report, and assistance with specific matters relating to local Council requirements, raw materials, site assessment, and strategic planning); and Coller, Shannon, Rill & Scott (licensing requirements).

••• Corporate member: Australian Institute of Agricultural Science ••• Registered Valuer ••• Member: Australian Association of Agricultural Consultants - AGRIBUSINESS & MANAGEMENT CONSULTANTS & VALUERS -

PETEMIC TECHNOLOGY PTY LTD - FINAL REPORT PRE-FEASIBILITY STUDY FOR THE ESTABLISHMENT OF A RECYCLING PLANT Page 2 Section TABLE OF CONTENTS

TABLE OF CONTENTS

PREFACE...... 1

TABLE OF CONTENTS ...... 2

EXECUTIVE SUMMARY & RECOMMENDATIONS ...... 8

MARKET ANALYSIS ...... 8 Recommendation ...... 9 PRODUCTION, EXAMINATION OF ENVIRONMENTAL ISSUES, & SITE ASSESSMENT ...... 9 Production, Labour Skills and Other Resources ...... 9 Site Assessment ...... 12 Environmental Issues...... 13 COMMERCIAL VIABILITY ...... 14 Recommendation ...... 16 LICENSING OF THE TECHNOLOGY...... 16 Protecting The Petemic Technology ...... 16 Recommendation ...... 17

INSTRUCTIONS/TERMS OF REFERENCE ...... 18

TERMS OF REFERENCE...... 18 Introduction to Consultancy Requirements ...... 18 Study Objectives ...... 18 CONSULTANT’S RESPONSE TO THE T.O.R. & GENERAL PROJECT OVERVIEW ...... 20 Introduction...... 20 FURTHER BACKGROUND & FEASIBILITY STUDY CONSIDERATIONS ...... 21 PROPOSED ACTIVITIES ...... 22 Required Evaluation (Brief) ...... 22 PURPOSE OF CONSULTANCY...... 23 OBJECTIVES ...... 23

PROJECT SUMMARY...... 25

S.W.O.T. ANALYSIS #1...... 26

STRENGTHS...... 26 WEAKNESSES...... 26 OPPORTUNITIES...... 27 THREATS ...... 27

25 Septemmber 1995 PreFeasibility Study Establish Solid Waste Recycling Plant.DOC PETEMIC TECHNOLOGY PTY LTD - FINAL REPORT PRE-FEASIBILITY STUDY FOR THE ESTABLISHMENT OF A RECYCLING PLANT Page 3 Section TABLE OF CONTENTS

S.W.O.T. ANALYSIS #2...... 29

STRENGTHS...... 29 WEAKNESSES...... 30 OPPORTUNITIES...... 31 THREATS ...... 32

STRATEGIC MANAGEMENT PLAN ...... 33

STRATEGIC OBJECTIVES ...... 33 MISSION STATEMENT ...... 34 ACTION PLANS ...... 34

MARKET PROSPECTS FOR THE PETEMIC SOLID WASTE RECOVERY PROCESS ...... 38

THE MARKET SURVEY - COMMENTARY...... 38 INTRODUCTION & OVERVIEW ...... 38 BACKGROUND...... 43 POTENTIAL FUTURE WASTE PRODUCTION ...... 44 WASTE DISPOSAL COST ISSUES ...... 46 STRATEGIC OPTIONS IN RELATION TO RAW MATERIAL AND MARKETS ...... 50 SUPPLY AND PRICE OF CONSTRUCTION MATERIALS IN THE SHIRE OF CABOOLTURE...... 54 SUPPLY AND PRICE OF AGGREGATE AND CONSTRUCTION MATERIALS IN SOUTH-EAST QUEENSLAND ...... 57 Regional Supply & Demand ...... 57 Value of the Industry ...... 58 Alternative Sources ...... 59 USE OF THE PETEMIC PRODUCT, AND COMPETITIVE ADVANTAGE ...... 60 The Price of the Product or Service ...... 61 The Quality of the Product or Service ...... 62 The Availability of the Product or Service...... 62 Exclusive Rights or Concessions Which Might Limit the Competitors Rights to Obtain a Raw Material, or Supply a Product or Service to the Marketplace ...... 63 CONCLUSIONS...... 63 Sales Potential ...... 66

SITE ANALYSIS ...... 68

PROSPECTIVE SITES ...... 68 SITE LOCATION CRITERIA...... 68 THE NARANGBA INDUSTRIAL ESTATE...... 69 Alternatives to the Narangba Industrial Estate...... 72

The Noxious, Offensive or Hazardous Industry Zone ...... 73

LABOUR SKILLS AND ORGANISATIONAL STRUCTURE...... 76

KEY MANAGEMENT...... 76 Delegation of Authority and Succession Planning...... 77 The Petemic Board of Directors...... 77 Professional Support Services ...... 78 Sub-Contracted Services ...... 79 ORGANISATIONAL STRUCTURE ...... 81 ORGANISATIONAL CHARTS ...... 81 One Shift ...... 82 Two Shifts...... 83 Three Shifts...... 84 POSITION JOB DESCRIPTIONS ...... 84 Use of Contract Labour and Enterprise Bargaining ...... 85 SKILLS AUDIT ...... 85 GENERAL MANAGER...... 86 ADMINISTRATION MANAGER ...... 87 SECRETARY ...... 88 PRODUCTION MANAGER...... 89 WEIGH BRIDGE OPERATOR & SECURITY ...... 90 LOADER OPERATOR ...... 91 LOADER, PULVERSIER & EXTRUDER OPERATOR ...... 92 LOADER & FORKLIFT OPERATOR, BRICK STACKER ...... 93 GENERAL HAND...... 94 TRUCK DRIVER (if required)...... 95 QUALITY ASSURANCE (QA) & TOTAL QUALITY MANAGEMENT (TQM)..... 95

PRODUCTION & PROCESSING OPERATIONS...... 98

CAPACITY...... 98 WASTE RECEIVING AREA...... 98

ENVIRONMENTAL GUIDELINES / ISSUES ...... 101

INTRODUCTION...... 101 OVERVIEW...... 101 GUIDELINES BACKGROUND ...... 103 Air and Emission Quality ...... 103 Water Quality ...... 104 Guidelines for Noise...... 104 REFERENCES (Environmental Issues)...... 105 Schedules to Environmental Guidelines & Issues ...... 107

BUSINESS PREMISES & INFRASTRUCTURE SUPPORT...... 114

INFRASTRUCTURE REQUIREMENTS...... 114 Land Requirements...... 114 Services...... 114

General Infrastructure ...... 115 BULDING (PREMISES)...... 116 SUNDRY PLANT & EQUIPMENT...... 118

COMMERCIAL VIABILITY: INCLUDING FINANCIAL PLANNING & ANALYSIS...... 119

INTRODUCTION...... 119 Status of Development Work ...... 119 TIMING...... 120 SUPPORTING DATA FOR ESTABLISHING COMMERCIAL VIABILITY (FINANCIAL PROJECTIONS AND ASSUMPTIONS)...... 121 FINANCIAL PLANNING & ANALYSIS ...... 122 Objectives...... 122 Commercial Viability - Overview of Results...... 122 Sales Estimates - Major Assumptions ...... 123 Notes on Primary Operating Costs ...... 124 Capital Investment Requirements ...... 125 Equity & Debt Ratio ...... 126 Profit & Loss / Cash Flow Statements...... 126 Balance Sheet Analysis...... 126 Break Even Analysis ...... 126 SENSITIVITY ANALYSIS...... 126 TRADE TARIFFS, CUSTOMS & EXCISE...... 134 Tariffs Applying to Building Aggregate ...... 134 Customs & Excise ...... 135 PATENTS, COPYRIGHT AND INDUSTRIAL DESIGNS...... 135 TRADE MARK REGISTRATION...... 136 ASSISTANCE MEASURES FOR MANUAFCTURING, EXPORTING & RESEARCH & DEVELOPMENT APPLICABLE TO THE PROJECT..... 137 The Industry Research & Development Board...... 137 Department of Trade Industry & Regional Development (DITRD - formerly DITAC) ...... 138 Federal Department of Industry, Science & Technology...... 139 TAXATION IMPLICATIONS FOR RESEARCH & DEVELOPMENT ...... 140 SALE OF THE NEUTRALYSIS WASTE PROCESSING PLANT ...... 142

LICENSING OF THE TECHNOLOGY...... 144

Introduction...... 144 Prospects for Licensing: ...... 144 Protecting The Petemic Technology...... 144 Licensing - Evaluation Against Alternatives:...... 145

DISCLAIMER & QUALIFICATION BY CONSULTANT ...... 146

APPENDICES...... 147

Appendix A - Job Descriptions...... 147 Appendix B - The Petemic Waste Recycling Process (Block Diagram for Provisional Patent Application)...... 160 Appendix C - The Petemic Waste Recycling Process (Block Diagram for Petty Patent) ...... 161 Appendix D - Panoramic View of the Narangba Industrial Estate ...... 162 Appendix E - Newspaper Clipping #1: Waste Management...... 163 Appendix F - Newspaper Clipping #2: Waste Composition ...... 164 Appendix G - Acknowledgments...... 165 Appendix H - References and Further Reading ...... 166

ATTACHMENTS...... 169

Attachment 1 - Organisation Chart (Three Shifts Basis) ...... 169 Attachment 2 - Project Implementation & Action Plan ...... 170 Attachment 3 - Strategic Management & Action Plan...... 171 Attachment 4 - Plant Construction & Capital Development Program..... 172 Attachment 5 - Commercial Viability Supporting Schedules ...... 173 Schedule 1 - Primary Base Assumptions...... 173 Schedule 2 - Major & Secondary Inputs & Outputs (Material Balance)...... 173 Schedule 3 - Infrastructure & Costs ...... 173 Schedule 4 - Building (Premises)...... 173 Schedule 5 - Sundry Plant & Equipment ...... 173 Schedule 6 - Plant Operating Equipment...... 173 Schedule 7 - Depreciation Schedule...... 173 Schedule 8 - Primary Operating Costs / Quantities ...... 173 Schedule 9 - Schedule of Salaries, Wages, & Sub-Contractors ...... 173 Schedule 10 - Cash Flow Assumptions (Sundry)...... 173 Schedule 11 - Loans, Leasing & Hire Purchase Schedule ...... 173 Attachment 6 - Cash Flow Budgets...... 174 Cash Flow Budget - Year 1 ...... 174 Cash Flow Budget - Year 2 ...... 174 Cash Flow Budget - Year 3 ...... 174 Cash Flow Budgets - Years 1, 2, 3, and Y.I.Y.O...... 174 Attachment 7 - Profit & Loss Summary (Years 1, 2, 3, and Year-In- Year-Out). 175 Attachment 8 - Balance Sheet Analysis (Years 0, 1, 2, and 3)...... 176 Attachment 9 - Break Even Analysis (Profit & Loss Summary) ...... 177 Attachment 10 - Locality Map - Narangba Industrial Estate...... 178 Attachment 11 - “Petemic Technology - A Technology Review” (Engineer’s Report - Chemquip Pty Ltd, June 1995)...... 179 Attachment 12 - “Mass & Energy (Heat & Material) Balances” (Engineer’s Report - Chemquip Pty Ltd, 20 July, 1995)...... 180

Attachment 13 - “Here’s the Plan” (Brisbane City Council’s Waste Reduction Program)...... 181 Attachment 14 - Provisional Specification for Patent Application - "A Waste Recycling Process and Apparatus" (Intellpro) ...... 182 Attachment 15 - Scale Drawings of Primary Apparatus ...... 183 Attachment 16 - “Licensing” (Report prepared by Attorneys-at-Law: Collier, Shannon, Rill & Scott, September, 1995)...... 184

EXECUTIVE SUMMARY & RECOMMENDATIONS

MARKET ANALYSIS

The study confirms that massive quantities of waste would be available to the Project. However, it should be noted that whilst the study concentrates on Eastern Australian Metropolitan areas, some data for the USA is also included.

At this stage, the Consultants have little information on costs for the Petemic process 4, but the basic product (aggregate pellets) should have a ready market at prices competitive with quarried materials. The price of such competitive materials will be very site specific.

The most attractive location for a Petemic type plant will be just inside the fringe of large metropolitan areas where:

• There will be plenty of waste, including hard-fill from building sites.

• Landfill sites will be scarce and dumping will be under pressure from urban residents.

• Waste disposal costs (including landfill lining and waste handling including compaction and transport) will be high.

• There will be a local demand for the product particularly added value variants such as bricks and tiles.

• There is a ready availability of clay

This report will be augmented by some discussion in relation to the above matters, with Petemic Management.

Discussions held with Company management assume that the following premises are to be used in regard to broad detail on expected plant size, capital cost and per tonne operating cost:

1. Capacity: 500 tonne per day

2. Capital Costs: $20 to $25m 5 ($A)

3. Costs per tonne for refuse disposal: $40 to $45 per tonne

Examination of the specifications put forward by Petemic Technology suggests that the Petemic product in basic form should command a premium over crushed and screened builders rubble. (Dumping charges for commercial refuse at municipal landfill sites in Eastern Australia may also vary up to about $50 per tonne, but can be expected to increase rapidly as new government environmental and "user pays" policies are progressively introduced).

4 However, management advise that indicative costs would be in the order of $40.00 per tonne 5 During the early stages of the pre-feasibility study, this amount was revised to $20m to $50m

Moreover the Petemic process has the potential to utilise a greater proportion of the waste handled in municipal disposal than simply hard-fill waste amenable to crushing and screening.

This analysis suggests that the break even point for the basic Petemic process might be about $50 per tonne of refuse input. This might be allocated as to $40 per tonne in landfill utilisation cost avoided, and $10 per tonne in base product value (on site).

The available data suggests that sufficient waste is available in the main metropolitan and urban areas to provide a consistent supply of input raw material, and that a regular demand for the basic output would be available at a price that would be competitive with quarried materials.

The indicative Petemic plant capacity to treat all the present Shire refuse would be about 280 tonnes per day (assuming a 5 day week), expanding to about 600 tonnes per day by the year 2006. We are advised that the optimum sized plant for the Petemic technology is about 500 tonne per day with an indicated capital cost 6 of $20 to $25 million 7.

Importantly, it can therefore be concluded that the physical input and output parameters for an optimum sized Petemic plant in the Shire of Caboolture would not be mismatched with the supply of refuse, and the expected Shire demand for aggregate. For example, the output from the Petemic facility would provide less than 10% of the expected demand for sand and aggregate in the Shire.

Recommendation

In view of the above findings, the Consultant recommended that the Project now proceed to the next phase of the Project, i.e. Production, examination of environmental issues, and site assessment.

This was subsequently agreed to by the client, and DBIRD.

PRODUCTION, EXAMINATION OF ENVIRONMENTAL ISSUES, & SITE ASSESSMENT

Production, Labour Skills and Other Resources

The key production issues as required under the Study objectives (assessment and quantification of availability of raw materials necessary to produce the aggregate) has been covered in the previous section of this Report.

6 As noted previously, during the early stages of the pre-feasibility study, this amount was revised to $20m to $50m 7 It should be noted that similar characteristics to the Shire of Caboolture are also present in adjoining Shires, particularly Pine Rivers and Redcliffe, and it is possible that a strategically located facility could also attract refuse from those Shires.

In relation to labour skills, “Key Management” will consist of three personnel (plus professional support services) in the General Manager, Administration Manager, and Production Manager.

All three positions are critical to the effectiveness of the Project, with quite distinct responsibilities.

The General Manager is responsible to the Petemic Board of Directors, and will not only implement policy and be responsible for the ultimate performance of the Company, but will also play a large part in the marketing of the Company and its products.

The Administration Manager, with a primary responsibility for providing financial management information, will act essentially as the Company’s bookkeeper and paymaster. He will be integrally involved in nearly all transactional processing activities.

The Production Manager is totally responsible for the production and processing operations, in addition to being the designated Quality Control Officer. This position also carries the ultimate responsibility for the production of the Petemic end-product to the specifications and standards established as Company policy. The Production Manager’s other critical area of responsibility is the day to day management of most Company staff. It can be expected that this person will have a key role in the “hiring and firing” of production and processing personnel.

Because of the possibility of key management being absent from the premises for extended periods, management will need to carefully consider the development of succession planning. Various programs, such as ATFIC (Assistance to Firms Implementing Change) may be suitable for assisting the Company in achieving such objectives, along with the possibilities of striking an Enterprise Bargaining agreement with all staff.

In the short to medium term, the Consultant recommends that the existing Board should look for at least two other, independent, non-executive Board members with expertise in the areas of:

• Financial Management • Engineering Technology (preferably with specific skills in the area of waste management)

The following Professional Support Personnel will also be required, in addition to full time personnel:

1) Industrial Chemist (required for the formal testing of product quality and composition. Some stress-testing of product may also be required to meet the potential requirements of local Councils and other clients of Petemic

2) Consultant(s) are required in the following areas:

• General Consultancy (allocation should be made for assistance with the financial management functions ).

• Engineering (implementation of Plant design, and ongoing calculations for product / process specifications. Plant modification “on the fly”).

3) Other Professional Support (Ongoing). This includes the appointment of an Accountant, Auditor and Solicitor

The following services will need to be retailed for the provision of various sub- contracted services:

Maintenance Crew

The maintenance crew (comprising skill areas of fitter, turner, and boilermaker) will be charged with the responsibility of maintaining the Petemic plant. A reduced requirement is indicated in the early stages of plant operation.

The purpose of the Maintenance Crew is to MAINTAIN PRODUCTION AND QUALITY by ensuring operation of machinery and mechanical equipment.

Security Guard

The Security Guard will be charged with the responsibility of ensuring the entry of only those persons authorised to do so, or otherwise legally required, outside of Plant operation . A secondary role will be the securing of the Company’s assets. A reduced requirement would be indicated should the Company proceed to two shifts, with a “nil” requirement where three shifts are in operation.

Electronic and Engineering Contractor

The Electrical and Engineering Contractor will be charged with the responsibility of maintaining the electronics and controls relating to the Petemic Plant. The Maintenance Crew will be directed by the Production Manager, but with the input from the Engineering Consultant engaged by Petemic.

The organisational structure of Petemic Technology Pty should be relatively “flat”, allowing for smooth communications between factory workers, and management. Whilst the Consultants have prepared structures for one, two and three shifts, in order to produce the intended product output (i.e. 500t per day plant), indications are that a total of three shifts per day will be required.

Preliminary indications, subject to further audit by Consulting Engineer 8, are that total staff numbers of at least 28 personnel will be required.

Positions have been identified as follows:

Management (as above)

• General Manager • Administration Manager • Production Manager

8 This matter is currently being investigated by Consulting Engineer Mr Peter Stone.

Administration

• Secretary • Administration Assistant

Operations and Production

• Sub-Foreman (Assistant Production Manager) • Weighbridge Operator & Security • Loader Operator • Loader, Pulveriser & Extruder Operator • Forklift Operator, Brick Stacker, and Loader Operator • General hand(s)

Suggested Position Results (Job) Descriptions for all personnel are appended to this Report, together with an audit of skills.

Finally, management must recognise the need for proceeding with the implementation of a formal Quality Assurance program 9. This will be sufficient to meet the expectations and demand of clients (both domestic, and potentially international clients), and the industry in general. Local Councils are becoming more insistent that service providers (and Petemic is potentially one of these) be Quality Assured. Progression to TQM is an option further on, however will capitalise and strengthen a formal commitment to QA principles.

Site Assessment

The Consultants have followed the Client’s directive in endeavoring to establish prospects for a suitable site or sites within the context of Queensland, and preferably South-east Queensland. From this point, the viability model for the establishment of a suitable Petemic plant can be adapted according to site variables and infrastructure requirements applying to any particular location.

An indicative location for such a pilot plant is the Shire of Caboolture. There are several prospective sites in the Caboolture Shire that may be suitable candidates for the setting up of a pilot plant. The preferred site selected is the Narangba Industrial Estate, based on the following factors:

• Able to support the identified infrastructure requirements (e.g. availability - or reasonable availability - of power, telephone, water, gas / furnace oil / diesel, etc.).

• Rapidly growing local population, and the implied availability of waste.

• Site is appropriately zoned Special Industry (“Noxious, Offensive or Hazardous” ) zone.

• Environmental restrictions, particularly that relating to noise, do not, prima facie , prohibit the planned development.

9 The Company should proceed to full implementation a formal program of Quality Assurance, in line with a Quality System fulfilling the requirements of Australian Standards AS3901 or AS3902 as may be applicable - the AS3900 Series Standards required by the Clever Country Policy of the Federal Government and the State Government Purchasing Policy 1991.

• Preliminary discussions with Caboolture Shire Council indicate that it is a likely possibility that it could be acceptable, prima facie , to the local Council.

• Low or nil level of objection likely posed by local / regional communities, due to its distant proximity to residential areas and placement within an identified “noxious, offensive, or hazardous” locality.

• Required land area - minimum of 10 to 15 acres (4 to 6 hectares) - is available .

• Excellent road access for heavy vehicles. Easy access to the Bruce Highway.

• Bitumen road access available to the Estate.

• Narangba Industrial Estate enjoys a significant “Buffer zone” which should serve to minimise or eliminate any undesirable effect on residential areas.

• Viewing from major arterial roads or highways is highly restricted. This will assist in minimising, or eliminating, any visual intrusiveness.

• Close proximity to a number of existing landfill dump sites, including those in several adjacent shires.

Environmental Issues

The primary legislation governing environmental issues in the context of the operation of a Petemic Plant are addressed in the Environmental Protection (Interim) Regulations 1995 (SL No. 46 of 1995) . This is subordinate legislation to the Environmental Protection Act 1994 . The primary areas of responsibility are: Ozone depleting substances 10 ; Licensing 11 ; Assessment criteria for air quality 12 ; Assessment of water quality uses 13 ; and finally, Noise level parameters 14 .

There are 10 schedules to the Regulations defining activities, licensing fees, controlled substances and compliance limits.

10 Regulations set out parameters for installation and control and release of controlled substances 11 Conditions for licensing are set out, including monitoring of operations. An Environmental Management Program will be required. 12 National Guidelines for air quality and control of emissions follow standards adopted by ANZECC & NH & MRC (1985) 13 Australian Water Quality Guidelines for fresh and marine waters (ANZECC). Sampling follows water quality sampling manual. (2nd Ed. 1995) 14 In general the acceptable limit will be 8-10 dB above the background noise level.

guidelines established under a range of earlier Queensland legislation. In other instances, earlier guidelines will remain in force until new guidelines are developed. Moreover, it is likely that Environmental Auditing under ISO 14000 will be implemented in early 1996. Standards Australia through its QRII Committee, may issue the latest draft of ISO 14000 as an interim standard for Australia.

For the Petemic process, an EIS (Environmental Impact Statement) will almost certainly be required containing very specific data. An environment management plan will also be required.

Licensing will be dependent on satisfying both the Council and the State Government. In practice the administration and enforcement of the Act is devolved to Local Government, but the Consultants believe that the Caboolture Council is reluctant to specify any clear guidelines in advance of a detailed plan.

Special Note: Development of an Environmental Management Plan, and possibly an Environmental Impact Statement (if required), should be completed post the pre-feasibility stage of the Project, when more specific data becomes available following further research and development of the process including operating data derived from the operation of major plant items using the input feedstock likely to be used in the process.

COMMERCIAL VIABILITY

The Financial Projections contained in this Report demonstrate that the Project is marginally viable, with a Year-In-Year-Out Net Profit After Tax of approximately $0.5m.

The primary base assumptions used in calculating this amount are that of 503 tonnes of Municipal Solid Waste (MSW) Garbage is received daily at a price $40.00 per tonne, with an output of 500 cubic metres of aggregate (350 tonnes) 15 sold at $14.00 per tonne.

The above primary assumptions are critical in the calculation of net profit, i.e. the Project is very sensitive to changes in MSW Garbage or Aggregate receipts / sale prices. For example, the level of Net Profit After tax approximately doubles where the price received for MSW Garbage is $45.00 per tonne.

The capital required to fund the Project is $20m, with the base model assuming that 80% ($16m) is derived from investors, and the balance ($4m) obtained through debt funding. This will support capital works in the order of $18m, and a further $2m working capital.

The “Break-Even” point 16 is reached where the amount received for MSW Garbage is $34.60 per tonne (assuming 100% equity / investor) funding.

The Project will take approximately four years (from the commencement of the commercialisation stage) to achieve annual profitability, although this could be

15 Based on 0.7 bulk density 16 The “Break-Even” point is defined as being Net Profit After Tax equalling $zero Year-In-Year-Out.

achieved up to 12 months earlier should the required Capital funding be wholly obtained from investors rather than partially obtained with debt.

Development of the technology is recommended to proceed in four stages which are summarised below:

STAGE 1 - CONCEPTUAL

At this initial stage the basic process parameters and testing requirements should be defined. Any restraints imposed by potential problems such as patent infringement should be built in to the project.

STAGE 2 - BENCH SCALE TESTING

The stage determines the feasibility of operating at the selected conditions, which are checked using bench scale equipment. Small batches of product should be produced to provide samples for initial testing for key properties.

Operations at this stage are essentially on a batch basis.

STAGE 3 - PILOT SCALE STAGE

The pilot stage is used to validate the process, assess continuous operation, provide the basis for scale-up to the semi-commercial or commercial design, produce sufficient product for large scale testing and trials, develop quality control procedures for the inputs, outputs and process, and enable development of confidence amongst plant designers and equipment suppliers so that a process guarantee can be obtained for the plant performance. (During this stage a generic engineering design is often carried out to assist in market development and to define capital costs more closely).

STAGE 4 - SEMI-COMMERCIAL/COMMERCIAL

This stage is usually a scale up from the Pilot Scale Stage and follows the completion of a major feasibility study which would include a detailed engineering study. Usually fine tuning and development of the process would be expected to continue at this stage, leading to a modified and improved design for the second plant.

The stage incorporates detailed process and engineering design, procurement, construction and commissioning.

The estimated duration of the above stages is within the following ranges:

Stage 1 6 - 9 months Stage 2 12-18 months Stage 3 24-30 months Stage 4 24-36 months

The estimated total duration from the commencement of concept planning to completion of the commissioning of a commercial or semi-commercial plant is therefore between 5 and 7.5 years. However, the financial projections in this Report assume the following milestones:

Stage Project Stage Description Commencement Duration

1 Conceptual 15-Dec-94 9 months 2 Bench Scale Testing 14-Sep-95 12 months 3 Pilot Scale Stage 13-Sep-96 24 months 4 Date to Commence Commercialisation 13-Sep-98 Plant Construction 13-Sep-98 14 months Plant Construction Completed 13-Nov-99 Commercial Product / Equipment Testing 13-Nov-99 4 months Commercial Production / Sales Commences 14-Mar-2000 6 months Project Completion (Commercial Plant Built & In Full Operation) 12-Sep-2000

Recommendation

In view of the above findings, the Consultant recommended that the Project now proceed to the next and final phase of the Project, i.e. Liscencing & Final Reviews.

This was subsequently agreed to by the client, and DBIRD.

LICENSING OF THE TECHNOLOGY

On the assumption that Petemic will obtain patent protection in connection with its Technology, it is concluded that the Petemic Technology embodies suitable intellectual property rights which can be the subject of a technology transfer license.

Based on contacts (various clients and others in the environmental engineering industry) it appears that the Petemic Technology is potentially “licensable”, provided it can satisfy the relevant regulatory requirements and become a viable alternative to competing processes and end products.

However, the recycling process developed by Petemic would have to compete with the alternative of relatively inexpensive landfill disposal and strong existing markets for recyclable products. As such, several contacts concluded that the demand for the Petemic Technology is “uncertain”.

Protecting The Petemic Technology

The need to protect the Petemic Technology through a carefully negotiated and properly drafted license agreement is emphasised.

Methods for formulating a commercially viable royalty rate and a brief analysis of Petemic’s potential areas of exposure is provided in the Collier, Shannon, Rill & Scott Report 17 , together with an analysis of the potential advantages and disadvantages of licensing the Petemic Technology 18

17 Refer Attachment 16 18 This is particularly as compared with the pros and cons of Petemic establishing a recycling facility, either on its own, or as part of a joint venture.

Recommendation

Subject to the qualifications mentioned previously, it is concluded that licensing presents a viable “lower risk” option when compared with the establishment of a recycling facility either independently or as part of a joint venture arrangement. It is suggested that a carefully devised licensing strategy is worthy of further consideration.

INSTRUCTIONS/TERMS OF REFERENCE

TERMS OF REFERENCE

The terms of reference for this Consultancy results from discussions held with Company name principals, and liaison with DBIRD's Sunshine Coast Regional Office staff (Ms Del Woodcock), and as contained in the Consultant's proposal dated 23 January 1994 and agreement dated 9 September 1994.

Formal written guidelines (Terms of Reference 19 ) for the Consultancy were received 19 September 1994 as follows:

Introduction to Consultancy Requirements

Petemic Technology Pty Ltd is considering undertaking a Feasibility Study into the Commercial viability of establishing a recycling plant to produce aggregate and the potential for licensing the technology / product nationally and internationally.

Study Objectives

Stage (i) Identify domestic and international market possibilities for the aggregate produced from the recycling process.

Stage (ii) Assess and quantify availability of raw materials necessary to produce the aggregate.

Assess specialist labour skills necessary for the project.

Identify any environmental issues which may be relevant to the Project.

Identify appropriate establishment sites in South East Queensland.

Stage (iii) Determine establishment and operating costs for a manufacturing plant to produce the aggregate and include a three year cash flow analysis.

Stage (iv) Assess the potential for licensing the technology and product domestically and internationally.

Expanding on these objectives the consultant should consider the following points:

Market Assessment

• Identify potential domestic and international markets for the aggregate.

19 Document entitled "Terms of Reference: Feasibility Study - Consultancy Submission - Recycling Project".

• Evaluate competitive advantage.

• Identify market competitors.

• Evaluate competitive re-action / retaliation (if any).

Raw Materials

• Identify sources of raw materials within Australia and overseas.

• Assess growth levels for raw materials for the Project.

• Identify availability of raw materials for the Project.

Labour Skills

• Assess specific labour skills necessary (if any) for the Production of the aggregate.

Establishment Sites / Environmental Issues

• Identify suitable establishment site/sites for the recycling plant presenting each on its own merits in relation to freight in and out, production costs, administration costs, etc.

• Investigate sites in relation to Local Authorities, community support and possible further expansion.

• Investigate all environmental issues relating to such establishment.

Commercial Viability

• Determine transport options and preferences.

• Investigate any potential tariff protection opportunities.

• Evaluate expected output in relation to supply and demand.

• Estimate establishment costs to meet identified market demand.

• Provide an estimate of running costs for a three year period based upon the markets identified in Stage (I).

Licensing

• Assess the potential for licensing of the technology

• Evaluate licensing against establishment and production.

CONSULTANT’S RESPONSE TO THE T.O.R. & GENERAL PROJECT OVERVIEW

The following information was provided in the introduction by the Consultant for the Project, and provides a comparative overview of the Company before commencement of the Consultancy:

The above formal Terms of Reference (TOR) for the Consultancy have been further discussed with the Project's proponents. The activity list and processes described below build upon the original TOR, and are a result of joint discussions held with Company Management (Mr Michael Walsh), DBIRD (Ms Del Woodcock), other interested parties present at meeting 23 September 1994, and further liaison with the technical consultants and ensuing discussions between all parties.

The Consultant has endeavoured to closely follow the above-mentioned TOR, and, as instructed, has addressed the proposed Feasibility Study in the same format as the TOR with Section 3 of this Report in particular addressing the key assessment issues.

Introduction

Petemic Technology Pty Ltd is a newly established company created essentially for the purpose of commercialising apparently new, unique technology related to the recycling of waste material such as building rubble, household garbage, and non-radioactive waste.

The Consultants understand that this technology is commercially sensitive, and accordingly will be required to sign an appropriate confidentiality agreement. The Consultants (agreeable to this requirement), have therefore prepared this proposal without full knowledge of the specific technology and its full implications. Nonetheless, we believe that our approach is relatively simple and robust and may be applied against the Project given its rigorous coverage.

The Company currently consists of several Directors whom have managed to capitalise the business to initiate commencement of the feasibility and other first stages. They have already identified a number of critical success factors which include:

• the need to establish and quantify sources of material for establishing the enterprise;

• the need to examine town planning and other issues, including environmental issues, likely to affect the site location of the proposed operations;

• the need to assess the market demand for final aggregate product as a prelude to financial planning;

• the need to establish viability of the enterprise;

• the need to examine the best ways to protect the technology by way of licensing or other means;

• the need to develop documentation likely to attract suitable investors, including private investors and / or bankers (in short, a "bankable document"); and

• the need, not only to identify capital funding and other financial requirements, but to establish management and all other resources required for the Project to succeed to Pilot Plant stage.

This Consultancy Assignment has been designed to address these, and other issues.

FURTHER BACKGROUND & FEASIBILITY STUDY CONSIDERATIONS

It is logical that the first step in proceeding with the proposed development is to establish firstly, the market demand for enterprise's products, and, if apparent demand is demonstrated, then proceed to conduct a feasibility study into the Project's viability. This step will be based on, inter alia, the availability of raw materials, required resources, and finally, proven financial soundness based on cash flow and other related analysis.

In this way the consultancy assignment can be designed to examine firstly the market and its constraints, and secondly (and most importantly), financial viability taking account of environmental, labour, plant, equipment, and other related issues. Having examined the first set of issues, the project is proposed to reach a major "GO/NO GO" stage, at which point if viability is demonstrated, the assignment could proceed to assisting the company with addressing the second set of issues, i.e. establishing viability to the point where investor support can be anticipated. That is to say, the Company will be in a position of achieving a commercial outcome .

The Consultant anticipates that a close working relationship will need to be developed with Company executives - and possibly Mr Michael Walsh in particular. This is not only to ensure that there is no duplication of effort, but to also ensure that the Company is fully involved in each stage of the consultancy whereby the process is interactive . The cost effectiveness of this approach has been factored into the quotation as detailed below .

Strategic Direction

Petemic Technology intend to set in place a strategic direction which will involve them in the recycling industry.

Accordingly, a component of the Consultancy will involve a degree of market research in order to establish the size, nature and scope in these markets. This will ensure that the Company's entry has the best chances for success. Whilst the proposed initial investment is probably (in relative terms) modest, the venture as proposed does represent a significant challenge in terms of management, future direction, technology protection, and funding.

General Comments

In addition to factors mentioned above, there are a number of reasons why the establishment of a technologically advanced recycling plant in Australia is prima facie , a commercial proposition. These could include:

• An increase in world-wide effluent / waste disposal costs and more stringent environmental controls - especially in Europe.

• Potentially low and continually falling labour intensity in processing / recycling operations - primarily through technological developments.

• Access to suitable raw material (waste).

• A general awareness of the need to promote environmentally friendly waste disposal methods.

In addition to proving the financial soundness of the Project, and the need to protect its technology, the challenge for Petemic Technology is probably one primarily of its ability to promote sales of recycled aggregate product. Whilst there is little evidence (other than anecdotal) supporting the Company's ability or effectiveness in this regard, the Consultants have numerous contacts in the political, bureaucratic and financial sectors which, at the direction of Company management, may be the subject of further action as the Project progresses.

PROPOSED ACTIVITIES

Required Evaluation (Brief)

Market Analysis - Market demand for the aggregate produced (current and future), both domestic and international - Country x Country.

Sources of Raw Material Supply - Location and numbers.

Processed Recycled and Other Product Competition - Australia and international - Profile each company.

Site Analysis - Sewerage or waste treatment - water supply - environmental requirements - freight - local Government planning and requirements - power - roads and other infrastructure.

Capital Items - land - buildings - equipment - working capital.

Financials - Revenue and expenditure budgets and analysis - return on assets - break even points - cash flows etc.

Timing - strategic importance of completion dates etc.

Technology Protection - Licensing of the technology - domestically and internationally.

Financial Assistance - apply for NIES, REDP or other Government assistance to support this project.

Recommendations

PURPOSE OF CONSULTANCY

The proposed consultancy is designed to cover the major elements of markets, management, structure, supply, technology protection, and funding. This is fundamental in the evaluation process in order to establish the viability of a recycling plant which is capable of producing aggregate which attracts an adequate market demand.

OBJECTIVES

In line with the Terms of Reference, the primary objectives of the Consultancy are to:

✎ In overall terms, to ensure the key issues associated with the development of a waste recycling plant are addressed. As mentioned previously, it is believed that our approach is simple and robust.

✎ Provide a detailed marketing plan which defines the current and future prospects for the domestic and international markets, and establishes the availability of raw materials necessary to produce the aggregate.

✎ Prepare cash flow / profit and loss projections for the full planning period (three year cash flow analysis) specifying likely returns and expenditures, complete with sensitivity and break even analysis. The projections will provide a basis for developing organisational performance measures, and provide detail as to capital expenditure and working capital requirements.

✎ Provide an in depth site analysis which examines, inter alia, infrastructure requirements, inputs (such as water supply, power supply, transport, etc.), effluent control and statutory requirements, and outputs including sewerage and waste treatment.

✎ Ensure the feasibility study (incorporating marketing, financial and organisational plans) is sufficiently detailed to provide the Company's Board with a clear direction in terms of the management and implementation of the Strategy. This will include a mass and energy balance, and additionally the assessment of specialist labour skills and other resource requirements.

✎ Recommend the appropriate corporate mechanism for delivery of the Strategy.

✎ Provide a detailed Implementation (Action) Plan identifying the key tasks and allocation of resources.

✎ Assuming to this point that the proposed venture offers good prospects for viability and success ...

✎ Assist with the practical aspects of

• assessing the potential for licensing the technology and product (both domestically and internationally), and

• ensuring that the information produced is in sufficient detail and coverage, and in an appropriate format, for the purpose of providing investor documentation

PROJECT SUMMARY

The following information was provided by the Consultants for the purpose of providing a brief Project description for public circulation as may be required throughout the duration of the assignment.

Petemic Solid Waste Recovery

The disposal of domestic waste has become an increasing world-wide problem. It will be essential to develop new systems for processing and reusing much of the waste that would otherwise be disposed of by expensive and environmentally hazardous landfill.

Petemic Technology is a Queensland owned company that is developing new technology in waste recycling to produce useful products from domestic garbage.

Petemic has lodged a patent application for a recycling process that treats domestic garbage, and solid building and demolition waste; to produce a commercially usable building material.

The development phase of this technology is being supported by a grant from the Queensland Department of Business, Industry, and Regional Development (DBIRD).

The Petemic process involves reduction of selected waste to a mass of finely divided particles of predetermined character; and compacting and processing the material to produce a relatively dense particulate product suitable for use as a building material, road base or moulding material for the production of bricks and tiles.

The plastic intermediate material can be extruded into pipes, bricks or tiles that can be dried or baked into a range of attractive building products.

Smaller pellets can also be produced that can be incorporated into other rigid structural materials such as concrete.

The process is being developed to service areas of expanding population where the composition of the urban waste contains both household refuse and building scrap.

The processing plant will be sited close to existing landfill installations and will significantly increase the useful life of each site.

The process has been designed to meet all current environmental standards.

Additional details of the process may be obtained from:

Mr Michael Walsh PETEMIC TECHNOLOGY PTY. LTD. A.C.N. 064 320 314

P O Box 435 Phone/Fax (07) 408 3844 Bribie Island Qld 4507 Mobile (015) 588 337

S.W.O.T. ANALYSIS #1

Workshop held by the client in conjunction with Ms Helen Gibson has resulted in the identification of the Company's perceived "Strengths, Weaknesses, Opportunities and Threats" (SWOT) as follows:

STRENGTHS

• Expanding road construction programs

• Expanding hydroponic farming

• Reduce the need to provide recycling and landfill sites, with the resultant reduction in costs to Local Authorities and the consumers.

• Use of timber mill waste products as fuel and raw material.

• Employment opportunities...technical, trade and clerical, as well as multi skilling.

• Flexibility of energy source, and therefore of running costs.

• Co-operation between Local Authorities in joint management of equipment and resources.

• Flexibility of raw material for production.

• No wastage of water due to in built recycling and reuse within the plant.

WEAKNESSES

• Failure of the Neutralysis program.

• The availability of suitably zoned land.

• The location of a suitable water supply and its proximity.

• Environmental constraints re. the emission of gases, etc. during the production process.

• Prolonged period of wet weather and the impact of same on the supply of raw materials.

• Negativity and/or resistance to a new product by consumers.

• Any interruption to the present level of the building industry.

• Storage on site of the required materials and any resultant potential environmental (including health) problems.

• No long term engineering or scientific data available concerning the durability, etc. of the final products.

OPPORTUNITIES

• Reduction of environmental problems with the reduced need for waste disposal sites, landfill, sites etc.

• Development of new building designs, engineering practices, etc. using the new light weight products.

• Ability to build up an experienced consultancy group to provide ongoing expertise to purchasers.

• Potential for export of technology and the final products both interstate and overseas.

• To maintain costs at a reasonable level for construction products by an efficient use of recycled products.

• The use of this technology will extend the life of natural resources with which its products may be substituted.

• Enable the joint involvement of Local Authorities with private enterprise in the process, and the opportunity for a local Authority to be self sufficient in some forms of road making materials (see new Local Government Act).

THREATS

• Objection by waste management companies presently operating landfill programs for local authorities.

• Objection by producers and suppliers of extractive resources for road making purposes, etc.

• Government (all three levels) support not forthcoming for the project.

• Potential for industrial sabotage by opponents.

• The possibility of the introduction of Government imposed taxes (Federal, State or local) on recycled products (e.g. as is on recycled paper).

• The reappearance of the Neutralysis process.

As an outcome of the above SWOT, the Consultant intends to set in place a strategic planning workshop during the next phase of the Project , which will identify:

1. Priority Issues for Action planning

2. Business Objectives

3. Company Mission Statement

S.W.O.T. ANALYSIS #2

A further workshop held was led by the Consultant on 25 March, 1995, resulted in the identification re-definition and amendment of the Company's perceived "Strengths, Weaknesses, Opportunities and Threats" (SWOT) as follows:

(note: SWOT's have been prioritised in preparation for the development of Strategic Objectives. In addition, numbering has been "doubled up" where the issues were considered to be of equal importance, or where they were considered to be essentially the same issue.)

STRENGTHS

1. Reduce the need to provide recycling and land fill sites

1. Environmental Planning legislation

2. Co-operation of local authorities with Petemic Technology

3. Use of timber mill waste products, mine sites, and others

4. Transportable plant with some limits e.g. foundation

• Expanding road construction programs

• Expanding hydroponic farming

• Employment Opportunities

• Flexibility of Energy source (site specific)

• Flexibility wider range of raw material for production

• Water recycling (no wastage)

• Freight advantages of "light weight" Petemic product.

• Development of a light weight building block/brick

• More competitive than Neutralysis.

• Ability to site technology/plant world-wide provided constraints are met (environmental)

• Majority of plant and equipment available "off the shelf"

• Potential market - huge

• Ready market for aggregate in some countries that lack appropriate natural resources.

WEAKNESSES

1. No long term scientific data available on Petemic products

2. Lack of substantial capital required to commercialise the process.

3. Confidentiality of Project

4. Apparent failure of Neutralysis program

• Availability of suitably zoned land in some areas (site specific)

• Location/proximity of water supply

• Environment constraints (process)

• Impact of weather on raw materials

• Consumer reaction to new product

• Viability of process connected to viability of building industry

• Storage problems: raw material supply (especially domestic refuse)

• Petemic product is untested - may fail to meet engineering standards. e.g. stress tests etc.

• Product variations according to raw material supply

• Lack of specific knowledge on end product

• Lack of some inputs for some sites e.g. building rubble in non-urban areas

• Unknown availability of appropriate furnace equipment

• Durability of plant - unknown

• Business systems not formalised

• Personnel - no technical expertise available "in house"

• Market size unknown

OPPORTUNITIES

1. Reduction of environmental problems (landfill)

1. Assisting State and Federal Governments in meeting their waste reduction objectives by year 2000 - 2006, especially landfill. (Uniquest reckons reduce waste by 80%) Un-substantiated

1. Environmental planning legislation.

2. Potential for licensing technology - $ sales (license of plant) number is high.

2. Plant construction by contract $ sales attached to # above.

2. Potential for consultancy to purchasers of plant, technology and aggregate (intellectual property, computer packages, etc.)

3. Potential for extending life of extractive natural resources e.g. clay, hardrock, sand.

• New products/designs available through Petemic light weight aggregate. Development of new building products.

• Export of above.

• Efficient use of recycled material (both in and out?)

• Joint involvement with local authorities

• Self sufficiency for road-making materials for local authorities (customers at "both ends")

• Saleability of the process on the basis of potential "green tax" levy.

• Possibility for availability of vast raw material supply resulting from natural or other disaster(s).

• More efficient use of rail system - back-loading of Petemic product to more remote areas.

THREATS

1. Objections by existing waste management companies

1. Government support for project - unknown quantity (all 3 levels)

1. Existing contracts with existing waste management companies who have long term contracts

2. Re-appearance of the Neutralysis process and appearance of other processes. (technology risk)

3. Objections by existing suppliers of extractive resources.

• Potential for industrial sabotage

• Possibility of government taxes on recycled products

Neutralysis Waste Processing Plant - located at Rocklea (Brisbane, Queensland). This plant has since been sold to an (undisclosed) overseas buyer, and reportedly re-commissioned overseas. The technology has reputedly been retained or sold separately. The process has apparently proven non-viable, however is identified as a “threat” because of it’s possible re-appearance. The Petemic process, however, needs to be differentiated to ensure support by potential clients.

STRATEGIC MANAGEMENT PLAN

STRATEGIC OBJECTIVES

A result of the Company having conducted a SWOT analysis process, the following Strategic Objectives have been developed:

1. To promote the Petemic process as a means of reducing the need for land fill sites in compliance with State/Federal Government objectives and environmental planning legislation.

2. To gain the co-operation of local authorities and other regulators in regard to:

• Site identification • Use of collected non-toxic, non-radioactive refuse • Participation in Project and use of local resources • Existing waste management contract obligations

3. To utilise the Petemic process as a means of recycling "non-recyclable" problem waste products such as industrial, timber, mining, building and other waste

4. To ensure the research and development of the technology enables the Petemic process to handle variable volumes of raw material, with maximum mobility.

5. To obtain independently verified scientific data/analysis on the Petemic products and processes.

6. To identify capital requirements up to commercialisation stage.

7. To maintain the confidentiality of the Petemic process.

8. To promote the distinctiveness of the Petemic process as compared to other waste management processes, especially Neutralysis.

9. To develop viable products resulting from the proving of the Petemic process, including:

• intellectual property • technology licenses • end-product(s) - aggregate etc. • construction contracts • etc.

10. To promote the Petemic process as a means of extending the life of existing and potential extractive resources, including sand, hardrock, and aggregate.

11. To closely monitor alternative waste management processes and practices.

12. To promote the Petemic process as being an environmentally friendly alternative to the use of extractive resources, e.g. hardrock, clay, sand, aggregate.

MISSION STATEMENT

The following Mission Statement has been adopted 20 :

‘‘Solving Today's Waste With Tomorrow's Technology’’

ACTION PLANS

As a result of the formulation of Strategic Objectives, the following Action Plans have been developed by the Consultant for adoption:

Appendix D provides full details of the Strategic Management Action Plan, which is summarised below. It provides, inter-alia, the following information:

1. Action detail (what the Action is)

2. Action Duration (the estimated time required to complete the Action).

3. Action Scheduled Start (when the Action should, or is due to, commence).

4. Action Scheduled Finish (when the Action is due for completion).

5. Action Predecessors (what other actions need to be undertaken before the Action in question - if any).

6. Action Resources (who / what resource is allocated to undertake or support the Action).

7. Critical Path (the development of a "Pert Chart" or similar which allows an overview of those Actions which are critical to the implementation of the Project, and / or those Actions most likely to cause a delay in implementing the Project).

8. A monthly summary of Actions required to be undertaken to assist in Managing the Project. This will ensure that the Project is kept "on-track".

20 The Mission Statement has been designed for incorporation on marketing material, and other publicly distributed information

1. TO PROMOTE THE PETEMIC PROCESS AS A MEANS OF REDUCING THE NEED FOR LAND FILL SITES IN COMPLIANCE WITH STATE / FEDERAL GOVERNMENT OBJECTIVES AND ENVIRONMENTAL PLANNING LEGISLATION

1. Prepare Project Summary document suitable for public circulation

2. Circulate Project Summary document to interested parties including Council, Government, etc.

3. Lobby Council and others as appropriate, appraising them of the Petemic process advantages

2. TO GAIN THE CO-OPERATION OF LOCAL AUTHORITIES AND OTHER REGULATORS IN REGARD TO:

* SITE IDENTIFICATION * USE OF COLLECTED NON-TOXIC, NON-RADIOACTIVE WASTE * PARTICIPATION IN PROJECT AND USE OF LOCAL RESOURCES * EXISTING WASTE MANAGEMENT OBLIGATIONS

4. Negotiate suitable site for the Petemic Plant with Council

5. Discuss the impacts of the Petemic Process with Council, especially with regard to waste reduction, utilisation of Council resources, possible aggregate sources, etc.

6. Determine existing waste management obligations of the Caboolture Shire Council

3. TO UTILISE THE PETEMIC PROCESS AS A MEANS OF RECYCLING "NON- RECYCLABLE" PROBLEM WASTE PRODUCTS SUCH AS INDUSTRIAL, TIMBER, MINING, BUILDING, AND OTHER WASTE

7. Commence process of obtaining investor support for Commercialisation of the Project

8. Commence set-up of Pilot Plant to demonstrate the effectiveness and viability of the Petemic Process

9. Continue with research and development activities to prove the Petemic Process prior to Commercialisation and Pilot Plant set-up, especially having regard to the viability of utilising a wide range of waste inputs

10. Commence testing of various waste inputs to prove the Petemic process

4. TO ENSURE THE RESEARCH & DEVELOPMENT OF THE TECHNOLOGY ENABLES THE PETEMIC PROCESS TO HANDLE VARIABLE VOLUMES OF RAW MATERIAL, WITH MAXIMUM MOBILITY

11. Commence testing of variable volumes of various waste inputs to prove the Petemic process

12. Conduct test experimentation of various waste product inputs to assist in the proving of the Petemic process

5. TO OBTAIN INDEPENDENTLY VERIFIED SCIENTIFIC DATA/ANALYSIS ON THE PETEMIC PRODUCTS AND PROCESSES.

13. Commence the obtaining of scientific analysis of Petemic product from accredited laboratory (once product available)

14. Determine scientific test requirements for Petemic products and processes

6. TO IDENTIFY CAPITAL REQUIREMENTS UP TO COMMERCIALISATION STAGE

15. Determine Capital requirements up to Commercialisation stage

7. TO MAINTAIN THE CONFIDENTIALITY OF THE PETEMIC PROCESS

16. Documentation to be secured at all sites

17. Obtain Sign-off for all external discussions (with third parties) with Petemic management and lead Consultant prior to progressing

8. TO PROMOTE THE DISTINCTIVENESS OF THE PETEMIC PROCESS AS COMPARED TO OTHER WASTE MANAGEMENT PROCESSES, ESPECIALLY NEUTRALYSIS.

18. Ensure the distinctiveness of the Petemic Process is included in Project Summary Document

19. Ensure the distinctiveness of the Petemic Process is included in all major documentation, especially that provided for public release

9. TO DEVELOP VIABLE PRODUCTS RESULTING FROM THE PROVING OF THE PETEMIC PROCESS, INCLUDING

* INTELLECTUAL PROPERTY; * TECHNOLOGY LICENSES; * END PRODUCT(S) - AGGREGATE, ETC.; * CONSTRUCTION CONTRACTS; * ETC.

20. Prove the viability (Feasibility Study) of the Petemic process

21. Feasibility Study (and Financial viability of the Petemic Process) completed

22. Commence continuation of Research and Development of Petemic end- Products, including the development of both "physical" end products, and the sale of intellectual and other property

23. Ensure the Feasibility Study for the Petemic Process includes information on potential end products, other than aggregate, e.g. intellectual property, contracts for constructing other plants, etc.

10. TO PROMOTE THE PETEMIC PROCESS AS A MEANS OF EXTENDING THE LIFE OF EXISTING AND POTENTIAL EXTRACTIVE RESOURCES, INCLUDING SAND, HARDROCK, CLAY AND AGGREGATE.

24. Ensure the Project Summary Document outlines the potential for extending the life of extractive resources

25. Lobby Council with details of extending-life capability of the Petemic process in relation to extractive and other resources

11. TO CLOSELY MONITOR ALTERNATIVE WASTE MANAGEMENT PROCESSES AND PRACTICES

26. Petemic Management to join Waste Management peak body / industry organisation

27. Petemic Management to enquire re subscribing to appropriate organisations for the regular review of relevant literature on the subject of waste management and recycling

28. Consultants to monitor other / alternate waste management processes that may impact upon viability of the Petemic process

12. TO PROMOTE THE PETEMIC PROCESS AS BEING AN ENVIRONMENTALLY FRIENDLY ALTERNATIVE TO THE USE OF EXTRACTIVE RESOURCES, E.G. HARDROCK, CLAY, SAND, AGGREGATE.

29. Lobby Council (and other appropriate organisations, including "Greenpeace" and others) on the environmental friendliness of the Petemic Process

MARKET PROSPECTS FOR THE PETEMIC SOLID WASTE RECOVERY PROCESS

THE MARKET SURVEY - COMMENTARY

This report assumes that anyone who uses extractive products are potential clients for the Petemic product. There is no other basis on which a survey can be conducted, viz:

1. There is no product to present to anyone

2. No specifications of any product are available

3. No price of any product has been suggested

4. No details of the process can be revealed (a condition of the consultancy).

Moreover, the Consultants have been requested not to approach or discuss the marketing of the product with the major potential competitors who are also the major users of aggregate materials. Discussions have been held with the Caboolture Shire Council, who would be a major potential customer.

In the absence of any information at all on the product, its specification or price, a survey of potential customers would not prove to be a useful exercise, and may even be counterproductive to the project.

The only proof that will ever exist in relation to the Petemic process will be survival in the marketplace.

As to the surveys and product demand, a very extensive literature search has been conducted of local and overseas material to provide background material to assist Petemic in their planning.

The Consultants point out that additional work (other than that undertaken) will be of no benefit in the absence of better information on the process, and until a product with defined specifications is available for presentation to the market.

INTRODUCTION & OVERVIEW

The disposal of domestic waste has become a major world-wide problem. The environmental aspects of landfill waste disposal, and rising disposal costs have directed ever increasing attention towards recycling.

In Australia and the USA, about one tonne of waste is produced per person every year. In Europe, per capita waste production is somewhat lower, often only about half the Australian level, but population density is higher, and disposal problems more severe.

Although recycling technology has been developed for the more valuable components of domestic and industrial waste, the cost of recovery and

processing for the lower value components has invariably exceeded the commercial value of these materials.

The quantity of waste material potentially available for treatment is immense. In 1971, the US Environmental Protection Agency (EPA) estimated that municipal solid waste (MSW) generation in the USA amounted to 125 million tonnes annually or 3.22 lb. per person per day excluding industrial waste. By 1993 the quantity of MSW had risen to 207 million tons, or 4.4 pounds per person per day. After materials recovery for recycling and composting, discards were 3.4 pounds per person per day. Virtually all of these discards were combusted or sent to landfills 21 .

EPA now projects that the per capita generation rate will decrease by the year 2000 to 4.3 pounds per person per day. These projections are based in part on source reduction efforts, especially actions to divert yard trimmings from the solid waste management system through backyard composting and leaving grass clippings on lawns. States that include more than half of the U.S. population already have regulations leading to these actions. Other source reduction activities, e.g., reduced packaging, are also contributing to this decrease.

Even with significant source reduction efforts, generation of MSW is projected to increase to 218 million tons in 2000. However, discards to combustion facilities or landfills are projected to decline from 162 million tons in 1993 to 152 million tons in 2000 assuming a 30 percent recovery rate for recycling and composting is achieved.

Recovery of materials for recycling and composting was estimated to be 22 percent of MSW generated in 1993, up from 17 percent in 1990. Combustion facilities managed 16 percent of total generation, and the remaining 62 percent of the municipal solid waste stream was sent to landfills or otherwise disposed.

Between 1990 and 1993, recovery of materials for recycling and composting increased from 38 million tons to 45 million tons, an increase of 18 percent. Recovery of paper and paperboard accounted for over half of this increased tonnage. Yard trimmings for composting contributed the next largest increase in tonnage recovered.

The percentage of MSW discards continues to decline due to increased levels of recovery for recycling and composting. In 1985, 83 percent of MSW was landfilled compared to 62 percent landfilled in 1993. Even with this reduction, land filling continues to be the single most predominant waste management method into the year 2000. 22

Recent evaluations in Australia confirm that the quantities are of similar or greater magnitude. In Sydney alone, up to 3.4 million tonnes of solid waste has been produced each year 23 , and until recently, the quantity has been increasing at a rate faster than population growth.

21 Environmental Protection Agency. USA (1994), " Characterisation of Municipal Solid Waste in the United States. Executive Summary " EPA Publication No EPA530-S-94-042 22 Environmental Protection Agency. USA (1994), " Characterisation of Municipal Solid Waste in the United States. Executive Summary " EPA Publication No EPA530-S-94-042 23 Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste

A goal for Australia has now been established under the National Strategy for Ecologically Sustainable Development , to significantly reduce landfill disposal of waste.

The New South Wales Government plans to reduce by half the amount of solid waste directed to landfill by the year 2000. NSW believes that this goal can be achieved by a mix of waste avoidance, recycling, and resource recovery initiatives. The Government also anticipates that the average increase in the cost of waste management will be about 5% per year between now and the year 2000 24 .

In Victoria, the Recycling and Resource Recovery Council (established under 1992 legislation) has also adopted a target of reducing the total waste going to landfill by 50% by the year 2000 25 .

Tasmania has also identified an increasing problem in waste disposal. In 1994, the Tasmanian Government released it's draft policy to deal with the problem, and proposes to replace existing license fees with new fees based on the volume of waste. Tasmania has set a target of reducing the volume of waste dumped at municipal tips by 25% by the end of 1995, and by 50% by the year 2000 26 .

The ACT legislature has also adopted a target of reducing landfill by 50% by the year 2000 27 .

Solid waste diversion objectives in overseas countries (Europe and North America) now vary between 8% and 60%, with target dates ranging up to the year 2000 28 .

The following summary graph, and following table shows the solid waste diversion objectives for some specific locations.

Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42. 24 Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42. 25 Victorian Government (1994), " The Resource and Recovery Council; Grant Programs 1993-94. "Reported at the Local Government Conference - Waste. 26 Skinner, J.H. (1975), " Demonstration of Systems for the Recovery of Materials and from Solid Wastes " Resource Recovery and Utilisation, ASTM STP 592, American Society for Testing and Materials. 53-63 27 Graham, R.A., Sharpley, G.E., & Thorpe, J.L. (1994), " Environmental Audits and Management Planning for Canberra's Landfills " in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne, Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 149-156. 28 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council.

Solid Waste Diversion Objectives Selected World-wide Jurisdictions

100% 2030 Source: Sinclair Knight, Waste Management Strategic Pla n for Ca b oolture Shire

80%

2000 (varies) 60% 2000 2000 2000 2000

"next few years" 1995 40% Objective

20% "near future" 2000

0% Great Britain Switzerland (Zurich) Ontario Canada United States Switzerland Germany (Hanover) Denmark Netherlands Toronto (metro) Jurisdiction

Solid Waste Diversion Objectives 29

Jurisdiction Objective Target Date

Netherlands 54% 2000 Great Britain 8% 2000 Denmark 50% 2000 Switzerland 16% "near future" Zurich, Switzerland 40% "next few years" Hannover, Germany 40% 1995 Canada 25% 1992 50% 2000 Ontario 25% 1992 50% 2000 Metro Toronto 30% 1992 45% 1995 60% 2000 70% 2010 90% 2030 United States 25% 1992 25% likely to be 1995 extended 50% possible 2000 US States 15% to 60% 2000 (varies) US Cities Berkeley, California 44% 1995 62% 2000 Newark, New Jersey 60% 1995 Seattle, Washington 60% 1998 Philadelphia, 50% 1997 Pennsylvania Chicago, Illinois 39% 1995 San Diego County, 30% 1992 California Los Angeles, California 25% 1995 50% 2000 Notes: (1) As a percentage of the total Waste Stream by weight

In May 1994, the Queensland Government Department of Environment and Heritage published a Draft Waste Management Strategy for Queensland . The Queensland strategy also encompasses the National Strategy for Ecologically Sustainable Development , and covers three basic issues described as being essential to effective waste management 30 ;

1. Waste Minimisation which seeks to reduce by prevention and recycling options, the volume of wastes which ultimately must be destroyed or disposed of.

29 Source: Sinclair Knight, Waste Management Strategic Plan for Caboolture Shire 30 Queensland Department of Environment and Heritage (1994), " Draft Waste Management Strategy for Queensland "

2. Waste Containment which seeks to handle, treat, and finally dispose of wastes without adversely affecting the environment or public health.

3. Pricing Equity which seeks to allocate waste disposal costs, so that those benefiting from activities which lead to waste generation will be expected to pay all the costs associated with disposal of the wastes.

The adoption of "user pays" principles in refuse disposal is also NSW Government policy, and appropriate charges are to be progressively introduced following updating of the Local Government Act in 1993.

It is now clear that State and Federal Government environmental and pricing policies can be expected to cause a steep rise in the cost of conventional waste disposal practices including landfill. Although specific details have not been collected for overseas countries, it is likely that similar policies and outcomes will apply in most of the developed countries .

It is in this context that Petemic Technology Pty Ltd is developing a strategy to satisfy the environmental goal of reducing landfill disposal, whilst at the same time producing a commercial raw material for the construction industry that can compete with landfill disposal for the lower value components of municipal waste.

The initial step in the Petemic strategy will be to test the cost/benefit of the Company's technology for solid waste recovery using a commercial scale plant, located in the Shire of Caboolture.

The Petemic plant will use domestic garbage and builders rubble to produce a mass of finely divided particles of predetermined character. This feedstock will then be compacted and processed to produce a relatively dense particulate product suitable for use as a building material, road base, or as a moulding material for the production of bricks and tiles. One particular advantage of the Petemic strategy is that the product will have a range of local uses, and will not require extended transport to it's market.

BACKGROUND

A number of studies have been carried out on Australian solid waste, and how it might be recycled to avoid landfill disposal. Work by van den Broek and Hutton (1992) set out the nature of the Sydney solid waste stream and presented an analysis of the materials that could be most readily diverted from landfill into beneficial use. This work provided for the first time in NSW a theoretical basis for development of a plan to achieve the Government's ambitious waste diversion target. In parallel to this work, Cook (1992) examined waste disposal pricing as a means to effect better waste management, including both economic incentives and disincentives 31 .

Prior to these initiatives, a process known as "Neutralysis" had been developed in Australia during the early 1980's to convert municipal, commercial and Industrial

31 Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42.

solid wastes, into an inert lightweight building aggregate suitable for the production of structural concrete, masonry blocks, and other building products. A nominal 25 tonne per day pilot plant was built in Brisbane to provide information for the development of a commercial scale facility. At that time, the capital cost of a commercial scale Neutralysis plant was estimated to be up to $A100 million with an annual operating cost of about $A8 million. The developers of the process estimated that revenues derived from waste disposal gate charges, the sale of aggregate, and power generation from surplus heat, would more than offset capital service charges and operating costs for the process 32 .

However, the pilot plant did not achieve the cost/benefit targets set by the Brisbane City Council, and further development did not proceed at that time 33 .

The Neutralysis project appears to have come before it's time. Perhaps the capital and operating costs were too high to encourage commercial investment. Moreover, public attention to environmental issues was less intense in the 1980's than it is today. Although refuse disposal costs in Queensland were rising at that time, landfill was ultimately chosen as the cheapest and most appropriate option by the Brisbane City Council.

The present Petemic strategy is to produce a similar lightweight aggregate to that produced by the Neutralysis method, but with a relatively simple process requiring a lower level of capital investment and operating cost. At the present stage of development, the Petemic process does not incorporate surplus heat recovery (also known as refuse derived fuel (RDF), or power generation.

POTENTIAL FUTURE WASTE PRODUCTION

Modern recycling policies have tended to reduce the quantity of waste being directed to landfill in Australia. However, these policies alone are unlikely to meet Government waste disposal targets. A recent paper by Cook and van den Broek delivered to the 2nd National Hazardous & Solid Waste Convention held in Melbourne in 1994, describes the situation in the Sydney metropolitan area 34 .

In 1990 a total of 3.4 million tonnes of solid waste was reported as having been generated in the Sydney metropolitan area. Since 1990 there has been a reduction in the quantities of waste recorded as received at disposal sites, to about 2.8 million tonnes per year. This reduction has been attributed to NSW Government waste minimisation initiatives introduced over recent years, including recycling and other resource recovery initiatives. The construction of the new runway at Sydney airport also provided a destination for a large proportion of the available solid fill and builders rubble. The effects of the

32 Stone, P. “ Neutralysis - A Use for Municipal Waste ” Proceedings of the International Conference of Solid and Hazardous Waste Management (Enviroworld), Singapore, June 1991. 33 The Consultant has advised the Project proponents that the Neutralysis plant and equipment was shortly coming up for auction. As at date of writing, the Auction did not proceed, and the Consultants understand that the whole of the Neutralysis Plant was sold privately to an overseas interest. 34 Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42.

recession may have also influenced the growth rate of waste disposal during this period 35 .

A comparison of the estimated waste generation rates for some municipal areas in Australia is contained in Table 1.

Table 1. Waste Generation for Selected Australian Municipalities 36 Kilograms per person per year.

Caboolture Brisbane Perth Sydney Port Stephens 37 Domestic waste 387 555 480 Industrial/Builders 481 460 500 Total 868 1015 798 980 711

Figures cover various periods between 1989 and 1993.

Waste Generation for Selected Australian Municipalities Kilograms per person per year. 1,200

1,000

800

600

400

200

0 Caboolture Brisbane Perth Sydney Port Stephens

Domestic waste Industrial/Builders Domestic or Industrial

Source: Sinclair Knight, Waste Management Strategic Plan for Caboolture Shire

Within the present waste management systems in Australia, large quantities of materials are now being recovered for re-use and recycling. While complete statistics are not available, the amount of recovery in Sydney is believed to be of

35 Brookes, G., Kenley, R., Kerby, N., & Ellwood, D. (1994), " Shire of Hornsby: Economic & Operations Feasibility Study for Major Recycling Initiatives and a Council Operated Transfer Station " in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 141-148. 36 Source: Sinclair Knight, Waste Management Strategic Plan for Caboolture Shire 37 Port Stephens Shire is approximately 180 km from Sydney, and is in an area of similar urban and commercial / industrial characteristics to Caboolture Shire, but with a reduced annual growth rate.

the order of one million tonnes per annum. This level of recovery is being achieved mainly from commercial and industrial sources, and includes materials such as scrap metal, plastic, and paper products, whose inherent value makes their recovery for recycling commercially attractive.

In addition, education of the commercial sector on waste minimisation, combined with Waste Service pricing policies which discourage mixing recyclable materials with waste, is now having the effect of encouraging source separation in commerce and industry for materials whose recovery may not have been commercially attractive in the past. Furthermore, there has been a growing rate of recovery from the domestic waste stream as a result of councils providing better recycling services, and with the assistance of policies such as the Council Recycling Rebate Scheme.

While levels of waste minimisation and recycling may still increase somewhat under present policies, new initiatives will be required to remove an additional one million tonnes from the Sydney solid waste stream to meet the NSW Government's 50% waste diversion target by the year 2000.

Cook and van den Broek 38 have predicted that the key tools available to meet the 50% diversion target for Sydney will be additional waste avoidance (particularly in the commercial and industrial sectors), recycling, green waste removal and processing; and new processing technologies such as Neutralysis, advanced composting, and refuse derived fuels (RDF).

WASTE DISPOSAL COST ISSUES

The weighted average disposal cost for solid waste in Sydney was about $29.50 per tonne in 1993. It is generally conceded that most of the new recycling and processing technologies have hitherto exceeded this cost. However, available landfill capacity in the Sydney region is limited, and as this capacity is exhausted, alternative disposal options have been estimated at about double the present cost. In addition, avoided environmental impact and disamenity costs, although difficult to quantify, will also favour increased diversion. Table 2 summarises the estimated cost of these technologies for the Sydney metropolitan area.

Table 2. Likely Disposal Charges for New Technologies 39 Green waste processing $40 per tonne Neutralysis $70 per tonne Composting $60 per tonne RDF $70 per tonne

Based on these costs, and assuming that funding support of $20 per tonne will be required to remove additional tonnes of waste by avoidance and recycling, the

38 Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42. 39 Source: Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42.

estimated weighted average cost for waste disposal in Sydney expressed in 1993 dollars would increase as shown in Table 3.

Table 3. Estimated Average Sydney Waste Disposal Costs 40 Weighted Average Cost 1993 29.50 1994 30.70 1995 33.00 1996 35.00 1997 37.10 1998 38.35 1999 39.70 2000 41.40

The above information and trend is more clearly demonstrated in the graph below:

Estimated Average Sydney Waste Disposal Costs

Dollars per tonne

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0

1993 1994 1995 1996 1997 1998 1999 Weighted Average Cost 2000

In the United States of America, disposal costs may be considerably higher. Thomas Duston (in Recycling Solid Waste; 1993) reports that the 1991 tipping fees for residential trash at five modern disposal sites in New Hampshire, USA ranged

40 Source: Cook, J.B. & van den Broek, B. (1994), " A Plan to Achieve 50% Waste Diversion in Sydney ". in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 39-42.

from $US40 to $US110 (trash to energy plants or lined landfill). This cost is equivalent to $A55 to $A150 at the 1995 exchange rate. Costs in other US States were said to be similar 41 .

In 1993, Sinclair Knight and Partners prepared a Waste Management Strategic Plan for the Caboolture Shire Council, and reviewed the options for disposal methods up to the year 2022. Sinclair Knight estimated the cost of simple land filling in the Caboolture Shire at $10 to $15 per tonne. Land filling after pre- treatment was expected to be double this cost, and advanced technologies such as incineration, pryrolysis, and Neutralysis were all expected to cost more than $50 per tonne, with capital costs exceeding $30 million for each of the advanced options 42 .

The Industry Commission recently conducted an inquiry into waste recycling and noted that:

"Many Councils and Waste Management Authorities may not be charging enough to cover the real costs to the community and provide for site replacement and environmental costs.

The Commission went on to state:

''that while Councils and Waste Management Authorities persist in charging unrealistically low disposal rates, the public will continue to discard rather than recycle. The public is, generally speaking, quite willing to participate in recycling programs on environmental grounds, confident that recycling is conserving material resources."

In it's Waste Management Strategic Plan for the Caboolture Shire Council, Sinclair Knight and Partners made the following comments on recycling options 43 :

"It is likely that in the short term, recycling will provide the bulk of waste diversion schemes being employed by local authorities. The viability of any recycling scheme is dependent on many factors including the cost of collection, the market value of the material less the cost of transport to the market, and the volume of material collected which is dependent on community participation rates. The viability of recycling schemes are particularly affected by remoteness of markets for recyclable materials, and transport costs are a major constraint.

On a commercial basis, recycling schemes are viable if the cost of the recycling is less than the value of the recycled material. However, this does not account for the cost savings in waste disposal. To this extent, Councils should subsidise or otherwise provide assistance to recycling."

The present recycling initiatives have been largely directed at higher value materials that can be easily separated. These include metal scrap, glass, plastics and paper. Most of the potential for the recovery of these materials may have been already exploited.

41 Duston, Thomas E. (1993) " Recycling Solid Waste " Quorum Books, Connecticut, ISBN: 0-89930-754-X 42 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council. 43 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council.

Other municipal waste of lower value including undifferentiated domestic waste and builders rubble, may not be so easily amenable to recovery by separation.

However, concrete and masonry products can be used as construction site fill or crushed and screened to produce both drainage and road base materials. The recent construction of the third airport runway into Botany Bay used a significant proportion of treated demolition material. The Industry Commission in 1991 estimated that 80% of Sydney's demolition rubble was being recycled at that time 44 . However, the long term opportunities for the economic construction site disposal of untreated hard fill may not match the recent Sydney performance.

One of the existing landfill sites in the Caboolture Shire - located at Boundary Road, Narangba.

Sinclair Knight & Partners report that trials undertaken in Brisbane suggest that crushed and screened masonry rubble can be produced for about $7.50 per tonne 45 . At this price the product is a competitive substitute for quarried materials. Estimates by Brookes et al for the Shire of Hornsby north of Sydney (1994), suggest that the reuse of crushed aggregate from clean and hard fill could save the Hornsby Council up to $14 per tonne for materials otherwise purchased 46 .

44 Brookes, G., Kenley, R., Kerby, N., & Ellwood, D. (1994), " Shire of Hornsby: Economic & Operations Feasibility Study for Major Recycling Initiatives and a Council Operated Transfer Station " in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 141-148. 45 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council. 46 Brookes, G., Kenley, R., Kerby, N., & Ellwood, D. (1994), " Shire of Hornsby: Economic & Operations Feasibility Study for Major Recycling Initiatives and a Council Operated Transfer Station " in

Moreover, the charges levied for the private dumping of industrial waste at council landfills has been increasing sharply. Dumping charges for commercial and industrial wastes at Brisbane and adjacent council landfills now range up to about $50 per tonne.

STRATEGIC OPTIONS IN RELATION TO RAW MATERIAL AND MARKETS

The optimum siting of a refuse recovery and recycling plant will be very site specific, and will depend on an adequate supply of raw material at an attractive price, together with an adequate demand for the output product at a price that will be competitive with alternative materials. These considerations suggest that the most attractive location for a Petemic type plant will be towards the fringe of a large and expanding metropolitan area where:

• There will be plenty of waste, including an adequate proportion of hard-fill from building sites.

• Landfill sites will be scarce and dumping will be under pressure from urban residents.

• Waste disposal costs (including landfill lining and waste handling including compaction and transport) will be high.

• There will be a local demand for the product fuelled by a high level of building activity, particularly for added value variants such as bricks and tiles.

An indicative location for such a pilot plant is the Shire of Caboolture. The Shire is growing rapidly, indicating an increasing supply of refuse, together with an expanding demand for building materials. One of the characteristics of an expanding urban area is a relatively high proportion of hard-fill in the refuse, compared with areas of stable population where soft domestic waste is the major component of garbage. This characteristic will provide the best feedstock for the Petemic process.

Since 1971, the population of the Shire of Caboolture has increased at growth rates in excess of 10% per annum, and growth is expected to continue at up to 8% per annum in the period to 2006 47 . This high growth rate is being maintained by urban expansion and inward migration of people.

The population of the Shire is now expected to more than double to 160,000 people by the year 2006. If the present housing occupancy rate remains at the current level of about 3.0 people per household, then the number of residences will also need to double from the current number of about 25,000, to about 53,000 houses by the same date 48 49 .

Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 141-148 47 Caboolture Shire Council (1993), " Strategic Land Use Plan, 1993 " 48 Source: Australian Bureau of Statistics (various publications including 1991 Census of Population & Housing, and Planning) Collaborative in Conjunction with Caboolture Shire Council

If occupancy remains at around the current 2.65 people per household, then the number of dwellings could exceed 60,000 as per the table below:

Population & Growth Rates - Caboolture Shire Source: Australian Bureau of Statistics Additional Source: Strategic Land Use Plan (1993) - Caboolture Shire Council Planning Collaborative in Conjunction with Caboolture Shire Council

Year Population Dwellings (Total) Occupancy Rate

1971 12,207 5,088 2.40 1976 20,060 7,588 2.64 1981 32,380 11,645 2.78 1986 48,602 17,386 2.80 1991 70,093 26,068 2.69 1996 96,390 36,374 2.65 2001 127,479 48,105 2.65 2006 159,349 60,132 2.65

Shaded area: Consultants estimates

The above information may be more readily absorbed by viewing the Graph below:

49 Caboolture Shire Council (1993), " Strategic Land Use Plan, 1993 "

Population & Growth Rates - Caboolture Shire

200 80

150 60

100 40 Thousand s Thousand s Population 50 20 Dwellings (Total)

0 0 1971 1976 1981 1986 1991 1996 2001 2006 Year

Pop ula t ion Dwellings (Tot a l)

Source: Australian Bureau of Statistics Additional Source: Strategic Land Use Plan (1993) - Caboolture Shire Council

Between 1985 and 1993 the number of building approvals in the Shire increased by 99.7%. Projections by the Department of Housing and Local Government show that construction in the Shire of Caboolture will increase to the year 2006, while Brisbane City will decline. Within the Strategic Land Use Plan there are large tracts of land allocated for sub-divisional development coupled with relatively short processing times for applications. According to the Department of Housing and Local Government, sub-divisional approvals in the Shire take approximately four weeks compared to approximately eight to nine weeks in Brisbane 50 .

50 Caboolture Shire Council (1993), " Strategic Land Use Plan, 1993 "

Projected New Dwelling Requirements 1986 - 2006

Brisba ne Cit y 15 Ca b oolture Thousand s

10 No. of new Dwellings

5 1986-1991 1991-1996 1996-2001 2001-2006 Year

Source: Medium Series Dara Dept. Housing, Local Government & Palnning for the Social Justice Startegy, 1990/91 Caboolture

The present production of refuse (excluding private landfill) in the Shire of Caboolture is about 900kg per person per annum, or a total refuse production (1993 basis) of about 70,000 tonnes per annum for the Shire. This quantity is expected to grow to about 150,000 tonnes by the year 2006 51 .

Most of the refuse in the Shire is currently sent to the main Caboolture landfill site. It is estimated that this site has about 20 years of remaining life at the present dumping rate of about 44,700 tonnes per annum.

The establishment of a waste recycling plant would significantly extend the life of this facility, and would eliminate the need to transfer operations to a new site by 2014. Most of the other existing landfill sites in the Shire have similar or earlier expiry dates.

The indicative Petemic plant capacity to treat all the present Shire refuse would be about 280 tonnes per day (assuming a 5 day week), expanding to about 600 tonnes per day by the year 2006.

We are advised that the optimum sized plant for the Petemic technology is about 500 tonne per day with an indicated capital cost of $20 to $50 million 52 .

51 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council. 52 Initial indications at the commencement of the study was $20 to $25m - Petemic management later revised this to the amount shown.

It should be noted that similar characteristics to the Shire of Caboolture are also present in adjoining Shires, particularly Pine Rivers and Redcliffe, and it is possible that a strategically located facility could also attract refuse from those Shires.

Accordingly, it is noted that the present and projected production of refuse in the Shire is reasonably well matched to the optimum estimated Petemic plant size, particularly having regard to the fact that it is likely to be several years before a commercial scale plant could be commissioned.

However, it should also be noted that long term refuse disposal contracts have been negotiated for most urban and per-urban municipalities close to Brisbane, and equity issues will need to be addressed prior to establishment of any treatment facility.

SUPPLY AND PRICE OF CONSTRUCTION MATERIALS IN THE SHIRE OF CABOOLTURE

In 1986, Mr M O'Flynn prepared a report on the quality and viability of extractive resources within the Shire of Caboolture 53 . He identified a number of deposits including a regionally significant deposit of hornfels, greenstone and granite rock in the upper reaches of Burpengary Creek. However the potential to develop these resources has been limited by the encroachment of rural residential development into the area.

Privately owned quarries at Narangba, Moodlu and Bracalba now supply the hard rock requirements in the Shire. Caboolture Shire Council has just approved an additional quarry at Bracalba, and a reliable source of hard rock will be available well into the next century. But the haulage distance from Bracalba to the main areas of population growth in the eastern part of the Shire may allow some advantage to a centrally located source of substitute aggregate. The Council also operate quarries at Round Mountain near Elimbah and Wamuran to provide aggregate for its own use.

Regionally significant deposits of fine to medium grained sand are located within the Shire along Six Mile Creek, Lagoon Creek, Lower Burpengary Creek, and at West Beachmere and West Torbul. Sand from these deposits is of excellent quality and is available (at source) for a price of less than $10 per tonne. It is unlikely that a "fine" Petemic product would be able to compete with local sand in the short term. However, in the long term, extraction may face some environmental restrictions and, some market potential might develop.

Extensive resources of ceramic clay occur in the lateritised and weathered sediments in the Landsborough Sandstone, mainly in the eastern half of the Shire. These deposits were identified in the O’Flynn Report. However, extensive rural residential development in this area has reduced the areas available for future extraction. Ceramic clay also occurs in the west of the Shire, but these deposits appear to have limited application for the building industry.

53 O'Flynn, M. (1986), " Revision of Rock and Mineral Resources in Caboolture Shire " reported in Caboolture Shire Council (1993), "Strategic Land Use Plan, 1993"

The declining resource base for extractive materials is discussed in the Caboolture Shire Council's Strategic Plan (1993) 54 . The Plan stresses that the availability of economic deposits of rocks and minerals for construction purposes is essential for the expansion and maintenance of urban services in the Shire. As urban or rural residential development eliminates viable extractive resources, the cost of urban infrastructure increases as materials need to be introduced from more remote locations. This increased cost is eventually borne by the entire community.

The O'Flynn report 55 as quoted in the Strategic Land Use Plan identified a number of innovations that might have been expected to mitigate the loss of extractive resources, these include:-

• The use of improved explosives, better blasting technique and more sophisticated pattern design and monitoring which together with other practices might enable the impact of operations in proximity to urban development to be better managed.

• An awareness that nuisance factors such as dust and noise must be monitored and mitigated. To do this, new techniques and processes have been introduced. Also important is the visual amenity of the operations, together with the future use of sites and the rehabilitation techniques required.

Since the O'Flynn report was prepared, extensive urban development in the Shire has resulted in the further loss of significant extractive resources.

At the same time, the rapid spread of rural residential development is greatly increasing the demand for low quality road base and fill. The Council has now reached the conclusion that strategically located deposits of these materials must be preserved where possible for the developing sections of the Shire.

The development of a centrally located recycling facility might be expected to relieve some of the pressure on the existing reserves of hard rock, especially those located within reasonable distance of developing urban areas.

Resources of creek sand along Six Mile and Lagoon Creeks are more widespread than previously estimated by O'Flynn in 1986. The material is generally better graded than the beach-ridge sands in near coastal areas and more suitable for blending with concrete and bituminous aggregate. Because of the lack of similar well graded, fine to coarse-grained sand on the north side of Brisbane, the deposits will be increasingly significant as the alternative sources on the south side of Brisbane are depleted.

The beach ridge deposits near the mouth of Burpengary Creek have been worked for nearly 20 years and the remaining resources are thought to be limited. Workable deposits of beach ridge sands are still likely in the Godwin Beach/Beachmere area.

In the Wamuran, Moodlu area and along the Lagoon Creek area, deposits are available in the vicinity of the existing workings. The area is largely rural and the

54 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council. 55 O'Flynn, M. (1986), " Revision of Rock and Mineral Resources in Caboolture Shire " reported in Caboolture Shire Council (1993), "Strategic Land Use Plan, 1993"

Council believes that future rural residential development should be excluded to maintain the availability of these deposits.

The current demand for hard rock and sand in the Shire is at least one order of magnitude greater than the projected output of a Petemic plant that would treat all the Caboolture Shire refuse.

The demand for hard rock and sand has increased substantially in recent years, although over the period 1993 to 1994 the situation has stabilised somewhat. Production for the Shire of Caboolture is demonstrated in the graph below:

QUARRY PRODUCTS DEMAND - CABOOLTURE SHIRE Amount of Material Extracted - January to December, 1993 and 1994

Cubic Metres Extracted 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Sand 1994 Deco

Hardrock 1993

Source: Caboolture Shire Council, Town Planning Department (March, 1995)

From the table above, it may be seen that extraction of hardrock in the Shire of Caboolture for the year to December 1994 amounted to 323,000 cubic metres. Deco production was 256,000 cubic metres and sand 353,000 cubic metres in the same year. It should be noted that aggregate and other construction materials also enter and leave the Shire.

Accordingly it can be concluded that the physical input and output parameters for an optimum sized Petemic plant in the Shire of Caboolture would not be mismatched with the supply of refuse, and the expected Shire demand for aggregate. The output from the Petemic facility would provide less than 10% of the expected demand for sand and aggregate in the Shire.

It should be noted that aggregate also enters the Shire from adjacent sources.

However, most of the deposits of hard rock and sand in the Shire have now been acquired by large competitive companies operating Australia wide. The most important operators in this field are Pioneer International, Boral and CSR. These Companies are vertically integrated and also produce pre-mixed concrete,

bricks, tiles, and a range of more specialised building products. These companies also operate in the contract supply of materials and services in road building.

The position in the sand and rock market has similar characteristics to the handling of domestic and commercial refuse. Large companies and long term arrangements dominate in the market place. It will be necessary to negotiate satisfactory arrangements with present concession holders to ensure access to the marketplace. Although this may present some problems, the community and government pressure to reduce landfill disposal will act as a powerful incentive in the establishment of competitive recycling facilities. However these facilities will need to be fully cost effective to succeed.

The price and quality of the recycled product will need to compete with locally quarried materials. Enquiries made with a long-standing independent supplier of aggregate at the retail level, who is also a substantial supplier of sand from his own deposits in the Caboolture Shire 56 indicates that the wholesale pricing of aggregate and sand (ex quarry) in the Shire is as follows:

$ per tonne Road base Medium quality at pit 9.00 Crushed aggregate 12.00 Graded aggregate (best quality) 18.00 Sand (lowest quality) 8.00

These prices are consistent with reports from other urban areas, and coincide with estimates of the cost of crushing and grading demolition rubble.

Accordingly, it is concluded that market parameters for the Caboolture Shire are favourable, and may be reasonably typical of similar locations elsewhere in Australia. The Shire of Caboolture thus presents the optimum opportunity and location for testing the Petemic technology on a commercial scale.

SUPPLY AND PRICE OF AGGREGATE AND CONSTRUCTION MATERIALS IN SOUTH-EAST QUEENSLAND 57

Regional Supply & Demand

The demand for aggregate (including sand and gravel) is dependent on the state of the construction industry. In turn, construction activity is a function of the population trend and the economic climate.

Local aggregate demand in South-east Queensland will probably increase proportionally, but will continue to be dominated by large public works such as the water and highway projects mentioned above. Local per capita base- consumption within this largely rural area is unlikely to exceed 0.5 m3/a.

56 Source: confidential 57 Material in this section has been largely sourced from: Department of Primary Industries Qld, Sand and Gravel Resources of the Upper Brisbane and Lockyer Valleys: A Technical Information Paper , DPI, Queensland, 1995.

However, much of the material that is extracted from the region is exported to the conurbations of Brisbane, the Gold and Sunshine Coasts, and Toowoomba. The region, therefore, has a potential market of nearly 2 million people, growing at 2.5% annually (ABS, 1993).

The volumes of aggregate being produced in the region (and consumed in the region - negligible quantities are being exported or imported) are considerable. In 1990, the last year in which statistics are available, 17.6 Mt of aggregates, including 6.6 Mt of sand and gravel, were produced in the Brisbane and Moreton Statistical Divisions (which incorporate the Cities of Brisbane, Caloundra, Gold Coast, Logan, Ipswich and Redcliffe, and the Shires of Albert, Beaudesert, Caboolture, Esk, Gatton, Kilcoy, Laidley, Maroochy, Moreton, Noosa, Pine Rivers and Redland).

Queensland’s per capita consumption of aggregate is remarkable high (compared with consumption in New South Wales, for example). This mainly reflects the escalating rate of quarry rock production. The trend of per capita sand and gravel consumption is slightly negative in Queensland, and the situation is mirrored in the southeast of the State. Nevertheless, it appears that Southeast Queensland’s demand for sand and gravel will remain above 6 Mt/a is the foreseeable future.

Coarse sand and gravel is currently being won from a number of sources, mainly from the Brisbane River estuary (0.8 Mm3/a), the Brisbane River between Ipswich and Fernvale (0.3Mm3/a), the North and South Pine Rivers (1.0 Mm3/a), Coomera River (.0.9 Mm3/a0 and the Mary River tot he north of the region (0.2 Mm3/a). Fine-medium sand is mainly won from the Oxlet/Blunder Creek system (0.8 Mm3/a) and the Logan River system(0.3 Mm3/a) , as well as a variety of other sources such as fossil beachridges near Toorbul and marine sand from Moreton Bay (O’Flynn, 1992).

Obviously, reserves from these sources are finite, and new sources will inevitably be required. Large resources of fine-medium sand of marine origin exist in the region but these are of lower quality than river sand and their availability is far from certain. Reserves of coarse sand and gravel are mainly confined to a few of the rivers in the region. Reserves in these ‘traditional’ sources of supply (particularly in the Coomera River and the Brisbane River estuary upstream of the Story Bridge) are approaching exhaustion , while other resources (such as the Brisbane River estuary downstream of the Story Bridge) are presently unavailable because of opposition from sectors of the community.

Accordingly, the industry is beginning to relocate further afield into areas such as the upper Brisbane River and Buarabe Creek. It is clear that the demand for sand and gravel form the study area is likely to increase markedly over the next few years. I t is also clear that deposits in the region will be unable to maintain supply beyond the short-term. Possible substitutes for such materials (i.e. long-term sources) include the Petemic aggregate.

Value of the Industry

Sand and gravel is valued at $5-10/m3 ‘on bank’ (i.e. stockpiled at the site) and $20-25/m3 delivered to the coastal markets (landscaping and concrete blends retail in Brisbane at $40-45/m3.). The Moreton region consumes about 3.5 Mm3/a

of sand and gravel, or about $70M annually. In 1994, operations in watercourses from within the region supplied only about 5% of this figure.

Most of this sand and gravel is used in concrete and concrete products. 2.5-3 Mm3 of concrete is produced in the region annually. At an average production cost of $110/m3 delivered, the region uses about $300M of concrete annually. Industry sources have advised the Qld Dept. Primary Industry that this represents over 10% of the region’s building and construction costs.

Alternative Sources

Fuvially derived sands and gravels are usually ideal concrete aggregates because they have been naturally beneficiated and they usually possess a desirable grading. However, suitable and accessible reserves of alluvial sand and gravel are finite, and alternative sources need to be identified. Three products need to be considered. In industry parlance, these are coarse aggregate (- 5mm), coarse sand (coarse sand/fine gravel; 1-5 mm) and fine sand (fine- medium sand; 0.1-1 mm).

For many years, hard rock quarries have provided the bulk of Brisbane’s coarse aggregate, and the trend will undoubtedly increase as gravels become increasingly scarce or unavailable. Rounded river gravel is preferred over crushed rock for certain applications, such as exposed aggregate and pumped concrete, although the main reasons for its use at present are cost competitiveness and consistent product quality.

An example of such a quarry in the Brisbane Valley is Kansas Properties Pty Ltd operate the Ravensbourne Sand Pit. A large face is cut into weathered, friable, mainly medium-grained, quartose Helidon Sandstone. The clay matrix has been partly removed as a result of groundwater leaching. The pit supplies sand for various concrete products, plaster sand and bedding sand for the Toowoomba market. The production level is unknown. Large reserves remain. A Mining Lease is also held over the area for silica sand and kaolin (O’Flynn, 1992).

Crusher dust from hard-rock quarries can substitute for coarse a\sand in concrete but it is generally only used when there is a supply shortfall because its shape is greatly inferior to that of sand. Its sharp, tabular nature decreases workability and pumpability, necessitates a higher cement content and allows increased shrinkage. This problem can be ameliorated to some extent by the use of impact rather than jaw crushers, and the used of certain admixtures (chemicals which modify concrete properties such as setting-time or viscosity).

Crusher dust production is presently incidental to coarse aggregate production. At present, almost all crusher dust produced in the region is used in roadworks. It is inevitable, however, that the use of this material in concrete will increase. If and when this occurs, new hard-rock quarries will need to be opened. Suitable hardrock quarry sites are not ubiquitous because of land use and geotechnical limitations. In addition to the impacts generally associated with hard rock quarries, such as noise, vibration and dust from blasting, and acid drainage from the oxidation of pyrite, there are added environmental costs associated with crusher dust production. Large quantities of water and energy are used, and high volumes of waste ‘slimes’ are produced.

Gap-graded concrete mixes (deficient in coarse sand) are possible but are generally undesirable because of the need to increase the contents of fine sand and cement to fill the interstices. More water is required in the mix to maintain workability and the strength of the concrete decreases. The higher cement content increases the cost of concrete and places additional pressure on calcium carbonate deposits, which are often environmentally sensitive areas (e.g. coral in Moreton Bay, limestone at Mt Etna).

The DPI suggest that, where possible, alluvial sand resources should be conserved for the more valued end uses. For example, lower grade materials could be used in lieu of river sand for general fill or bedding material. This is, of course, much easier said than done, because river alluvium is often more readily available and less expensive to supply, and the higher quality product will be assured of meeting quality specifications. If follows that for substitution will not occur unless river sand commands a higher price.

Materials technology may conserve resources in various ways. For example, the use of silica fume in structural concrete increases strength, and therefore less concrete is required overall. Of course, silica fume is expensive, making it unsuitable for more general applications. The use of ‘flowable fill’ rather than conventional concrete is increasing; this material uses a high proportion of fly-ash and much less aggregate. Flowable fill is being used as a bedding material along part of the Wivenhoe-Tarong Pipeline route.

Fly-ash (pozzolanic waste material from coal-fired power stations) is used in concrete to partially replace the cement, in order to reduce cost and potential reactivity. The coarsest fly-ash particles (unsuitable for cement replacement) can also be used to substitute for sine silty sand.

Concrete is being recycled in many parts of the world, generally for use in roads and as bedding material, and in some cases for reuse as concrete aggregate. Recycling is being trialled by the Brisbane City Council for use in suburban roads. There are, however, a number of problems associated with concrete recycling, such as quality control. Nevertheless, in future, waste concrete is likely to become an important source of constructional material. Other recycled and artificial aggregates (e.g. tyre rubber) have limited applicability and are of marginal interest.

USE OF THE PETEMIC PRODUCT, AND COMPETITIVE ADVANTAGE

Competitive or comparative advantage for an organisation or product is a marketplace concept. It refers to the ability to capture or expand market share relative to other competitors offering the same (or an equivalent) product or service. Comparative advantage arises from a number of parameters;

1. The price of the product or service

2. The quality of the product or service

3. The availability of the product or service

4. Any exclusive right or concession which might limit the competitors rights to obtain a raw material, or supply a product or service to the marketplace.

A number of secondary issues will also have a bearing on comparative advantage including;

• The source availability and cost of raw material

• Manufacturing and overhead costs

• Manufacturing ability including product range

• Ability to comply with regulatory requirements

• Degree of vertical integration of source materials, processing, and final market.

In practice, it will be extremely difficult to establish whether a product or service can gain a comparative advantage (i.e. can compete in the marketplace) without actually entering the marketplace.

Unless precise detail about the above mentioned parameters is available, then it will be impossible to derive the competitive boundaries for each of the relevant parameters for which advantage might arise. Moreover, the market response to a new competitor for the existing potential operators will be very difficult to predict. It is suffice to say that the Australian market for aggregate and construction materials is dominated by several large vertically integrated national companies.

The market survey revealed that the potential production from a Petemic plant based in the Caboolture Shire would have an output less than one tenth of the total production of generic extractive aggregate in the Shire.

It should also be noted that the market survey is presented as a “pre-feasibility” study. As such, information from this Report will be used to establish the economic boundaries within which Petemic would need to operate to be competitive. It is the responsibility of Petemic Management to demonstrate that it can meet those requirements.

The Price of the Product or Service

No information was available on Petemic product price at the time the survey was conducted.

At the bottom end of the aggregate market, the product can be regarded as generic, and competition will be based on price, provided that the product reaches the specifications required in the marketplace.

A major customer group is public sector instrumentalities (Road Departments and Local Government) who purchase on tender with specified standards. Otherwise the market is diverse and competitive.

It will be difficult to establish product differentiation in this market unless the product has particular attributes not available in competing products. We have no specifications for the Petemic product. Consequently we are unable to comment on this aspect.

We have obtained prices for generic products that we would expect to compete with Petemic products from local sources and from literature review, and these are included in the market survey.

The likely market competitors vary from place to place. It can be expected that the main competition will be the major Australian building products companies. These companies include CSR Ltd, Boral Ltd, and Pioneer International Ltd. These companies all quarry rock and sand at a large number of locations, and produce bricks and other derived products. They also offer a large range of contracting services (such as road building) that utilise the source building materials. Privately owned independent suppliers also operate at many locations especially where they have secured exclusive rights to raw material deposits.

Some Local Government Authorities (including Caboolture Council) maintain their own quarries for use in road building.

The market situation in the Caboolture Shire is typical of Australian urban locations, and the three national firms operate as well as a number of independents.

Petemic will have to demonstrate that it can supply products of defined specifications to compete on price with the range of products available from the existing extractive sources in the Shire.

We have no information at this stage to demonstrate that Petemic can deliver a competitive product in the marketplace.

The Quality of the Product or Service

No product has been produced from the Petemic process at the time the market survey was prepared, and no specifications had been provided that would have enabled the writer to seek comment from potential purchasers. The market survey was conducted on the assumption that the product(s) would be of equivalent quality to materials obtained from extractive deposits.

It is therefore concluded that, as at date of writing, no comparative advantage in respect of quality has been demonstrated for the Petemic product.

The Availability of the Product or Service

In some circumstances availability and timing are important attributes of comparative advantage. Reliability and timeliness in respect of product delivery and quality may provide a considerable comparative advantage. At the time the market survey was conducted, no information was available on this aspect, and the Consultants are not aware of any additional information to hand as at the date of writing this Report.

Consequently it is concluded that, as at the date of writing, no comparative advantage in respect of availability or supply has been demonstrated for the Petemic product.

Exclusive Rights or Concessions Which Might Limit the Competitors Rights to Obtain a Raw Material, or Supply a Product or Service to the Marketplace

The extractive industries and infrastructure construction projects are often subject to exclusive arrangements that limit the entry of competitors.

Exclusive assess to extractive resources is the general rule, and the large national companies have secured deposits at strategic locations. This fact may enable some operators to price products above a competitive market price, and enable them to maintain a comparative advantage over new entrants.

This may have some impact on a potential entrant (such as Petemic) where the existing operator has an excessive margin that will enable price reduction in the face of competition.

This survey was directed at establishing competitive prices that Petemic would be likely to face. As far as the Consultant’s can judge, Petemic has no advantage arising from an exclusive access to material not available to others.

Indeed, Petemic is yet to secure guaranteed access to the raw material sources (garbage and builders rubble). At present, this raw material source is the subject of an exclusive right held by Hunter Brothers. If the Petemic process is to source input material from the Caboolture Shire it will need to negotiate with Hunter Brothers. The cost of any arrangement negotiated will be relevant in establishing comparative advantage for the Petemic process.

As to the secondary issues mentioned above, the source and availability of raw materials will need to be secured in advance of any plant establishment. At the time of conduction of the market survey, no information on manufacturing costs or overheads were available, nonetheless Petemic management have advised that costs will be low enough for Petemic to compete. The issues of marketing ability and product range cannot be addressed until some product is actually processed. The compliance requirements have been set out in the environmental section of this Report, and will need to be factored into the manufacturing process and costs.

The final issues of access and vertical integration require some comment. Petemic is a small company with no national scope. Moreover it does not provide immediate prospects for vertical integration unless it forms an alliance with another group to assist with product demand.

Petemic will need to address some of these issues prior to establishing their Pilot.

CONCLUSIONS

The disposal of municipal waste has become a significant problem for local government authorities throughout the developed world. Earlier levels of waste generation at about one tonne per person per year have declined somewhat in the mid 1990's because of recycling and other government initiatives. However, the economic separation and recovery of the higher value items in municipal waste may now be reaching a practical limit.

Waste commonly directed to landfill in the higher population municipalities of Eastern Australia now contains 30% to 60% hard-fill and the balance in undifferentiated domestic garbage. The prospects for economic recycling for these materials is relatively limited 58 59 .

Environmental restraints imposed by government, rapidly declining capacity in existing landfill sites, and the shortage of new areas suitable for landfill disposal near to the main areas of population, can be expected to cause sharply rising costs in landfill refuse disposal. New initiatives will be needed to counteract these costs, and to comply with national targets of a 50% reduction in waste directed to landfill by the year 2000.

58 Brookes, G., Kenley, R., Kerby, N., & Ellwood, D. (1994), " Shire of Hornsby: Economic & Operations Feasibility Study for Major Recycling Initiatives and a Council Operated Transfer Station " in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 141-148. 59 Caboolture Shire Council (1993), " Waste Management Strategic Plan " Sinclair Knight Consulting Engineers for Caboolture Shire Council

Various commentators have suggested that the real cost of landfill disposal is higher than the charges now being levied by municipal authorities on the producers of refuse. It is now government policy at the state and federal level that users should pay the whole cost of refuse disposal. The future cost to dumpers is now likely to include forward planning and environmental costs.

The direct cost to local government authorities of landfill disposal in metropolitan and urban Australia currently varies between $10 and $50 per tonne, with the higher figure applicable to areas of higher population density. Similar costs in the USA may be up to three times greater.

Dumping charges for commercial refuse at municipal landfill sites in Eastern Australia may also vary up to about $50 per tonne, but can be expected to increase rapidly as new government environmental and "user pays" policies are progressively introduced.

Recent interest has been generated in some municipalities towards the recovery and treatment of builders rubble to produce roadbase and drainage aggregate. The cost of this treatment has been estimated at about $7.50 per tonne with the value of the product (on site) being up to $14 per tonne depending on the quality of the product, and the availability of competitive materials at the particular site. There will also be an additional benefit in this option in the cost of dumping avoided 60 .

Examination of the specifications put forward by Petemic Technology suggests that the Petemic product in basic form should command a premium over crushed and screened builders rubble. Moreover the process has the potential to utilise a greater proportion of the waste handled in municipal disposal than simply hard-fill waste amenable to crushing and screening.

Clipping 1 - The Courier Mail, 25 60 Brookes, G., Kenley, R., Kerby, N., & Ellwood, D. (1994), " Shire of Hornsby: EconomicMarch, & Operations1995 Feasibility Study for Major Recycling Initiatives and a Council Operated Transfer Station " in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention , Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 141-148.

Further, it is apparent that the physical input and output parameters for an optimum sized Petemic plant in the Shire of Caboolture would not be mismatched with the supply of refuse, and the expected Shire demand for aggregate. The output from the Petemic facility would provide less than 10% of the expected demand for sand and aggregate in the Shire.

However, it should be noted that no attention has been given in this analysis to the ownership of municipal waste, or to any contractual arrangements that local government bodies may have made with waste disposal contractors.

Aggregate from the Petemic process is anticipated to be similar in some ways to the aggregate produced by Neutralysis as shown in the photograph above, i.e. a lightweight, pelletised aggregate.

Sales Potential

Based on the foregoing data, calculations for annual sales potential are provided as follows:

Low Estimate Mid-Estimate High Estimate @ $8 / tonne @ $14 / tonne @$20 / tonne $ $ $ 7,200,000 12,600,000 18,000,000 12,960,000 22,680,000 32,400,000

61 As noted previously, this compares to the direct cost to local government authorities of landfill disposal in metropolitan and urban Australia which currently varies up to $50 per tonne in areas of higher population density.

The above estimates assume production in the order of 0.9m to 1.6m cubic metres of aggregate. This compares to the current Shire demand as follows:

Quarry Products Demand Amount of Material Extracted - January to December, 1993 and 1994 Caboolture Shire

Material Cubic Metres Extracted Cubic Metres Extracted 1993 1994 Sand 361,646 323,203 Deco 217,008 255,955 Hardrock 419,849 352,655 Total 998,503 931,813

The following graph of the above sales estimates is provided for analysis and comparison:

Indicative Sales Values for the Petemic Process - Caboolture Shire

40 Values based on current (93/94) demand

Low Estimate @ $8 30 Mid-Estimate @ $14 High Estimate @$20

Millions 20

10 Gross Sales ($) per annum per ($) Sales Gross

0 900 980 1,060 1,140 1,220 1,300 1,380 1,460 1,540 1,620 940 1,020 1,100 1,180 1,260 1,340 1,420 1,500 1,580 Expected demand for Sand & Aggregate in the Caboolture Shire (cubic metres)

SITE ANALYSIS

PROSPECTIVE SITES

The Consultants have followed the Client’s directive in endeavouring to establish prospects for a suitable site or sites within the context of Queensland, and preferably South-east Queensland. From this point, the viability model for the establishment of a suitable Petemic plant can be adapted according to site variables and infrastructure requirements applying to any particular location.

An indicative location for such a pilot plant is the Shire of Caboolture. The rationale here is that the Shire is growing rapidly, indicating an increasing supply of refuse, together with an expanding demand for building materials.

There are several prospective sites in the Caboolture Shire that may be suitable candidates for the setting up of a pilot plant. These have been visited by Company management and the Consultants.

SITE LOCATION CRITERIA

Site selection criteria has been based on the following factors 62 :

1. In general terms, the site must be able to support the identified infrastructure requirements (refer previous section of this Report). This would include the availability - or reasonable availability - of power, telephone, water, fuel (e.g. gas, diesel, furnace oil, etc.), etc. Limited water supply must be available (Petemic management advise a requirement of no more than several hundred litres per day 63 ). Treated sewerage water would be acceptable 64 .

2. Adequate supply 65 of refuse.

3. Site must be appropriately zoned, or likely able to be rezoned to suitable definition, e.g. “Noxious, Offensive or Hazardous”.

4. Environmental restrictions, particularly that relating to noise, must not, prima facie , prohibit the planned development (refer Section of this Report “Environmental Considerations”).

5. Should most likely to be acceptable, prima facie , to the local Council (and meeting likely requirements imposed by the Town Planning department in particular).

62 Some changes to the criteria listed below may be possible if plant design is modified 63 To be confirmed by Engineer 64 According to advice received by Petemic management 65 That is, supply of refuse must be sourced in sufficient quantities to support the ongoing viability of the Petemic processes raw material requirements. In the case of the Caboolture Shire, the rapidly growing local population indicates, primae facie , an increasing or at least maintained supply of refuse.

6. Low or nil level of objection likely posed by local / regional communities.

7. Minimum available land area of between 10 to 15 acres (4 to 6 hectares) 66 .

8. Excellent road access for heavy vehicles.

9. Preferably bitumen road access (or minimal requirement for bitumenisation of access).

10. Presence of buffer zone to minimise or eliminate any undesirable effect on nearby residential areas.

11. Restricted viewing from major arterial roads or highways to minimise or eliminate any visual intrusiveness.

12. Close or immediate proximity to existing landfill dump sites.

THE NARANGBA INDUSTRIAL ESTATE

One of the sites visited (refer photograph below) is the Narangba Industrial Estate, which is in part owned by the Department of Business, Industry & Regional Development (the consultants understand that land in this estate is available for freehold - if project eligible).

One of the possible sites - located at Narangba Industrial Estate. An ideal location because of the appropriate land zoning.

66 Indicative for a 500t output per day Plant

With the exception of a 35 hectare parcel of land which is undeveloped, the majority of the Special Industry zoned land has been utilised for noxious and hazardous industries. Indeed, latest advice from Council (as at date of writing) is that the Narangba Industrial Estate itself is in major part zoned a “Noxious, Offensive or Hazardous Industry zone”.

(Special Note: The Caboolture Shire Council Town Planning maps 67 indicate that the Estate is zoned “Special Industry” and in other parts “Special Purpose”. The Department of Business, Industry & Regional Development’s Locality map has categorised the Estate as being either “Special Industry” and / or “General Industry”. Council advice received indicates a “Noxious, Offensive or Hazardous Industry zoning).

The use of the Estate as an area containing “noxious, offensive or hazardous” industries, which established by right previously, now require Town Planning Consent in the Special Industry zone, thus affording greater control over the development. The Special Industry zoned land, which has been developed for the major part, is surrounded by an undeveloped tract of land. 68 A future Stage (No. 5A2) is planned.

A panoramic view of the Narangba Industrial Estate is appended to this report, as taken from the current (physical) end of Potassium Street (refer to Locality Map of the Estate, also appended to this Report.

Whilst advice to hand is that the existing Industrial Estate lots have all been taken up for development, expansion of this estate is imminent.

Site selection criteria is addressed as follows:

1. Able to support the identified infrastructure requirements (refer previous section of this Report). This includes the availability - or reasonable availability - of power, telephone, water, gas / furnace oil / diesel, etc. Town water supply (including fire hydrants) is available.

2. Rapidly growing local population (refer data presented in previous sections of this Report). Caboolture Shire (together with the Sunshine Coast) is one of the most rapidly growing - if not the most rapidly growing - populations in Queensland 69 .

3. Site is appropriately zoned Special Industry (“Noxious, Offensive or Hazardous” ) zone.

4. Environmental restrictions, particularly that relating to noise, do not, prima facie , prohibit the planned development (refer Section of this Report “Environmental Considerations”). However, as previously noted there may be a requirement for the completion of an Environmental Impact Statement, and / or Environment Management Plan.

67 Caboolture Shire Council Town Planning Scheme Map numbers 1:10,000 *15 (Issue #1), and 1: 5,000 *14C (Issue #1). 68 Source for information on the Narangba Industrial Estate is the Strategic Land Use Plan (1993), Caboolture Shire Council (pp. 137 - 138). 69 The Sunshine Coast Economic Development Board claim that the Sunshine Coast region is the fastest growing population centres in Australia.

5. Preliminary discussions with Caboolture Shire Council indicate that it is a likely possibility that it could be acceptable, prima facie , to the local Council (and meeting likely requirements imposed by the Town Planning and Health departments in particular).

6. Low or nil level of objection likely posed by local / regional communities, due to its distant proximity to residential areas and placement within an identified “noxious, offensive, or hazardous” locality.

7. It is likely that the a land area of between a minimum of 10 to 15 acres (4 to 6 hectares) is available 70 .

Area located on the outskirts of the Narangba Industrial Estate - creekbed to the north / north-east, with some evidence of pollution from other nearby industries. The area of the Industrial Estate is able to be further expanded towards this locality, with fire hydrants located strategically along the track seen to the rear of the photograph.

8. Excellent road access for heavy vehicles. Easy access to the Bruce Highway. 71

9. Bitumen road access available to the Estate.

10. Narangba Industrial Estate enjoys a significant “Buffer zone” which should serve to minimise or eliminate any undesirable effect on nearby residential areas.

70 Whilst indications are that the majority of lots on the Narangba Industrial Estate have been taken up, the area will be expanded further. Also, there has been limited development occurring on the outskirts of the Estate inferring that some blocks may become available for resale by private vendors. 71 Very limited exposure to residential areas

11. Viewing from major arterial roads or highways is highly restricted. This will assist in minimising, or eliminating, any visual intrusiveness.

12. Close proximity to a number of existing landfill dump sites, including those in several adjacent shires.

One of the existing Landfill dump sites located in the Caboolture Shire - and a possibility for co-development with a Petemic Plant located on site. This one is located at Boundary Road, adjacent to the Narangba Industrial Estate (Caboolture Transfer Station).

Alternatives to the Narangba Industrial Estate.

There are potentially a number of other fairly suitable sites located within reasonably close proximity to central Caboolture, for example a 300 acre (121 hectare) site located along Boundary Road 72 , and existing landfill / dump sites.

There may also be some potential to site the Project on an existing landfill site, however this would need to be negotiated with the Council and / or waste management contractor. Design of the plant, however, would need to take account of the possibility of leeching material. Some caution is advised since any problems associated with landfilling activities might be wrongly attributed to the Petemic process.

72 as per advice from DBIRD, Sunshine Coast.

The Caboolture Shire Light Industrial Estate at Narangba - not considered a potential Petemic Technology Plant site due to its zoning, proximity to residential areas, and existing development use.

A number of “apparently suitable” alternatives, not eventually considered for a variety of reasons to be viable, are also apparent. These include the Light Industry Industrial Estate, the ex Bribie Brickworks site, the Caboolture Shire Sewerage Treatment Plant (located near the coast between Beachmere and Deception Bay), and others.

The Noxious, Offensive or Hazardous Industry Zone

The Government gazetted town planning definition of the “Noxious, Offensive, or Hazardous Industry Zone” is provided as follows:

“To provide for industries which by their nature are likely to be noxious, offensive or hazardous in relation to other types of land use including other industries. Large scale general industries may also locate in this zone with Council consent. Junkyards, and other visually intrusive activities will be encouraged to locate in this zone. Residential and other forms of incompatible land uses will be restrained from locating near this zone.”

The Narangba Industrial Estate - a suitable site for a Petemic Plant. Shown here is the outskirts of the existing land allocation, at the end of Potassium Street.

Caboolture Shire Council advises that the property is zoned Noxious, Offensive, or Hazardous Industry 73 . The proposed use on the Narangba Industrial Estate therefore conforms with purposes for which buildings or other structures may be erected or used or for which land may be used without consent of the council 74 , including:

a) advertising hoarding, advertising sign, bulk store, car repair station, domestic pets, general industry, junkyard, light industry, liquid fuel depot, and park, and

b) caretaker’s residence, car park, hazardous industry, noxious or offensive industry, public utility and stockyard. 75

Limited consent (purposes for which buildings or other structures may be erected or used or for which land may be used only with the consent of the council includes:

• agriculture • commercial premises • lot feeding (intensive) • refreshment service

73 A current zoning certificate has not been obtained. The obtaining of such a Certificate is time consuming and costly, and often an excessive requirement for the purpose of this Report. The Consultant has therefore relied upon the verbal advice of Council. 74 Definition has been obtained from the Government Gazetted “Table of Development: Noxious Offensive or Hazardous Industry Zone.” 75 Such purposes are subject to special conditions

Purposes for which buildings or other structures may not be erected or used or for which land may not be used (i.e. prohibited development) includes:

• any purpose not referred to above

Council has advised that there are no immediate planned changes to the land zoning.

Another view of the Narangba Industrial Estate, taken from the western extremity of existing development. Note the excellent bitumen road access.

LABOUR SKILLS AND ORGANISATIONAL STRUCTURE

KEY MANAGEMENT 76

Key management, consisting of three personnel (plus professional support services), are vested with quite different and distinct responsibilities as follows:

➮ General Manager

The General Manager is responsible to the Petemic Board of Directors for the implementation of policy, and the leadership of the Petemic team. His is the ultimate responsibility for the financial performance of the Company and its production / processing operation. For this reason, his primary role is to achieve Company objectives.

He must also provide vision to the Company (both “upwards” and “downwards” communication), and must maintain regular contact with the owners / directors of the business.

➮ Administration Manager

The Administration Manager’s role is essentially to act as the Company's internal Bookkeeper and Paymaster. His primary role is to provide financial information to management, however in the process the Administration Manager will be responsible for the payment of creditors, exercising debtor control, maintaining and controlling the accounting system (including ordering and overseeing other transactional activity), and payment of staff wages.

The Administration Manager will need to be a strong “team player”, maintaining close liaison between the General Manager and the Operations / Production department. He will also need to implement directives concerning the engagement of professional service personnel, and on occasion initiate such engagements.

➮ Production Manager

The Production Manager has a critical role in the Petemic organisation, in that he is responsible for the “engine room” of the Company (i.e. production and processing operations). In addition to being the designated Quality Control Officer, the Production Manager will need to demonstrate detailed understanding, flair and initiative in relation to the Petemic process.

This position also carries the ultimate responsibility for the production of the Petemic end-product to the specifications and standards established as Company policy (subject to the outcomes of any ongoing research and development activity). This must be achieved in the most cost-efficient manner possible.

76 For convenience only, the Consultant has adopted the words “he” or “his” when referring to staff positions and organisational structure. However, the Consultant is committed to presenting data on an equal opportunity basis and for this reason the words “she” or “her” could also be used in replacement of the foregoing except where otherwise and specifically noted.

This position carries the key to achievement of the Company’s financial objectives, from a cost point of view. It is important that he also maintain on a regular basis his professional and technical knowledge, ensuring that he is fully acquainted with industry developments in the area of waste management.

Finally, the Production Manager’s other critical area of responsibility is the day to day management of most Company staff. It can be expected that this person will have a key role in the “hiring and firing” of production and processing personnel.

The sharp delineation in management responsibilities, as depicted above, will contribute towards a good working relationship being developed between the respective personnel.

Delegation of Authority and Succession Planning

The Company will need to consider the implications of the possibility of key management not being present for extended periods (especially the General Manager). Not only does this imply that the need for delegation of management responsibilities, but more importantly it emphasises the importance of putting in place a "succession plan" (comments follow below) for the current owner- Directors.

Key Management Risk

There is currently a reliance of "Key Men" (i.e. Walsh, Holbut, and Schulz). Because of their critical management and other functions undertaken, a risk to their spouses (as may be applicable), and the ongoing viability of the Company exists, they become incapacitated for a medium term or longer.

This risk will be considerably exacerbated once the Viability stage has been completed, and presumably construction commences on a Pilot or Commercial Plant.

One way that this may be overcome is for key management to identify suitable persons for succession. It is in fact in their own interest to do so, as the Consultant is not only cognisant of the personal objectives of the owners, but if the business is to become more self-reliant, it is imperative that this matter be attended to. This could be progressed along with a proposed ATFIC 77 program to be developed (the ATFIC is explored in the next sub-Section of this report).

In addition to the above, the management may wish to investigate suitable income protection insurance , in addition to implementing a system of revolving work duties, particularly with identified key workmen. This could also be conducted in conjunction with an ATFIC program

The Petemic Board of Directors

77 ATFIC - Assistance to Firms Implementing Change

The Organisation Charts below indicate a Board of three Directors (current organisational structure is two persons 78 ). These persons are could be:

1. Mr Michael Walsh (existing General Manager) 2. Mr Peter Holbut (existing Research Development & Technology Manager) 3. Mr Graham Schulz (Non-Executive Director)

In the short to medium term, the Consultant recommends that the existing Board should look for at least two other, independent, non-executive Board members with expertise in the areas of:

• Financial Management • Engineering Technology (preferably with specific skills in the area of waste management)

This would serve to bolster the skill base and expertise required to effect implementation of the Project.

Professional Support Services

The following Professional Support Personnel will be required:

Industrial Chemist

The engagement of an independent Industrial Chemist will be required for the formal testing of product quality and composition. Some stress-testing of product may also be required to meet the potential requirements of local Councils and other clients of Petemic 79 .

The nature and specification of tasks required to be completed would be subject to client requirements, and tailored to meet needs.

Suggested allocation : $2,000 per month upon construction of the Pilot or Commercial Plant.

Consultant(s)

Consulting services may be required in the following areas:

• General Consultancy (allocation should be made for assistance with the financial management functions 80 ).

• Engineering (implementation of Plant design, and ongoing calculations for product / process specifications. Plant modification “on the fly”) 81 .

78 Mr Michael Walsh, and Mr Peter Holbut. 79 The stress testing of material used, for example, as road base, will almost certainly be required) 80 Financial Planning and Analysis, including analysis of performance, will support the Administration Manager’s role. There will be a greater than usual requirement during establishment of the Plant, and for at least the first six month’s of operation. 81 A suitable Engineering Consultant has been located in Mr Peter Stone, who is being utilised by Petemic management as at the date of writing.

Suggested allocation : $1,500 per month for the first year commencing upon completion of the Viability Analysis (General Consultancy), and $1,500 per month for the first year commencing upon completion of the Viability Analysis (Consulting Engineer).

Other Professional Support (Ongoing)

An Accountant, Auditor and Solicitor should be appointed. The Solicitor should ideally be conversant with liscencing requirements of the Petemic Technology.

Suggested allocation : $3,000 per annum for the first year commencing upon completion of the Viability Analysis (Accountant); $1,500 per annum for the first year commencing upon completion of the Viability Analysis (Auditor); and $1,000 per annum for the first year commencing upon completion of the Viability Analysis (Solicitor 82 ).

Sub-Contracted Services

The following services will need to be retained for the provision of various sub- contracted services:

Maintenance Crew Assuming one shift only per day: Allocate $1,000 per month (first year of operation post Plant Construction) Allocate $2,000 per month (second year of operation) Allocate $2,500 per month (third year of operation and thereafter)

The maintenance crew (comprising skill areas of fitter and turner, and boilermaker) will be charged with the responsibility of maintaining the Petemic plant. A reduced requirement is indicated in the early stages of plant operation.

A formal schedule of regular maintenance tasks will need to be formulated by Petemic management, in addition to a “memorandum of understanding” in relation to “ad-hoc” maintenance that may be required from time to time.

The Maintenance Crew will be directed by the Production Manager. As with all sub-contracted and professional services, confidentiality agreements will need to be executed with the Companies / individuals concerned.

The purpose of the Maintenance Crew is to MAINTAIN PRODUCTION AND QUALITY by ensuring operation of machinery and mechanical equipment. Job Results are defined as follows:

1. ENSURES OPERATION OF MACHINERY AND MECHANICAL EQUIPMENT by completing preventive maintenance requirements on engines, motors, pneumatic tools, conveyor systems, and production machines; following diagrams, sketches, operations manuals, manufacturer's instructions, and engineering specifications; troubleshooting malfunctions.

82 This allocations assumes resolution of all liscencing issues

2. MAINTAINS EQUIPMENT, PARTS, AND SUPPLIES INVENTORIES by checking stock to determine inventory level; anticipating needed equipment, parts, and supplies; placing and expediting orders; verifying receipt.

3. LOCATES SOURCES OF PROBLEMS by observing mechanical devices in operation; listening for problems; using precision measuring and testing instruments.

4. CONSERVES MAINTENANCE RESOURCES by using equipment and supplies as needed to accomplish job results.

5. REMOVES DEFECTIVE PARTS by dismantling devices; using hoists, cranes, and hand and power tools; examining form and texture of parts.

6. PROVIDES MECHANICAL INFORMATION by answering questions and requests.

7. DETERMINES CHANGES IN DIMENSIONAL REQUIREMENTS OF PARTS by inspecting used parts; using rules, calipers, micrometers, and other measuring instruments.

8. PREPARES MECHANICAL MAINTENANCE REPORTS by collecting, analyzing, and summarizing information and trends.

9. ADJUSTS FUNCTIONAL PARTS OF DEVICES AND CONTROL INSTRUMENTS by using hand tools, levels, plumb bobs, and straightedges.

10. CONTROLS DOWNTIME by informing production workers of routine preventive maintenance techniques; monitoring compliance.

11. MAINTAINS CONTINUITY AMONG WORK TEAMS by documenting and communicating actions, irregularities, and continuing needs.

12. FABRICATES REPAIR PARTS by using machine shop instrumentation and equipment.

Security Guard Assuming one shift only per day: Allocate $800 per month (first year of operation post Plant Construction) Allocate $800 per month (second year of operation) Allocate $800 per month (third year of operation)

The Security Guard will be charged with the responsibility of ensuring the entry of only those persons authorised to do so, or otherwise legally required, outside of Plant operation .83

A secondary role will be the securing of the Company’s assets.

A reduced requirement would be indicated should the Company proceed to two shifts, with a “nil” requirement where three shifts are in operation. 84

83 During hours of Plant operation, the Weigh Bridge Operator will be charged with the responsibility of security.

Electronic and Engineering Contractor Assuming one shift only per day: Allocate $1,500 per month 85 (first year of operation post Plant Construction) Allocate $1,000 per month (second year of operation) Allocate $800 per month (third year of operation and thereafter)

The Electrical and Engineering Contractor will be charged with the responsibility of maintaining the electronics and controls relating to the Petemic Plant. A reduced requirement is indicated in the early stages of plant operation.

A formal schedule of regular maintenance tasks will need to be formulated by Petemic management, in addition to a “memorandum of understanding” in relation to “ad-hoc” electronic maintenance that may be required from time to time.

The Maintenance Crew will be directed by the Production Manager, but with the input from the Engineering Consultant engaged by Petemic.

ORGANISATIONAL STRUCTURE

The organisational structure of Petemic Technology Pty should be relatively “flat”, allowing for smooth communications between factory workers, and management.

ORGANISATIONAL CHARTS

The following charts represent the organisational structure and line operations / responsibility of the Company for one, two and three shifts 86 :

84 Since the Weigh Bridge Operator is charged with the responsibility during operation hours, in the case of three shifts the Plant would always be secured by employed staff. 85 Equivalent to $40 per hour 86 For clarity, a full page of the Organisation Chart for One Shift only is appended to this Report

One Shift PETEMIC TECHNOLOGY PTY LTD ORGANISATION CHART (ONE(ONE SHIFT)SHIFT)

FULL TIME STAFF EQUIVALENTS = 11 BOARD OF DIRECTORS Plus Sub-Contractors & Professional x 3 Support

GENERAL MANAGER x 1 * Vision * Leadership * Management * Overview

ADMINISTRATION OPERATIONS & SUB- PROFESSIONAL PRODUCTION CONTRACTORS SUPPORT GROUP

ADMINISTRATION PRODUCTION MAINTENANCE SECURITY GUARD INDUSTRIAL MANAGER MANAGER CREW CONTRACTOR CHEMIST x 1 x 1 x 1 x 1 x 1 * Accounting * Production * Fitter * Wages *Quality Control * Turner * Ordering * Operations * BoilerMaker CONSULTANT * Scheduling x 1 ELECTRONIC & FREIGHT ELECTRICAL (Road Transport) SECRETARY WEIGH LOADER LOADER, FORKLIFT GENERAL ENGINEERING CONTRACTOR x 1 BRIDGE OPERATOR PULVERISER OPERATOR, HAND CONTRACTOR OPERATOR x 1 & BRICK x 3 x 1 x 1 Freight In / Out & SECURITY EXTRUDER STACKER, * Sorting x 1 OPERATOR LOADER * Other Duties x 1 OPERATOR x 1

Two Shifts PETEMIC TECHNOLOGY PTY LTD ORGANISATION CHART (TWO(TWO SHIFTS)SHIFTS)

FULL TIME STAFF EQUIVALENTS = 19 BOARD OF DIRECTORS Plus Sub-Contractors & Professional x 3 Support

GENERAL MANAGER x 1 * Vision * Leadership * Management * Overview

ADMINISTRATION OPERATIONS & SUB- PROFESSIONAL PRODUCTION CONTRACTORS SUPPORT GROUP

ADMINISTRATION PRODUCTION MAINTENANCE SECURITY GUARD INDUSTRIAL MANAGER MANAGER CREW CONTRACTOR CHEMIST x 1 x 1 x 1 x 1 x 1 * Accounting (extended hours) * Fitter * Wages * Production * Turner * Ordering * BoilerMaker *Quality Control CONSULTANT * Scheduling * Operations x 1 ELECTRONIC & FREIGHT SECRETARY ELECTRICAL (Road Transport) x 2 ENGINEERING CONTRACTOR WEIGH LOADER LOADER, FORKLIFT GENERAL CONTRACTOR x 1 BRIDGE OPERATOR PULVERISER OPERATOR, HAND x 1 Freight In / Out OPERATOR x 2 & BRICK x 6 & SECURITY EXTRUDER STACKER, * Sorting x 2 OPERATOR LOADER * Other Duties x 2 OPERATOR x 2

Three Shifts PETEMICPETEMIC TECHNOLOGYTECHNOLOGY PTYPTY LTDLTD ORGANISATIONORGANISATION CHARTCHART (THREE(THREE SHIFTS)SHIFTS)

FULL TIME STAFF EQUIVALENTS = 34 BOARD OF DIRECTORS Plus Sub-Contractors & Professional x 3 Support

GENERAL MANAGER x 1 * Vision * Leadership * Management * Overview

ADMINISTRATION OPERATIONS & SUB- PROFESSIONAL PRODUCTION CONTRACTORS SUPPORT GROUP

ADMINISTRATION PRODUCTION FOREMAN MAINTENANCE INDUSTRIAL MANAGER MANAGER x 2 CREW CHEMIST x 1 x 1 * Assists Foreman x 1 x 1 * Accounting (extended hours) in his abscence * Fitter * Wages * Production * Turner * Ordering *Quality Control * BoilerMaker CONSULTANT * Scheduling * Operations x 1 SECURITY GUARD CONTRACTOR SECRETARY x 1 x 2 WEIGH BRIDGE LOADER LOADER, FORKLIFT GENERAL HAND (extended hours) OPERATOR & OPERATOR PULVERISER & OPERATOR, x 10 SECURITY x 4 EXTRUDER BRICK STACKER, * Sorting OPERATOR LOADER x 4 * Other Duties ELECTRONIC & x 4 OPERATOR ELECTRICAL x 4 ENGINEERING ADMINISTRATION CONTRACTOR ASSISTANT x 1 x 1 Assists Manager in his abscence FREIGHT (Road Transport) CONTRACTOR x 1 Freight In / Out

POSITION JOB DESCRIPTIONS

In view of the likelihood of staff turnover, accompanied by expected strong growth and the changes this will bring about, the matter of job definition is critical. Appendix D provides a detailed Job Definition of all staff to be employed.

The development of written Job Descriptions , defining the nature, scope and job function, along with relevant authority levels, is an important aspect of the Petemic management function. It is emphasised that a key factor in bringing about an efficiently managed organisation will be the clear definition of job functions and reporting lines. This becomes of even greater significance as employee numbers increase, and where the available time to spend with employees becomes less.

Job descriptions - developed for all existing and proposed positions, provides in a written form clear delineation of job duties/responsibilities and reporting lines. Ideally, each Job Description should be further refined in conjunction with each employee.

The Job Description models located at Appendix D could be used as a basis for the development of all staff positions. The major features of worthwhile and meaningful job descriptions are:

• Results and duties are both stated (the result expected and the duties needed to accomplish the result)

• Accomplishment is emphasised over "doing" (employees need to first know where they are going - only then can it be explained "how you get there")

• The focus is on results (including how the job fits into the overall scheme of the organisation, and how the job fits into the organisations' mission)

• Clear writing style, with job descriptions simple and easy to understand.

• Job Descriptions must be changed when job requirements change.

• Linkage should be established here possible with QA Procedures documentation .

Use of Contract Labour and Enterprise Bargaining

The Company may be interested in following up prospects of enterprise bargaining; from its point of view, in an effort to improve productivity (it may also have the potential to increase capacity utilisation of factory/processing operations.).

Should the Company wish to progress this matter, or in order to assist in identifying the training requirements of the enterprise, the Consultant recommends that the Company engage the services of Dr. Catherine Norton of the Norton Consulting Group 87 , for the purpose of submitting an ATFIC (Assistance to Firms Implementing Change) 88 proposal which would examine these and other issues related to staffing. The Government may provide up to $40,000 funding for this purpose. The primary purpose of this program should be to effect improvements in productivity.

SKILLS AUDIT

The following data is provided to guide management in the selection of personnel capable of performing executive and other positions planned for Petemic Technology Pty Ltd.

87 Phone 07-369 5523. The Consultant would be willing to arrange an introduction and preliminary visit if so desired. 88 ATFIC is a program run by DEET (Dept. Employment, Education & Training), and is designed to assist firms to expand or restructure and to develop business and human resource practices. The program assists companies retain or expand their workforce, and is designed for firms who have less than 50 employees, with up to $40,000 in funding over a 12 month period.

GENERAL MANAGER

Job Purpose: To ACHIEVE COMPANY OBJECTIVES: develop business opportunities; meet sales quotas; manage staff; provide leadership; implement Board directives. Estimated Salary per annum: $ 80,000 p.a. + vehicle + performance bonus 89 Employ from Month: 0 (Zero)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Leadership Demonstrated none performance in managing companies Visionary Demonstrated skills in none showing initiative and vision Personnel management Demonstrated skills in none - some informal the recruiting, or formal training in selecting, disciplining, management appraising and preferred. training employees Business development Demonstrated skills in none growing and expanding businesses and achieving sales targets Business Ethics Demonstrated none performance in maintaining high business ethics Professional and technical Experience in the Engineering or knowledge waste management related discipline industry preferred preferred but not essential Financial management Demonstrated Accountancy or understanding of related discipline Company financial preferred but not accounts and essential records, including Balance Sheet analysis and cash flow budgeting

89 No award applies - suggested salary is Consultant’s estimate

ADMINISTRATION MANAGER

Job Purpose: To PROVIDE FINANCIAL INFORMATION TO MANAGEMENT: Research and analyse accounting data; prepare reports; Implement administrative systems, procedures, and policies, and monitor administrative projects. Estimated Salary per annum: $ 45,000 p.a. + vehicle + performance bonus 90 Employ from Month: 1 (One)

Skill Required: Experience in Skill area Required minimum required: Educational Qualification (if any):

Transaction recording and Demonstrated ability to Accounting or analysis enter and interpret related discipline accounting information, auditing, debtor and creditor control. Accounting procedures Demonstrated ability in the Accounting or development and related discipline maintenance of accounting procedures and systems. Business Ethics Demonstrated none performance in maintaining high business ethics Personnel management Limited demonstrated skills none - some informal in the recruiting, selecting, or formal training in disciplining, appraising management an and training employees advantage. Professional and technical Experience in the waste Accounting or knowledge management industry related discipline. preferred. Experience in the accounting profession mandatory Financial management Demonstrated capabilities Accountancy or in the production of related discipline. Company financial accounts and records, including Balance Sheet analysis and cash flow budgeting

90 No award applies - suggested salary is Consultant’s estimate

SECRETARY

Job Purpose: To ENHANCE (COMPANY) EFFECTIVENESS: providing information-management support. Estimated Salary per annum: $ 21,840 p.a. 91 Employ from Month: 3 (Three - or at commencement of plant construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Reception Experience in greeting Office customers and management, gaining their Business or related confidence preferred discipline preferred. Telephone technique Experience in none answering or referring enquiries preferred. Office Procedure Filing, transcribing, Office maintaining management, calendars, arranging Business or related meetings, discipline preferred. conferences preferred. Reporting Experience in Office providing written and management, verbal reports to Business or related management and discipline preferred. other staff preferred. Business Ethics Demonstrated none performance in maintaining high business ethics an advantage. Word-processing Ability to type at least none 80 wpm mandatory. Computer skills Demonstrated Office understanding and management, ability to operate Business or related maintain, and back- discipline preferred. up computers mandatory.

91 Equivalent to Grade 4 - State Clerical Employees Award ($420 per week base rate)

PRODUCTION MANAGER

Job Purpose: To PRODUCE PRODUCTS: Supervise staff and operations; create new designs and modifications; establish and enforce quality standards; test materials and product. Estimated Salary per annum: $55,000 p.a. + vehicle + performance bonus 92 Employ from Month: 0 (Zero)

Skill Required: Experience in Skill area Required minimum required: Educational Qualification (if any):

Leadership Demonstrated none performance in managing personnel teams mandatory Personnel management Demonstrated skills in the none - some informal or recruiting, selecting, formal training in disciplining, appraising management and training employees preferred. Professional and Experience in the waste Engineering or related technical knowledge management industry discipline preferred but preferred not essential Project management Demonstrated none experience in successfully managing and implementing projects strongly preferred. Financial management Demonstrated Accountancy or understanding of related discipline would budgeting and activity be an advantage but costing a distinct not necessary advantage Production scheduling Demonstrated none experience in scheduling and assigning employees mandatory Production achievement Demonstrated skills in none, however growing and expanding experience in quality businesses and achieving assurance sales targets through implementation prudent production preferred. management and cost effectiveness

92 Suggested salary is Consultant’s estimate - above appropriate Award rate.

WEIGH BRIDGE OPERATOR & SECURITY

Job Purpose: To OPERATE WEIGHBRIDGE AND MAINTAIN SECURITY: Operates weighbridge equipment; allows entry / departure of only authorised vehicles and personnel. Estimated Salary per annum: $22,447 p.a. 93 Employ from Month: 6 (Six - or at completion of plant construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Weigh Bridge Operation Experience in weigh none bridge operation preferred Security management Experience in none maintaining security of company premises and assets could be an advantage Equipment maintenance Experience in none maintaining weighing machines or similar an advantage Documentation Demonstrated none experience in documenting / completing logs an advantage

93 Equivalent to General Labour Rate (Building Construction Industry Award) being $431.68 per week

LOADER OPERATOR

Job Purpose: To TRANSPORT AND MANOUEVRE PRODUCT OR MATERIAL: Operates a Loader. Estimated Salary per annum: $ 20,888 p.a. 94 Employ from Month: 6 (Six - or at completion of Plant construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Loader Operation Experience in Loader Loaders ticket / operation strongly certificate strongly preferred preferred Equipment maintenance Experience in none maintaining Loading machines or similar an advantage Documentation Demonstrated none experience in documenting / completing maintenance, records and other logs an advantage

94 Equivalent to Transport Distribution and Courier Industry Award - Grade 3 being $401.70 per week (Grade 4: 5-10 tonne)

LOADER, PULVERSIER & EXTRUDER OPERATOR

Job Purpose: To FORM PRODUCT and TRANSPORT AND MANOUEVRE PRODUCT OR MATERIAL: Operates pulversiser and extruding equipment; operates Loader Estimated Salary per annum: $21,283 p.a. 95 Employ from Month: 6 (Six - or at completion of Plant construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Loader and Heavy Equipment Experience in Loader Loaders ticket / Operation and heavy machinery certificate strongly operation strongly preferred preferred Equipment maintenance Experience in none maintaining Loading machines, heavy equipment or similar an advantage Documentation Demonstrated none experience in documenting / completing maintenance, records and other logs an advantage

95 Equivalent to Transport Distribution and Courier Industry Award - Grade 4 being $409.30 per week (Grade 5: 10-34 tonne)

LOADER & FORKLIFT OPERATOR, BRICK STACKER

Job Purpose: To STACK BRICKS and TRANSPORT AND MANOUEVRE PRODUCT OR MATERIAL: Operates Loader and Forklift; Stacks Bricks Estimated Salary per annum: $21,283 p.a. 96 Employ from Month: 6 (Six - or at completion of Plant construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Loader, Forklift and / or Heavy Experience in Loader, Forklift ticket Equipment Operation Forklift and heavy mandatory. Loaders machinery operation ticket / certificate strongly preferred strongly preferred Equipment maintenance Experience in none maintaining Loading machines, forklifts and heavy equipment or similar an advantage Documentation Demonstrated none experience in documenting / completing maintenance, records and other logs an advantage

96 Equivalent to Transport Distribution and Courier Industry Award - Grade 4 being $409.30 per week (Grade 5: 10-34 tonne)

GENERAL HAND

Job Purpose: To MAINTAIN PRODUCTION AND QUALITY: Ensures operation of machinery and mechanical equipment; sorts raw material and other product; attends to general factory maintenance. Estimated Salary per annum: $15,080 p.a. 97 Employ from Month: 2 - 6 (Two to Six)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

General Labouring Demonstrated none experience and track record in providing labour services Maintaining machines Experience in the none, however some maintaining of light formal training in and / or heavy mechanical machines an engineering would advantage be advantageous Technical knowledge Mechanical none, however some engineering skills an formal training in advantage but not mechanical necessary engineering would be advantageous

97 Equivalent to Building Products Minor Manufacture Award - ranges from Junior 16-17 ($188.80 per week) to Junior ($291.70 per week) and Adult ($343.20 per week). Allowance: average, say $290 per week.

TRUCK DRIVER (if required)

Note: it is anticipated that deliveries (inwards / outwards) will be sub-contracted. However, the following is provided should employment be contemplated:

Job Purpose: To TRANSPORT AND DELIVER PRODUCT OR MATERIAL: Operates a truck and trailer. Estimated Salary per annum: $21,284 p.a. 98 Employ from Month: 6 (Six - or at completion of Plant Construction)

Skill Required: Experience in Skill Required minimum area required: Educational Qualification (if any):

Loader Operation Extensive experience Current truck drivers in Truck Driving and license (over 2 operation strongly tonne) mandatory preferred Equipment maintenance Experience in none maintaining Trucks and Trailers an advantage Documentation Demonstrated none experience in documenting / completing maintenance, records and other logs an advantage

QUALITY ASSURANCE (QA) & TOTAL QUALITY MANAGEMENT (TQM)

Management must recognise the need for proceeding with the implementation of a formal Quality Assurance program. The Company should proceed to full implementation a formal program of Quality Assurance, in line with a Quality System fulfilling the requirements of Australian Standards AS3901 or AS3902 as may be applicable - the AS3900 Series Standards required by the Clever Country Policy of the Federal Government and the State Government Purchasing Policy 1991. This will be sufficient to meet the expectations and demand of clients (both domestic, and potentially international clients), and the industry in general.

The future success of the Company's market penetration to both local, and potentially export markets, could well depend upon the Company's commitment to QA accreditation , and should therefore be addressed with some priority. Local Councils are becoming more insistent that service providers (and Petemic is potentially one of these) be Quality Assured.

98 Equivalent to Transport Distribution and Courier Industry Award - Grade 4 being $409.30 per week (Grade 5: 10-34 tonne)

Progression to TQM is an option further on, however will capitalise and strengthen a formal commitment to QA principles.

Objective: Implementation of Quality Assurance / Total Quality management to ensure the highest possible product quality standards, and a commitment to quality by all staff.

Meaning: 99 Traditionally Quality has been assessed by a product's reliability, durability and conformance to specifications.

While these are still important criteria, customer' expectations today are broader; they are influenced by perceptions of the whole organisation, not just the products it makes. Enterprises with a high overall quality rating in the eyes and minds of customers will win both market share and repeat business. An ongoing competitive advantage.

Thus, the starting point for Quality-based management is the customers' viewpoint. It's the perspective from which the enterprise will plan to utilise the principles of Quality-based management, known internationally as Total Quality Management (TQM). Total Quality Management is the driving force for company-wide improvement; commitment to improving performance at every level; strategies to improve its processes and systems; enhanced productivity and profitability; involvement and development of every employee.

It embraces all products, all services, all processes, all people, at all levels.

99 Adapted from NIES brochure - Quality: The Strategic Advantage

Responsibility: 100 Initially, management must have an awareness and understanding of Total Quality Management. It is they who must be convinced of its potential strategic advantage. It is they who must commit to shaping, leading and resourcing their organisation in the TQM implementation. TQM recognises the role of people as managers and workers in the system and the vital contribution they can make together towards improvement in every aspect of the business.

So quality improvement in an organisation becomes a way of life; it involves everyone from the CEO to the most junior employee in the process of on-going improvement.

Implementation: NIES has developed a comprehensive TQM 'How To' model. the NIES network will assist in the selection of a trained and licensed consultant.

This should follow the Company's involvement in the QA process.

A high level of Quality Control can be achieved through the Company's commitment to a formal program of Quality Assurance / Total Quality management, including export accreditation if required (AS 3902 - 1987) 101 .

100 Adapted from NIES brochure - Quality: The Strategic Advantage 101 Company to install a Quality system fulfilling all the requirements of Australian Standards AS3901 or AS3902, now more generally described as the ISO9000 series.

PRODUCTION & PROCESSING OPERATIONS

CAPACITY

The capacity of feed and product storage will depend upon aspects such as supply arrangements, operating schedules, requirements for buffer capacity, marketing arrangements and seasonal demand for the product. Open stockpiles offer advantages to silos in that they are more accessible and not prone to blockage or hold up. On the other hand they take up more ground space and can be subject to product degradation. Examples of sizes for a 500 tpd waste plant, receiving on one shift per day, 5 days per week are:

Waste receival 500 tonnes Intermediate waste 1,500 tonnes Product 3,000 tonnes

WASTE RECEIVING AREA

The waste receiving area can be bunker or open floor type. The later is becoming more popular overseas as it enables inspection and some facility for pre-sorting. It will need to be enclosed to prevent escape of odours, and sloped to a collection sump to collect drainings and wash-down. Deodorising sprays will most likely be required.

WASTE SELECTION WASTE REDUCING MEANS

Garbage Ferrous Metal Pulverisor #1 Primary Pulverisor #2 Secondary Weighbridge Vibrating #1 Hopper Sorter Vibrating Screen Screen

Conveyor #1 Conveyor #2 Conveyor #3 Conveyor #4 Conveyor #5

BINS Plastics BUILDERS RUBBLE Building (Product for Sale) Small Ferrous BINS HOUSEHOLD GARBAGE Rubble (Oval) Metal Separator (Product for Sale) CLAY Crusher MIXER & BINDER STAGE INDUSTRIAL WASTE (Non-Toxic)

Weighbridge Binder Mixer Tumble Dryer #2 Station

Conveyor #6 Conveyor #7 Conveyor #8 Conveyor #9

COMPACTING & HEATING STAGE

Extruder Cutters #1 Revolving Kiln/s Recovery Crusher Storage Bays and #2 Tumbler (1,200deg.C) Bay

Pre-Heater (600deg.C)

Conveyor #10 Conveyor #11

Figure 1- Block Diagram of the Petemic Waste Recycling Process (Provisional Patent)

BINS (Product for Sale) WASTE SELECTION ROAD BASE (Crushed Building Rubble) WASTE REDUCING MEANS

Garbage Ferrous Metal Pulverisor #1 Primary Pulverisor #2 Secondary Weighbridge Vibrating #1 Hopper Sorter Vibrating Screen Screen

Conveyor #1 Conveyor #2 Conveyor #3 Conveyor #4 Conveyor #5

BINS Plastics BUILDERS RUBBLE Building (Product for Sale) Small Ferrous BINS HOUSEHOLD GARBAGE Rubble (Oval) METAL Metal Separator (Product for Sale) CLAY Crusher MIXER & BINDER STAGE METAL INDUSTRIAL WASTE (Non-Toxic)

Weighbridge Binder Mixer #2 Station

Conveyor #6 Conveyor #7 Conveyor #8

COMPACTING & HEATING STAGE

Pan Palletiser Tumble Dryer Kiln/s Recovery Storage Bays (1,200deg.C) Bay

Conveyor #9 Conveyor #10

Figure 2- Block Diagram of the Petemic Waste Recycling Process (Petty Patent)

ENVIRONMENTAL GUIDELINES / ISSUES

INTRODUCTION

1. Ozone depleting substances. Regulations set out parameters for installation and control and release of controlled substances.

2. Licensing. Conditions for licensing are set out, including monitoring of operations. An Environmental Management Program will be required.

3. Assessment criteria for air quality are set out. National Guidelines for air quality and control of emissions follow standards adopted by ANZECC & NH & MRC (1985)

4. Assessment of water quality uses Australian Water Quality Guidelines for fresh and marine waters (ANZECC). Sampling follows water quality sampling manual. (2nd Ed. 1995)

5. Noise level parameters are defined. Maximum noise levels are set out in the schedules. In general the acceptable limit will be 8-10 dB above the background noise level.

There are 10 schedules to the Regulations defining activities, licensing fees, controlled substances and compliance limits.

For the Petemic process, an EIS (Environmental Impact Statement) will almost certainly be required containing very specific data.

An environment management plan will also be required.

OVERVIEW

The disposal or treatment of domestic waste is classified as a Level 1 Environmentally Relevant Activity under the Environmental Protection (Interim) Regulation 1995 (SL No 46 of 1995) (“ The Regulation ”). The Regulation is Subordinate Legislation as part of the Environmental Protection Act 1994.

The Regulation requires that defined Activities must be licensed, and must comply with regulatory guidelines.

The compliance requirements are presently in a state of flux, as new and uniform guidelines are developed for all Australian States following the passage of the National Environmental Protection Council Act 1994 (Commonwealth), and the complementary legislation; the National Environmental Council (Queensland) Act 1994 . In some instances new standards are in force and replace former guidelines established under a range of earlier Queensland legislation. In other instances, earlier guidelines will remain in force until new guidelines are developed. Moreover, it is likely that Environmental Auditing under ISO 14000 will be implemented in early 1996. Standards Australia through its QRII Committee, may issue the latest draft of ISO 14000 as an interim standard for Australia.

The Regulation ( SL No 46 of 1995 ) establishes new and detailed guidelines for the use of ozone depleting substances, particularly refrigerants and other halogenated hydrocarbons. It is possible that these particular requirements of the Regulation will not impact greatly on the Petemic process. But in the absence of detailed information on the process machinery and the nature of the gas emissions, the writer cannot be certain that there will be no impact at all.

For the other elements of Environmental Compliance, Transitional Provisions will apply. These Transitional Provisions are included as Part 5 of the Regulation. In general, the Transitional Provisions apply to air pollution, water quality, and noise.

It can be expected that the new Environmental Guidelines will apply to the establishment of any Petemic manufacturing facility, the operation of the facility, and the training of the staff.

It is almost certain that an Environmental Impact Study (EIS) will be required prior to licensing. It is equally likely that a Management Plan will be required as part of the licensing procedure.

With the particular product range anticipated from the Petemic Process, it is also likely that quality parameters will be set for the testing and use of any exported product.

Although the Minister for Environment and Heritage administers the Environmental Protection Act 1994 , Ministerial powers are usually delegated to Local Government Authorities.

Accordingly, the administration of licensing and compliance for a Petemic facility sited in the Narangba Industrial Estate is likely to be managed by the Caboolture Shire Council. The Council has indicated that the Petemic process is likely to be classified to a zone for “Hazardous, Noxious or Offensive Industry”. The potential site in the Narangba Industrial Estate lies within such a zoning.

Environmental management is a politically sensitive issue nowadays, and Councils (including Caboolture) will be reluctant to depart at all from accepted guidelines in licensing a new facility, unless they can be certain that “the public interest” is being served, and that community sentiment is strongly in favour of the establishment of the facility.

The absence of any strong precedents relating to overall compliance under the new legislation will mean that any and all Councils will be extremely reluctant to commit themselves to approving any new project having environmental overtones without a very detailed submission.

Enquiries with the Caboolture Shire Council have confirmed their level of uncertainty about the intention of the Government in the administration of the Environmental Protection Act . It is virtually certain that the Council will decline to offer any guidelines or advice other than those contained in the Legislation and Regulation. Moreover, responsible Council Officers have indicated to the writer, that the Council will not be prepared to offer any opinion on the acceptability of a project without a detailed submission in terms of the Act.

The present policy of the Council is to require a “Request for Terms of Reference for an Environmental Impact Statement” pursuant to Section 8.2 of the Local Government (Planning and Environment) Act to be lodged with the Department of Housing, Local Government and Planning. This particular Legislation defines “Designated Developments” requiring an EIS. Item 30. of these designated activities is reproduced below:

30. Refuse transfer station, sewage treatment plant, waste disposal facility, waste landfill or waste treatment plant for burying, crushing, disposing of, incinerating, processing, recovering, storing, or transferring hospital wastes or chemical, liquid, oil, petroleum, or solid wastes.

Caboolture Shire Council is likely to insist on a formal reference in terms of Section 8.2 of the Local Government (Planning and Environment) Act before giving any opinion at all on the Petemic process.

This would seem to require some operating experience, or at least, a very detailed specification of operating parameters. It is difficult to see how an EIS can be constructed without actual operating data derived from the operation of major plant items using the input feedstock likely to be used in the process.

GUIDELINES BACKGROUND

As mentioned above, Transitional Provisions are in force for designated activities.

These arrangements cover;

1. Air and Emission Quality.

2. Water Quality

3. Noise

Air and Emission Quality

Air quality will be subject to analytical contents standards, and testing for dispersion. The present interim compliance standards follow “Exposure Standards for Atmospheric Contaminants in the Occupational Environment” adopted by the National Occupational Health and Safety Commission, October 1991. The interim “national air quality standard” means the lower value of;

(a) for fluoride-a goal stated in ‘National Goals for Fluoride in Ambient Air and Forage, March 1990’ published by ANZECC;

(b) for carbon monoxide, lead, nitrogen dioxide, ozone or photochemical oxidants, sulphur dioxide or particles; a goal adopted in session by the National Health and Medical Research Council (NHMRC).

The more recent “National Guidelines for Control of Emission of Air Pollutants from New Stationary Sources” was published by the Australian Environmental Council, National Health and Medical Research Council (NHMRC) in 1986. These guidelines are included as Schedule 1 at the end of this section.

Water Quality

In general, a facility of this type will be required to retain all liquid effluent produced on the site. Containment of run-off after rain will also be required if the run-off is likely to scavenge any pollutants from the surface of the site. The use of containment ponds to intercept any surface run-off may be required. Where there is a chance of pollutants percolating through to the groundwater, a mechanical barrier may be required. The use of sheet sealing to prevent percolation to the groundwater is becoming a more common feature of urban refuse landfill sites.

The more stringent requirements for site pollution and percolation should be a positive point for the Petemic process relative to the increasing compliance costs in landfill. But compliance will also be a feature of the Petemic operating site, and care will need to be taken to restrict any risk of site pollution and run-off from introduced refuse.

The standard criteria for water under the Transitional Provisions of the Regulation are:

(a) for paragraph (j) of the definition “standard criteria” in the Act, the Australian Water Quality Guidelines for Fresh and Marine Waters published by ANZECC is the relevant standard for an activity involving the release of a contaminant into waters.

(b) for subsection (1), the collection, storage, preservation and analysis of samples for measuring a parameter under the Guidelines must be carried out under the Water Quality Sampling Manual, 2nd edition, February 1995.

It is likely that the relevant ANZECC standard applied will be the guidelines for raw waters for drinking purposes. These guidelines are attached as Schedule 2.

Guidelines for Noise

The standard for noise is somewhat dependent on location. Proximity to urban residential areas requires a higher level of noise control than for more isolated areas. The hours of operation are also relevant. The acceptable upper limit for noise pollution is dependent on both the time and the ambient noise levels. In practice, noise levels will be measured at the most noise sensitive point on the boundary of the site.

Under these Guidelines, the standard is related to the adjusted average maximum A-weighted sound pressure level under AS 1055.1-1989; Acoustics- Description and Measurement of Environmental Noise: Part 1-General Procedures.

The “ambient noise” means the totally encompassing sound in a particular environment. An approved instrument for calculating the level of noise is defined as an instrument that complies with the specifications for sound level meters type 1 or 2 under AS 1259.1-1990 Acoustics-Sound Level Meters.

Schedule 7 of the Regulation sets the maximum noise level for a commercial place as 10dB above the background level during the day, and 8dB above the background level during the night (10pm to 7am).

REFERENCES (Environmental Issues)

Agriculture and Resource Management Council of Australia and New Zealand (1994) “ Guidelines for Sewage Systems. Acceptance of Trade Waste (Industrial Waste) ”. Canberra

Australian Environmental Council, National Health and Medical Research Council (1986) “ National Guidelines for Control of Emission of Air Pollutants from New Stationary Sources ” - Australian Government Publishing Service, Canberra

Australian and New Zealand Environment and Conservation Council (1992) “Australian Water Quality Guidelines for Fresh and Marine Waters ”. Canberra

Caboolture Shire Council (1993), “ Waste Management Strategic Plan ” Sinclair Knight Consulting Engineers for Caboolture Shire Council.

Caboolture Shire Council (1993), “ Strategic Land Use Plan, 1993 ”

Caboolture Shire Council (1993) “ Procedures for the Submission of Consent Applications within the Caboolture Shire ”.

Monahan, D. & Scott, R. (1994), “ New Approaches to Regulation of Environment Protection including Waste Minimisation Aspects ” in Achievements and Challenges; Proceedings of the 2nd National Hazardous & Solid Waste Convention, Melbourne. Australian Water & Wastewater Association and Waste Management Association of Australia; Artarmon NSW. 82-89

Queensland Department of Environment and Heritage (1994), “ Draft Waste Management Strategy for Queensland ”

Queensland Department of Environment and Heritage (1994), “ Environmental Protection Act 1994 ”

Queensland Department of Environment and Heritage (1994), “ Environmental Protection (Interim) Regulation 1995 ”

Queensland Department of Housing, Local Government and Planning (1992), “Environmental Impact Statements and Designated Developments ”. Brisbane

Queensland Department of Housing, Local Government and Planning (1992), “Request for Terms of Reference for an Environmental Impact Statement ”. Brisbane.

Stone, P. “ Neutralysis - A Use for Municipal Waste ” Proceedings of the International Conference of Solid and Hazardous Waste Management (Enviroworld), Singapore, June 1991.

Working Group Environmental Auditor Certification (1995), “ Outline Proposal for Environmental Auditor Certification System ”. Artarmon NSW

Working Group Environmental Auditor Certification (1995), Progress Update - April 1995 . Artarmon NSW

Schedules to Environmental Guidelines & Issues SCHEDULE 1.1

Table 1 Schedule of Pollutants

Pollutant Standard applicable to Standard Notes

Dark smoke 102 Stationary fuel-burning sources 1. Fired by solid fuel Ringelmann 1 2. Fired by any other fuel Ringelmann 1

Shipping Ringelmann 1 Opacity 1 All sources 20% (excluding effect except the following: of water vapour Portland cement plants - clinker cooler 10% - other 20% Nitric acid plants 10% Iron and steel plants - basic oxygen process furnaces 10% - dust handling equipment 10% - other 20% Primary aluminium reduction plants - prebake 10% - other 20% Lime manufacturing plants - rotary lime kilns 10% - other 20% Petroleum refinery FCCU - other 30% Kraft pulp mills - recovery furnaces 35% other 20% Solid particles Boilers other than power stations 0.25 g.m. -3 2% CO 2 burning solid fuels reference Power station boiler 0.08 g.m. -3 level

12% CO 2 reference level

102 The more stringent (level) of Dark Smoke or Opacity to apply, dependent on measurements available.

SCHEDULE 1.2

Table 1 Schedule of Pollutants (continued)

Pollutant Standard applicable to Standard Notes

Solid particles Incinerators - less than 300 kg/hr 0.5 g.m. -3 12% CO 2 - equal to or greater than 300 kg/hr 0.25 g.m. -3 reference Furnaces for the heating of metals 0.1 g.m. -3 level 12% CO 2 Any other trade, industry process, 0.25 g.m. -3 reference industrial plant or fuel-burning level equipment Except where standards in Table 2 apply Soot Any boiler or furnace burning liquid Bacharach Other than or gaseous fuels Shade 3 for lighting or soot blowing Sulphuric acid Any trade, industry or process other 0.1 g.m. -3 mist and sulphur than sulphuric acid plants and fuel expressed as trioxide burning equipment SO 3 Fuel-burning equipment Sulphuric acid plants or plants producing sulphur trioxide 0.2 g.m. -3 Any trade, industry or process expressed as manufacturing sulphuric acid SO 3 Sulphur dioxide 0.075 kg.t -1 of 100% acid or equivalent

2.0 kg.t -1 of 100% acid Acid gases 0.4 g.m. -3 Acid gases and mists readily soluble in water and expressed as hydrochloric acid

SCHEDULE 1.3

Table 1 Schedule of Pollutants (continued)

Pollutant Standard applicable to Standard Notes

Nitric acid or Nitric Acid Plants 2.0 g.m. -3 Expressed as NO 2 oxides of nitrogen 103 Steam Boilers Nitrogen oxides For liquid and solid fuels calculated as - general industrial 0.5 g.m. -3 NO 2 at a 7 per - for electricity generation cent oxygen where rated electrical output is as reference level 104 follows: less than 30 MW 0.5 g.m. -3 greater than 30 MW 0.8 g.m. -3 For gaseous fuels 0.35 g.m. -3

Gas Turbines For gaseous fuels - rated electrical output as follows: less than 10 MW 0.09 g.m. -3 Nitrogen oxides greater than 10MW 0.07 g.m. -3 calculated as For other fuels NO 2 at a 15 per - rated electrical output as follows: cent oxygen less than 10 MW 0.09 g.m. -3 reference level 2 greater than 10 MW 0.15 g.m. -3 Fluorine Any process or industrial plant used 0.02 g.m. -3 compounds for the manufacture of aluminium expressed as from alumina hydroflouric acid Limit refers to total emissions from Any other trade, industry or process 1.0 kg F or F new primary compounds aluminium expressed as F smelting facilities per tonne of aluminium produced 0.05 g.m. - expressed as hydrofluoric acid

103 The corrected nitrogen oxide emission concentration is calculated as follows: Corrected NO x concentration = Measured No x concentration x [21% volume, minus Reference Oxygen Concentration (% volume)] [21% volume, minus Measured Oxygen Concentration (% volume)]

SCHEDULE 1.4

Table 1 Schedule of Pollutants (continued)

Pollutant Standard applicable to Standard Notes

Chlorine and Any trade, industry or process 0.2 g.m. -3 chlorine expressed as compounds other chlorine than hydochloric acid Carbon Any trade industry or process other 1.0 g.m. -3 Processes monoxide than cement manufacture, brick exempt manufacture and stationary should be industrial diesels fitted with stacks in order to achieve adequate dispersion Hydrogen Any trade, industry or process 5.0 mg.m -3 sulphide Total of antimony, Any trade, industry or process 10.0 mg.m -3 Addition of arsenic, each metal cadmium, lead, or compound mercury and Any trade, industry or process 3.0 mg.m. -3 expressed as vanadium and Any trade, industry or process expressed as the metal in their respective cadmium each case compounds 3.0 mg.m -3 Cadmium and its expressed as compounds mercury Mercury and its compounds

SCHEDULE 1.5

Table 2 Schedule of Hazardous Pollutants*

Pollutant Standard applicable to Standard Notes

Nickel and its Any trade, industry or 20.0 mg.m -3 expressed compounds, process as nickel except nickel carbonyl Any trade, industry or 0.5 mg.m. -3 expressed Tentative standard Nickel carbonyl process as nickel only Beryllium and its Extraction plants, 10.0 g over 24 hour Limit refers to total compounds ceramic plants, period emissions from all foundries etc. points in a facility Mercury and its Mineral ore processing 2300 g over 24 hour Limit refers to total compounds and mercury cell period emissions from all chlore-alkali plants points in a facility Waste-water-sludge 3200 g over 24 hour Limit refers to total incinerators period emissions from all Vinyl chloride points in a facility monomer Ethylene dichloride 20.0mg.m -3 purification 0.1 g.kg - 100% ethylene Limit refers to total Ocychlorination dichloride product emissions from all points in a facility Vinyl chloride formation 20.0 mg.m -3 and purification 20.0 mg.m -3 Polyvinyl chloride polymerisation plants Asbestos An emission standard for asbestos fibres is at present exceedingly difficult to define. To assist in the design of equipment for the control of asbestos emissions, the following is recommended: All emissions shall be passed through a fabric filter collection device complying with section 61.154 of the United States Federal Register 48 (135):p. 32132, July 13, 1983, or equivalent before they escape to or are vented to the outside air. There shall be no visible emissions. Best available control technology shall be used to minimise fugitive emissions. There shall be no visible fugitive emissions.

*These pollutants will be kept under review. Further standards will be declared when appropriate.

SCHEDULE 2.1

Table 4.1 Summary of quality guidelines for raw waters for drinking purposes subjected to coarse screening

Parameter Guideline values (mg/L, unless otherwise stated)

Biological parameters Micro-organisms: Total coliforms Up to ten coliform organisms may be occasionally accepted in 100 mL. Coliform organisms should not be detectable in 100 mL of any two consecutive samples. Throughout any year, 95% of samples should not contain any coliform organisms in 100 mL.

Faecal coliforms No sample should contain any faecal coliforms in 100 mL Algae Up to 5,000 cells/mL may be tolerated; levels of 1,000 - 2,000 cells/mL of cyanobacteria may result in problems Toxic parameters

Inorganic: Arsenic 0.05 Asbestos NR Barium 1.0 Boron 1.0 Cadmium 0.005 Chromium 0.05 = 50 ug/l Cyanide 0.1 Lead 0.05 Mercury 0.001 Nickel 0.1 Nitrate-N 10.0 Nitrite-N 1.0 Selenium 0.01 Silver 0.05

Organic: Benzene 10.0 ug/L Benzo(a)pyrene 0.01 ug/L Carbon tetrachloride 3.0 ug/L 1,1-Dichloroethene 0.3 ug/L 1,2-Dichloroethane 10.0 ug/L Pentachlorophenol 10.0 ug/L Pesticides (Table 4.2) Polychlorinated biphenyls 0.1 ug/L Tetrachloroethene 10.0 ug/L 2,3,4,6-Tetrachlorophenol 1.0 ug/L Trichloroethene 30.0 ug/L 2,4,5-Trichlorophenol 1.0 ug/L 2,4,6-Trichlorophenol 10.0 ug/L Radiological: Gross alpha activity 0.1 Bq/L Gross beta activity 0.1 Bq/L (excluding activity of 40K)

Table 4.1 Summary of quality guidelines for raw waters for drinking purposes subjected to coarse screening (continued)

Parameter Guideline values (mg/L, unless otherwise stated)

Aesthetic parameters Physical: Colour 15.0 Pt-Co Taste & odour Not objectionable* Turbidity Site-Specific determinant Chemical: Aluminium 0.2 Ammonia (as N) 0.01 Chloride 400.0 Copper 1.0 Oxygen > 6.5 (> 80% saturation) Hardness (as CaCO3) 500.0 Iron 0.3 = 300 ug/L Manganese 0.1 Organics (CCE & CAE) 0.2 pH 6.5-8.5 Phenolics 0.002 Sodium 300.0 Sulfate 400.0 Sulfide 0.05 Surfactant (MBAS) 0.2 Total dissolved solids 1,000.0** Zinc 5.0

NR No guidelines recommended at this time; MBAS Methylene blue active substances

* Engineering & Water Supply Department suggests combined concentration of geosmin and methylisoborneol should be less than 20 ng/L

** Levels in excess of 500 mg/L cause a deterioration in taste

BUSINESS PREMISES & INFRASTRUCTURE SUPPORT

INFRASTRUCTURE REQUIREMENTS

Supporting infrastructure Requirements are assessed as follows (further details are shown at Attachment 5 of this Report):

Land Requirements

Requirement Specification

Land Area • 10 to 15 acres (4.05 to 6.07 hectares) minimum 105 . Zoning • Noxious, hazardous or offensive zoning, or similar

Services

Requirement Specification

Power • 4,040 to 4,850 kilowatts per hour of operation 106 . • Transformer & Substation required. • 5,700 kWh/hr installed capacity Telephone Access Road • Bitumen Sewerage and Septic (Staff Amenities) Gas or Recycled Furnace Oil (optional) • Fuel Oil: 780 to 2,100 litres per hour of operation 107 . • 90 Gj/hr maximum gas requirement. Water (fresh) • Approx. 1,210 cubic metres maximum per day 108 • See note below • Can be treated sewerage water Lime (used for gas scrubbing) • 3,000 tpa Diesel (fuel for plant) • 354 kL/yr 109

105 40,469 to 60,703 square metres 106 4,040 kWh/hr average running requirement; 4,850 kWh/hr peak running requirement; 5,700 kW installed capacity 107 The fuel oil requirement could vary from of the order of 780L/hr using heat recovery to 2100 L/hr without heat recovery. If gas is required then the maximum requirement is 90 Gj/hr. 108 Equivalent to 42,731 cubic feet, or 1,583 cubic yards 109 354,000 litres per annum

1,200 m 3/day of water is required (may be recycled water) plus portable water @ 0.2 m 3/person/day.

The 1,210m 3/day is based on:

Washdown and pallet makeup: 70 m 3 day Scrubber water: 116 m 3 day Gas Cooling: 1,024 m 3 day Total: 1,210 m 3 day

General Infrastructure

Requirement Specification

Water Holding Tank • 90Kl (concrete) 110 Silos • Steel or Concrete • 350 tonne 111 holding capacity Bunker Holding Pits x 3 • Open floor space is preferred 112 Bunker Holding Pit (see note below • Fully enclosed 113 table) Control Equipment, Electronics, Wiring • approx. 15% of capital cost (as per engineers specifications) 114 Air filtration Unit 115 • as per engineers specifications (see Note below table) Engineering Design Fee • 10% of final capital cost (say $6.0m) Environmental Management Plan Environmental Impact Statement • May not be required (not included for the purpose of this analysis) 116

110 The water holding tank is needed for surge capacity only. Capacity of this tank is estimated at 90kL. 111 Equivalent to 350 cubic metres. On ground stockpiles are preferred. “Open” stockpiles offer advantages to silos in that they are more accessible and not prone to blockage or hold up. On the other hand they take up more ground space and can be subject to product degradation. 112 As above (“Open” stockpiles offer advantages to silos or as in this case, bunker holding pits) 113 A Waste Transfer Station has now been completed at Narangba. This means that there is a reduced requirement for holding pits since waste can be accessed directly and locally on a virtually “ad hoc” basis (i.e. as required). Also, refer note below table: Drainage collection and deodorising required. 114 Estimated electrical cost (from Perry Chemical Engineers Handbook 6th Edition Table 25-50) is from 13% to 25% of delivered equipment cost. Instrumentation is estimated to be between 3% and 12% of delivered equipment cost. 115 This is for the purpose of gas emission, and air pollution control 116 This Report assumes that all Research and Development has been completed, a Pilot Plant established which has proven the concept. This Report assumes operation of a “full scale” commercial / semi-commercial Plant, i.e. Stage IV operation as described in the attached Report completed by Enginneers Chemquip Pty Ltd. Therefore, development phases (Stages I to III being Conceptual, Bench Scale Testing, and Pilot Scale Stage) are assumed to have been successfully completed.

Explosion suppression and relief on • as per engineers specifications Pulveriser Fuel Storage Bunds • as per engineers specifications

The air pollution equipment specified will vary depending on the licence conditions. It could be reasonably expected to include:

• afterburner

• quench (cooling)

• acid gas scrubbing

• particulate removal (baghouse or ESP)

The above specifications do not include:

1. Engagement of Plant Construction Team (supply and installation of plant)

2. Computer Programming and Software

BULDING (PREMISES)

Requirement Specification

Main building area to house plant and • 10,000 sq.m. machinery • Height minimum 6 metres. • Slab size 4 to 12 inches reinforced 117 Sound-proofed Pulversing Room and • 500 sq.m. approx. Crushing Plant • Explosion proof • 12 inch reinforced slab floor 118 Computer Room • 25 sq.m. • air-conditioned Office • 80 sq.m. • air-conditioned Staff Amenities Block • 150 sq.m. minimum, including lunch room, showers, lockers and toilets. •

117 The slab sizes will vary from say 4 inch to approximately 12 inch depending on use. The pulverises and other large equipment will require special foundations and slab design. 118 To be advised by Engineer Mr Peter Stone (matter currently being investigated)

SUNDRY PLANT & EQUIPMENT

Requirement Specification

Front End Loaders • x 3 to 4 119 Forklift • x 1 Motor Vehicles 120 • x 3 121 Computer, Printer • One 16Mb Ram, 500Mb Hard disk; 486 or Pentium • 5 ppm Laser printer or better • One Notebook 486 Computer 122 Office Furniture & Equipment • Staff Amenities • Fridge • Uniforms • Safety Equipment Safety Equipment • Fire Fighting Main, Hydrants and Hosepoints • Fire Fighting Extinguishers • First Aid kit • Respiratory Protection • Gloves, earmuffs, helmets, etc. Security System • as per engineers specifications Computer based Plant Control System •

119 3 or 4 front end loaders are likely to be required (1 or 2 for waste receival, 1 for product, 1 for intermediate product handling). 120 Motor vehicles are provided for the General Manager, Administration Manager, and the Production Manager 121 A plant utility will be required but may be one of the 3 vehicles listed. 122 There is likely to be a requirement for at least one notebook computer for plant work

COMMERCIAL VIABILITY: INCLUDING FINANCIAL PLANNING & ANALYSIS

INTRODUCTION

Technical consultants Chemquip Pty Ltd suggest that the Project can be progressed on the basis of a four stage development program. This would be required to bring the technology from the present concept stage to commercial viability. The suggested program encompasses bench and pilot scale testing. Product produced in these tests will need to be tested for at least leachability and engineering properties, dependent on the final market.

The development program is likely to take between 5 and 7.5 years. A preliminary estimate of funding requirements based on what was spent on Neutralysis development is $16.5 million.

Alternate strategies are suggested for consideration. These are separate treatment of building rubble, specific target marketing, and obtaining a licence for the Neutralysis process. These alternate strategies have not been factored into the Commercial Viability tests which form part of this Report.

Status of Development Work

At this point of time the development work has been basically conceptual. Only one limited trial has been attempted.

Assuming the pre-feasibility study shows that the project is viable, and providing there are considered to be no insurmountable restrictions due to the patent situation, then the next stage of the process should concentrate almost exclusively on technology development.

Development of the technology should proceed in four stages as outlined in the attached Report “Petemic Technology - A Technology Review”. The results of each stage should be reviewed prior to commitment to proceed with the next stage. Reviews should also be held at appropriate times during each stage.

These four stages are summarised below:

STAGE 1 - CONCEPTUAL

STAGE 2 - BENCH SCALE TESTING

Operations at this stage are essentially on a batch basis.

STAGE 3 - PILOT SCALE STAGE

The pilot stage is used:

• for validation of the process

• for an assessment of continuous operation

• to provide the basis for scale-up to the semi-commercial or commercial design

• to produce sufficient product for large scale testing and trials

• to develop quality control procedures for the inputs, outputs and process

• to enable development of confidence amongst plant designers and equipment suppliers so that a process guarantee can be obtained for the plant performance. This guarantee is usually required to obtain funding for the commercial plant.

• for the detailed examination of process parameters and for the solution of operating problems. Some of the parameters which may need to be investigated are, typically, process control, residence times, pellet fusion, thermal stresses, gas quality, kiln ringing, and emissions composition.

During this stage a generic engineering design is often carried out to assist in market development and to define capital costs more closely.

STAGE 4 - SEMI-COMMERCIAL/COMMERCIAL

This stage is usually a scale up from the Pilot Scale Stage and follows the completion of a major feasibility study which would include a detailed engineering study. For a plant of the type envisaged for the Petemic Technology a scale-up factor of approximately 8 to 10:1 is appropriate for developmental units.

Usually fine tuning and development of the process would be expected to continue at this stage, leading to a modified and improved design for the second plant.

The stage incorporates detailed process and engineering design, procurement, construction and commissioning.

It is also this stage against which the Commercial Viability is assessed which is the subject of this Report.

TIMING

The estimated duration of the above stages is within the following ranges:

Stage 1 6 - 9 months Stage 2 12-18 months

Stage 3 24-30 months Stage 4 24-36 months

Some overlapping is possible. The estimated total duration from the commencement of concept planning to completion of the commissioning of a commercial or semi-commercial plant is between 5 and 7.5 years. This assumes that an order is received for a commercial plant immediately after the completion of pilot scale testing.

The financial projections in this Report assume the following milestones: (for detailed information, refer Attachment 4 - Plant Construction and Capital Development Program) 123

Stage Project Stage Description Commencement Duration

1 Conceptual 15-Dec-94 9 months 2 Bench Scale Testing 14-Sep-95 12 months 3 Pilot Scale Stage 13-Sep-96 24 months 4 Date to Commence Commercialisation 13-Sep-98 Plant Construction 13-Sep-98 14 months

Plant Construction Completed 13-Nov-99

Commercial Product / Equipment Testing 13-Nov-99 4 months Commercial Production / Sales Commences 14-Mar-2000 6 months

Project Completion (Commercial Plant Built & In Full Operation) 12-Sep-2000

Total Project Duration to Plant Commissioning 3.8 Years Stage 4 (Commercialisation) 2.0 Years Total Project Duration 5.8 Years

SUPPORTING DATA FOR ESTABLISHING COMMERCIAL VIABILITY (FINANCIAL PROJECTIONS AND ASSUMPTIONS)

The supporting data behind the financial and production projections contained in this Report are comprehensively detailed in the following Attachments:

Attachment 5 - Commercial Viability Supporting Schedules

• Schedule 1 - Primary Base Assumptions • Schedule 2 - Major & Secondary Inputs & Outputs (Material Balance) • Schedule 3 - Infrastructure & Costs • Schedule 4 - Building (Premises) • Schedule 5 - Sundry Plant & Equipment • Schedule 6 - Plant Operating Equipment • Schedule 7 - Depreciation Schedule • Schedule 8 - Primary Operating Costs / Quantities • Schedule 9 - Schedule of Salaries, Wages, & Sub-Contractors

123 Also, refer Schedule 1 of the of the Commercial Viability Supporting Schedules.

• Schedule 10 - Cash Flow Assumptions (Sundry) • Schedule 11 - Loans, Leasing & Hire Purchase Schedule

Attachment 6 - Cash Flow Budgets

• Cash Flow Budget - Year 1 • Cash Flow Budget - Year 2 • Cash Flow Budget - Year 3 • Cash Flow Budgets - Years 1, 2, 3, and Y.I.Y.O.

Attachment 7 - Profit & Loss Summary (Years 1, 2, 3, and Year-In-Year-Out).

Attachment 8 - Balance Sheet Analysis (Years 0, 1, 2, and 3).

Attachment 9 - Break Even Analysis (Profit & Loss Summary)

The above attachments will be referred to throughout this section of the Report:

FINANCIAL PLANNING & ANALYSIS

Objectives

In overall terms, the major objectives in completing the financial planning and analysis section of this Report are:

• To establish commercial viability of the Project.

• To establish the parameters upon which commercial viability can be demonstrated.

• To establish the level of funding required to implement the Project.

• To determine the point (operating and other parameters) at which the Project can “Break - Even”.

• To determine the variables upon which the Project is most sensitive.

Commercial Viability - Overview of Results

The Financial Projections contained in this Report demonstrate that the Project is marginally viable, with a Year-In-Year-Out Net Profit After Tax of approximately $0.5m.

124 Based on 0.7 bulk density

The “Break-Even” point 125 is reached where the amount received for MSW Garbage is $34.60 per tonne (assuming 100% equity / investor) funding.

The Project will take approximately four years (from the commencement of the commercialisation stage) to achieve annual profitability, although this could be achieved up to 12 months earlier should the required Capital funding be wholly obtained from investors rather than partially obtained with debt.

Sales Estimates - Major Assumptions

The primary assumptions in establishing sales levels are contained within Schedules 1 (Primary Base Assumptions) and 2 (Major & Secondary Inputs & Outputs) of Attachment 5 of this Report. This information is summarised hereunder:

SCHEDULE 1 PRIMARY BASE ASSUMPTIONS BASE MODEL

Aggregate Production 500.0 cubic metres per day Bulk density 0.70 tonnes per cubic metre = Production (available for sale) 350 tonnes per day

Building Rubble Receivals 102.0 tonnes per day = Production (available for sale) 100.0 tonnes per day

Production levels from Plant Completion date (post equipment testing) Estimated time to full capacity = 6 Months Estimated capacity @ Month Cash Flow (Project) Month Capacity is 10.00% 0 18 Mar-2000 Capacity is 25.00% 1 19 Apr-2000 Capacity is 40.00% 2 20 May-2000 Capacity is 55.00% 3 21 Jun-2000 Capacity is 70.00% 4 22 Jul-2000 Capacity is 85.00% 5 23 Aug-2000 Capacity is 100.00% 6 24 Sep-2000

Clay Clay: Dry Garbage ratio 100.00% = Required clay input 341.00 tonnes per day

125 The “Break-Even” point is defined as being Net Profit After Tax equalling $zero Year-In-Year-Out.

SCHEDULE 2 MAJOR INPUTS & OUTPUTS (MATERIAL BALANCE) - PRICES, & QUANTITIES REQUIRED tonne per Tonnes / Tonnes / Tonnes / Tonnes / Cost / Price BASE MODEL tonne of day week month Year per tonne ($) MSW Days per period = 7.0 28.0 336.0 INPUTS Wastes Municipal Solid Waste (MSW) Garbage 503 3,521 14,084 169,008 $40.00 1.000 Liquid waste (or water) 51 357 1,428 17,136 $0.00 0.101 Other Clay 341 2,387 9,548 114,576 $4.50 0.678 Lime (for flue gas scrubbing) 8 56 224 2,688 $208.00 0.016 Scrubber Water 104 728 2,912 34,944 $0.00 0.207 Quench Water 1,176 8,232 32,928 395,136 $0.00 2.338 Natural Gas 8 56 224 2,688 $460.00 0.016 Combustion Air 3,390 23,730 94,920 1,139,040 $0.00 6.740 Total Inputs 5,581 39,067 156,268 1,875,216 n/a 11.095

OUTPUTS Products Aggregate 350 2,450 9,800 117,600 $14.00 0.696 Reclaimed metal 28 196 784 9,408 $57.50 0.056 Wastes Rejects (non-metal) 29 203 812 9,744 $5.00 0.058 Scrubber Residues * 17 119 476 5,712 $0.00 0.034 Flue Gas 5,157 36,099 144,396 1,732,752 $0.00 10.252 Total Outputs 5,581 39,067 156,268 1,875,216 n/a 11.095 * For re-processing back through the Recycling Plant

SECONDARY INPUTS & OUTPUTS - PRICES, & QUANTITIES REQUIRED Tonnes / Tonnes / Tonnes / Tonnes / Price per day week month Year tonne ($) Days per period = 7.0 28.0 336.0

INPUT Building Rubble Quantity Received 102 714 2,856 34,272 $20.00 Losses 2.00% 2 14 57 685

OUTPUT Building Rubble Production (Sale of Road Base) 100 700 2,800 33,600 $9.00

Notes on Primary Operating Costs

In addition to information shown on the above tables, primary operating costs are shown at Schedule 8 (Primary Operating Costs / Quantities) of Attachment 5, summarised as follows:

SCHEDULE 8 PRIMARY OPERATING COSTS / QUANTITIES BASE MODEL Description Unit Fuel Oil Quantity Required (minimum): 780.0 litres per hour of operation (using heat recovery) Quantity Required (maximum): 2,100.0 litres per hour of operation (without heat recovery) Percentage of time operated: 5.00% without heat recovery Quantity Required (average): 846.0 litres per hour of operation Quantity Required (average): 568,512.0 litres per month of operation Cost: $262.89 per tonne = Cost: $0.2300 per litre (BP) - Shell is @ $0.30 per litre

Gas Natural or LPG - maximum required: 90.0 Gj per hour LPG - Cost: $0.46 per Kilogram LPG or Natural gas $0.23 per Litre (CIG or Elgas) Cost: $0.00 per Gj

Water (Fresh) Maximum per day required: 1,210.00 cubic metres per day = Equivalent to: 1,210,000 litres = Equivalent to: 266,200 gallons

Diesel (Fuel for Plant) Useage = 354.00 Kilo litres per annum = equivalent to 29,500.00 lites per month Cost = $0.6290 per litre

Power Average Running Requirement = 4,040.00 Kilowatts per hour Peak Running Requirement = 4,850.00 Kilowatts per hour Installed Capacity Requirement = 5,700.00 Kilowatts per hour Cost of Power = $0.0770 per Kilowatt hour (first 16 hrs) Cost of Power = $0.0310 per Kilowatt hour (next 8 hours) Cost of Power = $0.0617 per Kilowatt hour (average for 24 hr period) Cost of Power = $167,418 per month average requirement

Clay Cost = $2.50 per tonne Average delivery charge = $2.00 per tonne Total Delivered Cost = $4.5000 per tonne

Fuel Consumption

Some factors such as fuel consumption will be considerably influenced by factors such as the degree of heat recovery and the process flow of the gasses. For instance the fuel oil required may vary by a factor of three times depending on whether the heat is received from the gasses evolved from the waste. Fuel oil including recycled oil can be used provided the temperature required for clay hardening can be achieved. Otherwise LPG or natural gas will be necessary.

Water Utilisation

The amount of water used will vary depending on the moisture in the waste, the clay properties, and the air pollution control system used. By far the largest amount used is for scrubbing plus gas cooling.

Capital Investment Requirements

Capital Investment Requirements are summarised as follows:

CAPITAL WORKS SUMMARY

See Schedule INFRASTRUCTURE & COSTS $5,107,850 3 BUILDING (PREMISES) $4,858,350 4 SUNDRY PLANT & EQUIPMENT $1,289,590 5 PLANT OPERATING EQUIPMENT $6,788,650 6 TOTAL $18,044,440

Equity & Debt Ratio

Debt to Equity Ratios

Proposed Total Capital Funding = $20,000,000 Equity: 80.00% Debt: 20.00% EQUITY REQUIRED: $16,000,000 DEBT REQ UIRED: $4,000,000

Profit & Loss / Cash Flow Statements

Refer Attachment 6 (Cash Flows), and Attachment 7 (Profit & Loss Summaries).

Balance Sheet Analysis

Refer Attachment 8

Break Even Analysis

Refer Attachment 9

SENSITIVITY ANALYSIS

A 10% sensitivity analysis 126 on the "base Model" cash flows for each of the years 1, 2, and 3 has been completed (refer right hand column on the cash flows at Attachment 6). These amounts show in broad terms the Project’s overall sensitivity to cost/price squeeze.

In addition, sensitivities to various prices, costs, and production / input levels have been conducted, with the results shown graphically below:

126 This analysis assumes 10% lower income, and 10% higher variable costs (i.e. loan repayments, etc. are assumed static)

PETEMIC TECHNOLOGY PTY LTD SENSITIVITY ANALYSIS

Base Model Millions