BUILDING ACOLLECTIVE FOCUS

REVIEW OF PETCOACTIVITIES 2018

CONTENTS

1

INTRODUCTION 3

CHAIR AND CEO REVIEW 4Top accomplishments for 2018 9

ABOUT PETCO 13

END-USE MARKET DEVELOPMENT 15Alternative mechanical recycling developments 15

Energy recovery 15Bottle-to-Bottle (B2B) 16Bottle-to-Fibre (B2F) 16

Other end-uses 17

PETCO PROJECTS 18Commercial-scale recycling projects 18

Collection, training, and visible recycling projects 19PET infrastructure and equipment provision 19

Collector training and development 20Education and awareness 21

Special projects and joint ventures 21Fostering government partnerships 21

Building the recycling network 22Voting membership 22

Associate membership 22Consumer education and awareness 33

FINANCIAL INFORMATION HIGHLIGHTS 34

WHERE TO FROM HERE?THE OUTLOOK FOR 2019 AND BEYOND 36

Looking forward 36What do our stakeholders think about the future? 39

CELEBRATING THE PETCO PEOPLE 40

REVIEW OF PETCO ACTIVITIES

A POWERFULGLOBALNETWORKIS EMERGING

What is evident is that a lot has changed for thePET industry in the last 12 months and an urgentset of sustainable changes are needed to meetimpending targets and to avoid environmentaldegradation.

The issue of managing plastics in the wastestream isn't a new problem, but it hit theheadlines in a big way in 2018.

National Geographic's June 2018 issue entitled,'Planet or Plastic?' identified plastic in the marineenvironment as one of the greatest globalchallenges.

We have a global calamity in our oceans thatwe are all equally responsible for. All over theworld, people are aware of plastic and its impacton the environment. Is plastic seen as the miraclematerial or an environmental blight? Maybe both.

It is undeniable that plastic has changed ourlives for the better. But it has also created apollution problem at an almost unimaginablescale. It's a problem that's visible; we know it'sharmful, but it's also solvable.

So, how can we solve this challenge? We needto accelerate the move to a sustainable, resource-efficient economy: re-invent how we design, re-think how we use, and re-define what is possiblethrough re-use and recycling.

Really small actions, such as considering theglues that we use to hold a label around a bottleand the colours that we use for our bottles areminor changes that can increase the recyclabilityof many of our products.

The problem has emerged due to the lineareconomic systems we've created, which arewasteful and inefficient.

That means we take resources from nature,transfer them to the industrial systems that weuse to create goods, and then we landfill thosegoods once we don't need them any longer.

We have created a system where things havesingle purpose: they are used and then theyare no longer valued. When they are no longervalued, no one takes responsibility for them.

The proposition to solve the linear economyis a circular economy. When you have a circulareconomy, things are valued from the start, andproblematic or unnecessary plastic packagingis eliminated or changed through redesign.

Then we have a world where plastic is valuedand doesn't pollute the environment.

We have come a long way already.

There remains a great deal of work to do.

Tackling the plastics problem is a must.It brings new opportunities for innovation,competitiveness and job creation.

A powerful global network is emerging.

Collectively, we have the opportunity tobecome world-leaders in plastic resourcemanagement. We have a roadmap and thereis a role for everyone.

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2018 marks the 14th year that the PET Recycling Company NPC (trading as PETCO) hasissued this review. This review is intended to provide the reader with a detailed overviewof the recycling of polyethylene terephthalate (PET) bottles in South Africa (SA) during2018, and a general summary of the recycling of PET thermoforms.

Together we can.

In 2018, Collins Dictionary dubbed 'single-use'as word of the year.

Industry and governments all over the worldreacted. The EU pushed through a ban onsingle-use plastics. The Ellen MacArthurFoundation (EMF) partnered with the Wasteand Resources Action Programme (WRAP) tolaunch the UK Plastics Pact, a trailblazinginitiative bringing together businesses fromthe entire plastics value chain with UKgovernments and NGOs to tackle plastic waste.This vision is now supported by 68 memberswho are responsible for 80% of plasticpackaging sold in UK supermarkets and halfof all packaging placed on the market. Thecross-value chain Alliance to End Plastic Waste(AEPW), made up of nearly thirty membercompanies located throughout North and SouthAmerica, Europe, Asia, Southeast Asia, Africa,and the Middle East, committed over US$1billion over the next five years to help endplastic waste in the environment. In December2018, the European Parliament and the Councilof the European Union reached a provisionalpolitical agreement on the ambitious newmeasures proposed by the Commission totackle marine litter at its source. Commonlyknown as the “Single-use Plastics DirectiveProposal on the reduction of the impact ofcertain Plastic Products on the Environment”,member states have two years to transpose itinto national laws, which should come intoeffect at the beginning of 2021. The EuropeanCommission launched the "Circular PlasticsAlliance" aiming to improve the economicsand quality of plastics recycling in Europe,which will strengthen the match betweensupply and demand for recycled plastics.

Here at home, the National Department ofEnvironmental Affairs (DEA) issued the Section28 Call for Industry Waste Management Plans(IndWMP) and, in response, on 5 September2018, PETCO made its submission for the PETpackaging sector to shape the PET wastemanagement industry of the future. This wasa massive collaborative effort that involvedtough decisions and strategic debates.

Now, more than ever, companies failing to addressenvironmental performance in product design anddevelopment will find it increasingly difficult tocompete in the global market. Globally, productstewardship or Extended Producer Responsibility(EPR) has become the requirement for all producers.The Waste Act now makes this a legal requirement.

Clearly, it cannot be right to allow plastics to leakinto the environment, but neither is it acceptableto lose the opportunity to utilise plastic as a fit-for-purpose and cost-effective material for somany applications.

Creating the right balance of legislative driversand positive long-term business conditions willallow a viable and resilient system to beestablished which demonstrates the value ofplastics as a circular material and prevents plasticin the natural environment. EPR is seen by manyas one of the key drivers to achieving these aims.

Our 2018 results were impacted by what transpiredin the latter half of the previous year. In 2017, therecession in the South African economy, togetherwith the local supply disruptions of virgin PETand the inclement weather which delayed shipsfrom docking, resulted in a situation which, forthe first time in PETCO's history, saw the totalvolume of PET consumption in South Africadecline from 2016 to 2017. This caused major de-stocking of resin, preforms and bottles, whichwas only reversed by the second quarter of 2018,when resin as an indicator of market sizenormalised. This meant that the recycling rateachieved in 2017 was higher than anticipated, aswe did not reduce the recycled tonnage to matchthe market contraction.

In spite of these tough conditions, in 2017 PETCOmanaged to collect 93 235 tonnes of PET bottlesout of a market consumption that only reached211 000 tonnes for the year - that was a record65% of post-consumer bottles recycled.

After suffering a 13% contraction in 2017, the PETmarket saw 10% growth in 2018. The market endedat 232 000 tonnes, although we were expectingit to be approximately 225 000 tonnes.

CHAIR ANDCEO REVIEW

4

2018 will go down as the year things changed for the plastics industry forever.

No one could have predicted the pressure and attention placed on plastics in 2018. Fuelledby David Attenborough's engaging storytelling that highlighted the toll that plastics aretaking on marine life, it sent shock waves about the literal sea of plastic pollution, andkicked off what is now known as 'The Blue Planet Effect'.

This is the first time in the 14 years of PETCO's history that the recycling rate dropped year-on-year,but it was essentially due to the 2017 anomaly. What is remarkable is that the percentage decreasewas so small.

The decrease was difficult to avoid for a few reasons: recyclers were at capacity, the market correctedmore than we expected and, as seen in the graph of net tonnes exported, net exports of material(which usually make up a few percentage points of our target), evaporated under the China ban.Some exports of PET bottles and flakes were already curtailed in 2017 and, for the first time, we sawa slight net import of material to South Africa (approximately 500 tonnes).

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In 2018, recycling tonnage grew by 6% year-on-year to 98 649 tonnes. The recycling percentage isjust above our 62% draft Memorandum of Understanding (MOU) target with DEA at 63%, althoughit was a slight decrease on our 2017 result of 65%. The recycling rate is the total tonnage collectedfor recycling, divided by the total amount of bottles placed on the South African market i.e.:

Recycling Rate % =Tonnes Post–Consumer Bottles Purchased for Recycling

Total Tonnes PET Bottle Market

PET MARKET SIZE

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100 000

150 000

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

RECYCLED TONNES

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40 000

60 000

80 000

100 000

120 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ACHIEVED VS MOU TARGET

0%

10%

20%

30%

40%

50%

60%

70%

2014 2015 2016 2017 2018

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Investment by our recycling partners continued.Extrupet concluded negotiations on theexpansion of its “bottle-to-bottle” plant at itsfacility in Wadeville, Johannesburg. The build hasalready commenced and will, on its completion,double the current capacity from 20 000 to 40000 tonnes per annum. The technology is bothUS Food and Drug Administration (USFDA) andEuropean Food Safety Authority (EFSA)compliant. Having made significant inroads withkey brand owners such as Woolworths, Unilever,Pick n Pay and Clover, Extrupet's upgrade willintroduce new qualities of recycled PET resin(called PhoenixPET) that will rival virgin PETmaterial for quality and capabilities. New end-use markets that can now avail themselves ofthe superior grades of polymer includecarbonated soft drinks as well as bottled water.Extrupet's expansion will reduce reliance on virginPET products and strengthen South Africa'sposition as a circular economy leader in Africa.

Da Run Fa entered the end-use market ofstrapping and Propet started commercialisingthe strapping that they produce from rPET. Whatis exciting about rPET strapping is that it can bemade from green plastic bottles which have hada limited end-use market to date. Asmanufacturers make the switch to locally sourcedrPET strapping, PETCO and its recycling partnerswill be able to make better use of coloured plasticand grow the overall recycling rates even further.Recycled strapping now conforms to stringenttechnical specifications, such as high tensilestrength, and, most importantly, maintains theproduct stack integrity during handling andtransportation.

The PET recycling sector has an important roleto play in contributing to the transformation ofthe South African economy. There are few issuesmore important. PETCO has compiled a strategythat will be central to the PET Recycling sectors'future and is a key feature of our IndWMP.The direct number of jobs in PETCO-supportedprojects is approximately 2 400. Our 60supported projects employ 1 000 FTE (full-timeemployees) between them. PETCO's spend oncollectors focuses on SMMEs. We estimate thata R500 000 spend generates approximately20 jobs. While pursuing substantial increases inemployment in the sector, in its approach PETCOalso seeks to minimise the risk of potentiallyharmful unintended consequences frominterventions in the PET value chain, particularlyto the lives and livelihoods of the most vulnerable.

A lot of time, effort and resources went intoguiding the PET industry in other African countriesto establish similar PET Recycling Companies,based on the PETCO South Africa model. This ispart of PETCO's commitment to fully participatein the solution to address the plastic pollutionproblem on the continent, to grow andconsolidate collection, and to help countriesdevelop their own recycling infrastructure in thenext few years. A highpoint of 2018 has been theestablishment of the PET Recycling Company(Pty) Ltd. in Kenya (PETCO Kenya), with PETCO

Ethiopia and Tanzania to follow. The plasticsindustry in Kenya currently imports 32 000 tonnesof PET annually and is estimated to grow at arate of 10% each year. The industry was achievinga recovery and recycling target of just around5% of what is consumed. PETCO Kenya aims toachieve a recovery and recycling rate of 25% in2018 and 70% by 2030. Researchers warn thatindustry-led schemes are inadequate unless lawscompel manufacturers to take responsibility forthe waste they produce. The Kenyans want anExtended Producer Responsibility clause insertedin waste management legislation in parliamentas soon as possible. In Ethiopia, the focus is ontraining women who support their families bycollecting post-consumer PET destined forlandfills. In 2018, this training resulted in 2 000women receiving higher pay for their segregatedplastics. PETCO has also provided invaluablesupport to Coca-Cola in Mozambique andNamibia, especially with respect to the visiblerecycling of PET.

PETCO's engagements with stakeholders onissues of design for recycling continue to providebenefits on quality of feedstock. Most importantly,engagement with government ensures that theneeds of recyclers are represented in any potentiallegislation that may arise. This is critical if we areto motivate further investments in this sector.

During the year, PETCO actively encouraged andcontributed to the education of learners throughvarious national schools recycling competitionsand schools' projects undertaken with ourpartners, where we leveraged key relationships,partnered with government, invested ineducational materials or sponsored prizes.

PETCO also conducted five accreditedEntrepreneur Training courses for 320 SMMEand cooperative members as well as threePRASA (Paper Recycling Association of SA)Entrepreneurship courses involving 165 SMMEsand cooperative members. PETCO helped toestablish the Ekurhuleni Waste ManagementAssociat ion (EWMA), which includes40 cooperatives and SMMEs in the businessof waste management.

PETCO's #Do1Thing marketing campaignreached over 2.2 million people through socialmedia and 2.5 mill ion people throughtraditional media. Our PR efforts unlockedalmost R7 million worth of value (a return oninvestment of over 3 000%).

We were proud to welcome RPC AstrapakThermopac as a Voting Member of PETCO.

PETCO hired Kara Levy as a Marketing Officer.Tlou Sebola was promoted to RegionalRepresentative and Pearl Molepo joined asRecycling Programme Manager.

Alistair Schorn, PETCO Business DevelopmentManager, left the company to settle in NewZealand. We wish him well and thank him for theexcellent work over the period.

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Through the remarkable network of people,companies and organisations we work with, 6.2million PET bottles were collected for recyclingacross South Africa every day during the courseof 2018, creating 68 000 income-generatingopportunities for small and micro-collectors,and changing their lives and those of theirfamilies in immeasurable ways. This is the magicof PETCO and the stories of the men and womenon the ground are reflected in the annual PETCOAwards that you'll read about later in this review.

PETCO's continued support for the six PETrecyclers in South Africa ensured another yearof increased collection volumes. By enteringinto contracts with our recycling partners,PETCO demonstrated its commitment tomeeting our target of 70% of post-consumerPET bottles recycled by 2022. The recordcollection by one of our recyclers in Octoberand November 2018 of just under 4 000 tonnesrespectively set a benchmark.

The stability of the PETCO EPR model washighlighted when China, and more recently India,banned the import of waste plastics. Recyclingindustries in many countries were plunged intoturmoil by this act; however, due to the fact thatPETCO and its partners have developed localend-use markets over the years and 100% ofpost-consumer bottles that are collected arerecycled here in South Africa, we were notaffected too much by the ban.

Through the manufacture of recycled end-useproducts, R1.2 billion was injected into the SouthAfrican economy.

A highlight of 2018 was the submission of theIndustry Waste Management Plan (IndWMP).The implementation of the IndWMP will see afundamental change in the landscape of SouthAfrican PET recycling. PETCO is proposinginclusion of edible oil products (e.g. cooking

oil) and the thermoform and sheet sectors (trays,blister packs, etc.). These sectors have notcurrently elected to be part of the voluntaryPETCO model. PETCO has been approached toinclude strapping producers in the IndWMP andone member has showed signs of comingonboard. Ultimately, the choice of joining PETCOwill be theirs. Due to PETCO's collaborativeefforts since 2005, PET bottle recycling ratesin South Africa are already substantial for thePET Bottle Sector. The recycling rates for EdibleOil Bottles, Thermoforms and Sheet, will startoff on a low or near-zero base, but we arepleased that one major thermoforming converter,RPC Astrapak Thermopac, has signed up as aPETCO member.

Alignment between waste stream reporting,mandatory membership of the whole PET market,including thermoform and edible oil producers,and the increased, regulated powers to collectdata will enable PETCO to put in place a newoperating regime.

PET Thermoforms are currently not includedin our Bottle Market recycling rate figure. Weare in the process of developing a supportmodel for Thermoform recycling. Edible oilbottles are also not included in the PET Bottlefigure. These are a challenge to recycle dueto the high levels of contamination thatare stuck to the bottle on account of theresidual oil. This can have a significant impacton the final quality of rPET and can in someinstances damage recycling equipment. Insome cases, small numbers of bottles do findtheir way into the recycling process or arehand-fed into the stream in very small batches.The recycling of Edible Oil Bottles andThermoforms is costlier than that of beveragebottles; however, their recycling rateseffectively start from zero tonnes, steadilygrowing to include a greater proportion of thetotal tonnage placed on the market.

TONNES EXPORTED (NET IMPORT)

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2 000

4 000

6 000

8 000

10 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-2 000

1 Our efforts over the past year led to a 6% increase in bottles recovered for recycling year-on-year.98 649 tonnes were collected for recycling in 2018, which equates to a total of 2.3 billion bottlesand some 6.2 million bottles collected each and every day. This resulted in a 63% recycling rate.

2 We welcomed our first thermoform converter as a PETCO member: RPC Astrapak Thermopac.The successful feasibility pilot of thermoform recycling to polyester fibre conducted by Extrupet,was a highlight.

3 Our continued support for the recyclers ensured another year of increased collection volumes andinvestment in infrastructure:• Record collection by Extrupet in October and November 2019 of close to 4 000 tonnes respectively.• Extrupet announced its B2B expansion for 2019 that will on completion double the current

capacity from 20 000 to 40 000 tonnes of rPET per annum.• Kaytech ramped up their additional continuous filament line to full capacity.• Sen Li Da Chemical Fibre began expansion of their fibre production.• Da Run Fa began expansion of their fibre processing capacity.• Propet opened a new PET strapping line in the Western Cape.

4 We submitted our PET Industry Waste Management Plan (IndWMP) in response to the call byGovernment. The plan is a “Shared-Cost” plan submitted under the Packaging SA Federation of Plans.

5 We signed on as a member of Poverty Stoplight. Membership is only endorsed for those organisationswho are running poverty-elimination programmes and who intend to use the information resultingfrom the surveys to do something about it.

6 Our commitment to fully participate in the solution to address the plastic pollution problem onthe continent, to grow and consolidate collection and to help countries develop their own recyclinginfrastructure in the next few years, led to the establishment of PETCO Kenya.

7 We conducted five (5) accredited Entrepreneurs Training courses for 320 SMMEs and cooperativemembers, as well as three (3) Recycle Paper ZA, formerly known as Paper Recycling Association(PRASA), Entrepreneurship accredited courses to 165 SMMEs and cooperative members.

8 We helped to establish the Ekurhuleni Waste Management Association (EWMA), which includes40 cooperatives and SMMEs involved in waste management.

9 A total of 60 projects in nine provinces to increase visible recycling, create jobs and assistentrepreneurs, were supported.

10 Our #Do1Thing campaign reached over 2.2 million people through social media and 2.5 millionpeople through traditional media.

11 We were invited to present at an International Product Stewardship Conference in Sydney,highlighting the role of the informal sector. We were also invited to submit a paper on the PETCOmodel by the International Solid Waste Association (ISWA).

12 We won several awards during the year, including:• The 2018 Gauteng Premier's Service Excellence Bronze Award for Environmental Sustainability.• The 2017/18 DESTEA Environmental Programmes Award for Best Supporting Company.

In celebrating our remarkable results in driving post-consumerPET recycling, we can summarise the year's highlights:

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TOPACCOMPLISHMENTS

FOR 2018

Dr Casper Durandt Cheri ScholtzChairman, PETCO Chief Executive Officer, PETCO

We were shocked and saddened by the passingof South African Minister of Environmental Affairs,Edna Molewa. Minister Molewa made incrediblecontributions to South Africa and we had theprivilege of working alongside her on numerousoccasions, including the opening of the very firstBottle-to-Bottle PET recycling plant in Wadevillein 2015. We send our deepest sympathy andcondolences to the family, staff and friends ofthe late Minister.

Our new Minister, Nomvula Mokonyane, wasappointed on 22 November 2018. We hope tocultivate a close relationship with the Ministerand her team.

Through the many projects documented later inthis review, PETCO continues to support smallrecycling businesses throughout the country,creating jobs and growing skills.

Thanks, and credit for funding PET recycling inSouth Africa, must go to the organisations whopay the PET recycling fee on each and everytonne of raw material that they purchase, plusthe brand owners and raw materials producerswho support recycling with grants-in-aid.

The PETCO Board of Directors continues to showcommitment and thanks are due to them for theirefforts and insight.

PETCO enjoys Associate Membership of theEuropean Association of Plastics Recycling andRecovery Organisations (EPRO) and of the GlobalProduct Stewardship Council. We are alsorepresented on the African Marine Waste Network,

The Waste Minimisation and Recycling InterestGroup (WMRIG), the National ResearchFoundation (NRF), the Institute of WasteManagement South Africa (IWMSA: Gauteng andKZN Committees), and the Waste PickersGuidelines Task Team.

PETCO enjoys the support and collaborativeefforts of both Packaging SA and Plastics|SAand makes annual financial contributions to theseorganisations.

PETCO has worked with countless municipalities,schools, local NGOs, international organisationsand South African government officials, as wellas other Producer Responsibility Organisations,to make interventions across the value chain andover the length and breadth of South Africa andbeyond.

These results have been achieved throughpartnerships with business large and small,organisations and numerous individuals, makinga tangible positive impact on the lives of SouthAfricans, contributing significantly to the economy,and minimising the impact of post-consumerPET on the environment.

PETCO is well-placed to continue deliveringresults in this next stage of South Africa'senvironmental legislation i.e. mandatory ExtendedProducer Responsibility for packaging products.

We are honoured and excited to work alongsideyou.

Let's make it happen.

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NOPOVERTY

ZEROHUNGER

GOOD HEALTH& WELL-BEING

QUALITYEDUCATION

GENDEREQUALITY

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CLIMATEACTION

LIFE BELOWWATER

LIFE ONLAND

PEACE, JUSTICE& STRONG INSTITUTIONS

PARTNERSHIPSFOR THE GOALS

CLEAN WATER& SANITATION

AFFORDABLE& CLEAN ENERGY

DECENT WORK& ECONOMIC GROWTH

INDUSTRY, INNOVATION &INFRASTRUCTURE

REDUCEDINEQUALITIES

SUSTAINABLE CITIES& COMMUNITIES

RESPONSIBLE CONSUMPTION& PRODUCTION

THE GLOBAL GOALSFOR SUSTAINABLEDEVELOPMENT

Adapted for us from 'Transforming our world:the 2030 Agenda for Sustainable Development’(http://www.un.org/sustainabledevelopment/).

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PETCO IMPACTDASHBOARD2018

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SUSTAINING THE ENVIRONMENTSD Goals: 6, 7, 13, 14 and 15• 98 649 tonnes of post-consumer bottles recycled (6% increase over 2017);• 63% post-consumer recycling rate;• 612 000 m3 of landfill space saved;• 148 000 tonnes of carbon emissions saved.

STRENGTHENING THE ECONOMYSD Goals: 8, 9, 11 and 12• 68 000 income opportunities in recycling;• R3.4 million spent in support of collectors for equipment and training;• R42 million spent in support of contracted industry recycling projects;• R540 million paid by recyclers for baled bottles delivered to plants;• R1.2 billion injected into the downstream economy.

SHAPING SOCIETAL TRANSFORMATION THROUGH EDUCATIONSDG Goals: 4• 5 accredited training courses;• 133 726 total website sessions (260% increase on 2017);• 489 306 total website page views (408% increase on 2017);• 39 715 Facebook Likes (423% increase on 2017);• 13 945 Twitter Followers (232% increase on 2017);• 549 Instagram Followers (245% increase on 2017);• 254 YouTube Subscribers (254% increase on 2017);• 7 Voting and Associate Member Workshops.

IMPROVING GOVERNANCESD Goal: 16• PETCO achieved a clean financial audit;• > 80% attendance by Directors at Board meetings (59 board meetings thus far);• Adherence to internally developed operational management & governance processes.

SEEKING PARTNERSHIPSSD Goal: 17• The Council for Scientific and Industrial Research (CSIR);• International Labour Organisation (ILO);• Department of Environmental Affairs (DEA);• Department of Science and Technology (DST);• Packaging SA and Member Associations:

• Recycle Paper ZA, formerly known as Paper Recycling Association (PRASA)• Polyco• MetPak-SA• The Glass Recycling Company• South African Vinyls Association (SAVA)• Polystyrene Association of South Africa

• National Recycling Forum (NRF);• Institute of Waste Management South Africa (IWMSA: Gauteng & KZN Committees);• PlasticslSA;• SA National Bottled Water Association (SANBWA);• GreenCape;• South African Plastics Recycling Organisation (SAPRO);• The Sustainable Sea Trust (SST);• The African Marine Waste Network (AMWN);• Consumer Goods Council of South Africa (CGCSA);• Fair Trade Tourism;• Western Cape Recycling Action Group (WCRAG);• Waste Minimisation and Interest Group (WMRIG);• The Waste Pickers Guidelines Task Team.• National Recycling Forum (NRF);• Poverty Stoplight.

Circular economy thinking leverages the economic and environmentSustainable Development (SD) Goals clusters, impacting them all:

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PETCO is the trading name of the PET RecyclingCompany NPC South Africa, a not-for-profitcompany incorporated in 2004. PETCO fulfilsthe PET industry's role of Extended ProducerResponsibility (EPR), being a voluntary industrydriven and financed environmental solution forpost-consumer PET plastic. To achieve thiseveryone involved, from government to the rawmaterial producers, the converters, brand owners,retailers, consumers and recyclers, play their partin the solution. By imposing accountability overthe entire life cycle of PET products andpackaging, companies that manufacture, importand/or sell PET products and packaging arefinancially and physically responsible for suchproducts after their useful life.

As has been the case since PETCO's inception in2004, the organisation raises the ExtendedProducer Responsibility (EPR) fee directly fromits members. This amount is applied to the rawmaterial and pre-form purchases, both locallyproduced as well as imported. Those companieswho purchase PET Resin (both virgin andrecycled) or preforms/sheeting pay the EPR feeto PETCO on a rand/tonne basis. This modelpresents the lowest risk to all stakeholders,negates the need for PET EPR funding becominga drain on the national fiscus, and is the mostcost-efficient solution for society.

A Board of Directors comprising the full valuechain of the obliged industry governs PETCO.

PETCO WORKS WITH MANYPARTNERS INCLUDING:

• GovernmentTo build policy and implementationframeworks that support the conceptof Extended Producer Responsibilityand grow the Green Economy.

• PET IndustryTo harness knowledge and innovationleading to increased PET recycling efforts.

• Voting and Associate MembersTo sustain PET collection interest andsupport PET recycling efforts therebyreducing volumes of PET in the waste stream.

• International Industry and AgenciesTo collaborate on best practice withrespect to post-consumer PET recycling.

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PET bottles make up approximately 68% of the total PET market in South Africa, withthermoformed trays, edible-oil bottles, jars and strapping accounting for the balance.PET trays and blister packs (alongside all plastic trays) are not currently collected andrecycled in South Africa. This will be addressed soon.

PETCO's voluntary members represent approximately 90% of the volume of the PET Bottlemarket in South Africa.

*Taken from the 2018 Packaging South Africa Report, Prepared by BMi Research.

PET PACKAGING MARKET

PET BOTTLE MARKET

AS PROPORTION OF TOTALPACKAGING IN 2017

AS PROPORTION OF TOTALPLASTIC PACKAGING IN 2017

AS PROPORTION OF TOTALPACKAGING IN 2017

AS PROPORTION OF TOTALPLASTIC PACKAGING IN 2017

211 000 tonnes; 6% of total packaging

3 549 600 tonnes; 94% of total packaging

211 000 tonnes; 24% of total plastic packaging

656 000 tonnes; 76% of total plastic packaging

143 480 tonnes; 4% of total packaging

3 617 120 tonnes; 96% of total packaging

143 480 tonnes; 17% of total plastic packaging

723 520 tonnes; 83% of total plastic packaging

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PETCO'S WORK FOCUSES ON FIVE MAIN AREAS:

• 1 INDUSTRY PROJECTS

By taking responsibility for post-consumer PETrecycling, PETCO imposes accountability overthe entire life cycle of PET products and packaging.This means that companies that manufacture,import and/or sell PET products and packagingare financially and physically responsible for suchproducts after their useful life.

For any recycling economy to function, theremust be market demand for the materialscollected. The PET recyclers, i.e. those companieswho buy post-consumer PET and re-processthese materials to make new products, arecritically important to the functioning of therecycling economy. Currently, PETCO works withall six PET recyclers that operate in South Africa.

Recycling is a commodities-based business.Recyclers of PET sell products whose price isgoverned by global commodity prices. As such,there are periods when it becomes uneconomicalto recycle, and recyclers are forced to lowerprices for their raw materials (e.g. post-consumerbottles) to such a point that collectors may stopcollecting them.

Since PETCO's incorporation, the organisationhas supported the growth of the recycling valuechain enabling it to weather economic downturns.

A variety of support mechanisms are used, butall are premised on assisting the recycling chainmore when times are bad, and less when timesare good - thus ensuring the organisation doesnot over- or under-support recycling, and thatthe financial spend remains efficient andeffective. Support is channelled via recyclerson a long-term basis of 5-year contracts. Allproducts within the same end-use market (e.g.fibre, food-grade, etc.) receive the same supportacross recyclers to ensure that the playing fieldsare level. Support is provided on the basis ofpost-consumer PET purchased, and funds arereceived by recyclers in arrears and uponfulfilment of PETCO's mandate. This “safety net”allow recyclers to plan ahead, build capacity,and invest in collection networks, whilst stillpaying market-driven rates for collectedmaterial. This support is what has helpedcollectors' grow their market from under 10000 tonnes in 2005 to 98 649 tonnes in 2018,whilst also fetching higher prices for theirmaterial.

As part of our strategy, we continue to focuson stimulating investment in infrastructure andinnovation in the development of new endmarkets for rPET as well as the stimulation ofexisting markets.

• 2 TRAINING AND MENTORSHIP OF ENTREPRENEURS

PETCO sees the role of training and thementorship of collectors as being critical toimproving working conditions and assistingentrepreneurs to grow and sustain theirbusinesses, thereby stimulating economic growth,job creation and development in our country.

We strengthen relationships with municipalities

to encourage the establishment of kerbsidecollection projects and expand existing PETcollection into new areas. PETCO supportsprojects and initiatives through the sponsorshipof infrastructure and equipment that unlockscollections, helps collectors improve theirefficiencies as well as the quantity and qualityof PET collected.

• 3 CONSUMER AWARENESS AND EDUCATION

PETCO's vision is that capacitated, empoweredconsumers are informed about PET and knowthat it is recyclable and safe to use; theyunderstand the potential and value of PET andrecycled PET (rPET); they use their influenceand buying power to drive positive recyclingbehaviour by demanding products that containrecycled content and that are recyclable. Weencourage consumers to participate in kerb-siderecycling projects where these exist and supportcommunity projects and drop-off sites thatactively recover post-consumer PET for recycling.

We actively encourage and contribute to theeducation of learners through national schoolsrecycling competitions and school collectionprojects undertaken with our partners, inspiringlearners to re-think the future through the lensof the circular economy.

Print publications, broadcast, digital and socialmedia are all used to convey PETCO's recyclingmessage. We conduct face-to-face engagementsat exhibitions, public events and host interactiveworkshops and conferences.

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END-USE MARKETDEVELOPMENTA growing recycling economy benefits from increasing its mix of end-use markets, such as thepolyester fibre sector (used for making shirts, duvets, pillows, roof insulation, etc.), and the food-grade and bottle-to-bottle sector, which currently accounts for almost half of all processed tonnage.South Africa has two bottle-to-bottle grade factories, an outstanding achievement globally.

Food-grade and bottle-to-bottle recycling allows PETCO to move to a fully circular economy; however,alternative end-use markets still need to be developed to ensure a home for all PET products, as notall are suitable for closed-loop recycling.

The announcement made by Extrupet to expand its Bottle-to-Bottle (B2B) line by 2020 was welcomedby PETCO. This expansion allows for brand owners to specify even higher levels of recycled content;it will strengthen South Africa's position as a circular economy leader in Africa and place uscompetitively within the global packaging market. We also believe that it will enable us to meet ourrecycling and job creation targets in the forthcoming years.

It is worth noting that the production of thermoform packaging (e.g. trays and punnets) in SouthAfrica has for a long time been an end-use market for PET Bottle recycling and contains substantiallevels of recycled content - thus reducing the need for virgin raw materials to begin with.

ALTERNATIVE MECHANICALRECYCLING DEVELOPMENTS

PETCO supports an increasing number ofalternative PET producers, such as thestrapping producers. In addition, we are seeingmore recyclers tapping into different end-usemarkets, as an example; one of our recyclersis planning on producing PET tiles, hairextensions and other PET products in thecoming year. The production of pallets for thefruit export market is an exciting potentialdevelopment as it has the potential for fairlylarge volumes of recycling of more difficult torecycle bottles (such as heavily pigmentedbottles), as well as thermoforms and sheetingwhich have not been recycled to date.

• 4 SUSTAINABILITY AND BUSINESS INNOVATION

• 5 INSIGHT AND ANALYSIS

Recognising that business innovation sits atthe heart of economic transitions, PETCO is acatalyst for design for recycling innovation. Weaim to stimulate dialogue and direct action inshifting the use of finite resources, preservingthe value of existing resources and utilising

renewable resources. Taking action to createa supportive business environment forcompanies that use recovered resources willhelp drive additional recycling, create morejobs, reduce greenhouse gases and extendthe life of existing landfills.

Our insight and analysis, reports and global bestpractice case studies feed into a growing bodyof information highlighting the rationale for atransition towards an economy where plasticsnever become waste.

ENERGYRECOVERYPETCO will avoid utilising waste to energy if atall possible, as it falls lower down the wastehierarchy, and the organisation will seek to achieveits targets without utilising this methodology.Whilst PETCO recognises that this is a solutionof last resort, the organisation notes that adoptionmay be necessary in the future. PETCO's plan forall products is to drive their development to bemore fully recyclable (e.g. design for recycling);however, some products, particularly with regardsto imported finished goods in thermoforms,sheets and blister packs, may be more suitablefor energy recovery than for recycling in the shortterm. Such a project will be done jointly withother plastic and packaging streams as the energyrecovery facilities use a range of input material.

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• BOTTLE-2-BOTTLE (B2B)

The ban on the importation of various categoriesof industrial and post-consumer wasteimplemented by China in September 2017 wasan indication that the global supply of baledpost-consumer PET bottles significantlyexceeded demand.

In South Africa, we did not experience the negative

impact of this situation. Local recycling continuesto favour the fibre producers, especially in theexport market. This is evidenced in the plans ofour fibre recyclers, for example: Sen Li dacommenced the expansion of their fibre line inNew Castle, with this project expected to becompleted in 2019. Da Run Fa also has plans toexpand its fibre line in 2019.

At a domestic level, the South African PETrecycling sector in the first half of 2018 continuedto be impacted by the fact that there was asignificant disruption in the supply of virgin food-grade rPET resin in the latter part of 2017,following major delays in the commissioning ofa capacity expansion at the country's virgin resinproducer, Safripol (Hosaf). This led to a situationin which, for the first time in PETCO's history,demand for food-grade rPET resin exceededsupply by a significant margin.

The lack of availability of virgin food-grade PET,along with the effective implementation of sugartax on beverage drinks on 1 April 2018 in SouthAfrica, has resulted in a constrained supply ofbottle feedstock for PETCO's recycling partners.This was particularly evidenced in the low PETcollection rate during the first half of the year.

From PETCO's perspective, the on-going bottleshortage has led to a change in theorganisation's policy of limiting applicationsfor post-consumer PET waste import permitsto very small amounts. Additionally, permitapplications that were approved for the

importation of PET bottle feedstock, camefrom neighbouring countries (which arein many instances supplied by South AfricanPET converters).

The introduction of a pilot Bottle GradingSystem by PETCO, in partnership with SANBWA(the South African National Bottled WaterAssociation), will aid in the recyclability of PETbottles and positively impact the collectionrate for 2019.

For the beverage industry, the implementationof sugar tax in April 2018 came after over ayear of debate and interaction with government.In the end, most believed that the effort to tryand mitigate the proposed tax was successfulwith the final concession to allow the first4g/100ml to be tax-free and reduce the taxrate slightly. The delayed implementation to2018 allowed many brands time to reformulatetheir products, and so when the tax wasimplemented, much of the industry had eitherreformulated or introduced new pack sizes totry and mitigate the potential price pointmovement and, as a result, protect volume.

• BOTTLE-2-FIBRE (B2F)

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Despite the situation described above, PETCOand its recycling partners continue to investigatenew end-uses for post-consumer PET material,with a number of projects in various stages ofcommercial and pre-commercial development.

A critical development was the 2018 opening ofa R35m PET strapping line by Propet SA. Thisline is located at the Propet fibre plant in CapeTown and provides a valuable outlet, at significantvolume, for problematic green, brown andcoloured PET bottles. In a growing industry shifttowards sustainable packaging and product design,one of South Africa's largest manufacturers ofwood-based products, PG Bison announced itsdecision to use locally sourced rPET strapping

sourced from Propet. This announcement waswelcomed as this is one example illustrating howcompanies can meet their Extended ProducerResponsibility objectives through the recycledPET value chain.

As with the global trends, thermoform productsare not recycled in South Africa. This is primarilydue to the physical characteristics of PETthermoform products and their physicalincompatibility with the existing installed PETrecycling capacity in South Africa. However, in2018 PETCO's investment and commitmentenabled the successful feasibility pilot ofthermoform recycling to polyester fibreconducted by Extrupet.

Tonnages collected for recycling clearly shows Bottle to Bottle/ Foodgrade sector proportional growth

PET BOTTLE COLLECTIONSBY END USE MARKET

• OTHER END-USES

64 108 74 360 90 749 93 235

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

PET Bottle recycling Tonnage by End-Use: Recycled tonnages by end-use since 2014.This shows the continued growth in food-grade sector as an end-use market.

98 649

BOTTLE / FLAKE EXPORTSBOTTLE-2-FIBRE (incl. industrial)BOTTLE-2-FOODGRADE

In 2018, PETCO's support for high-volumecommercial recycling operations constituted56% of the organisation's total expenditure dueto unexpected favourable market conditions.

In order to maximise the positive impact derivedfrom the financial resources available to PETCO,we closely monitor global and local marketprices and cost variables and adjust our level ofsupport on a quarterly basis.

We also continue to collaborate with ourcommercial partners in expanding their collectionnetworks and unlocking new collections inhistorically under-serviced regions.

In terms of the cost associated with PETCOmembership for the PET converting sector,

(which are potentially passed on to the end-consumer), in 2018 the indirect cost of thePETCO f inancia l model remained atapproximately 1 cent per bottle, andapproximately 2 - 3% of the cost of a tonne offood-grade PET resin, depending on globalprice movements.

PETCO's contracted recyclingpartners in 2018 were:

• Da Run Fa Chemical Fibre

• Extrupet

• Kaytech

• Mpact Polymers

• Propet SA

• Sen Li Da Chemical Fibre

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PETCOPROJECTS• COMMERCIAL SCALE RECYCLING PROJECTS

Collectively, our partners:

purchased close to

99 000 tonnesof post-consumer PET material,

at an approximate market value of more than

R540 millionOur partners also placed end-use products intolocal and international markets worth approximately

R1.2 billionto the South African economy.

During 2018, this equates to more than

2.3 billionbottle recycled, or

6.2 millionbottles recycled per day.

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Financial support for recyclers adheres to the following principles:

• Equal rates are paid across an end-use.• Recognition that economics of end-use differ.• Support increases when economics of recycling are poor and decreases when they are good.• Economics must be able to be monitored on one or more objective measures.• Support seeks to carefully balance supply and demand, and cause a spiral of increasing bottle

prices but not to the detriment of sound economic performance of recyclers or the benefit ofincreased tonnage collected and processed.

• The financial support aids the value chain of recycling. Maintaining demand by recyclers for post-consumer material ensures the whole chain, from informal waste pickers through to large separationat source scheme operators and all in-between, benefit for a steady and growing demand forthat material.

• COLLECTION, TRAINING, AND VISIBLE RECYCLING PROJECTS

PETCO spent 5% of its budget to support initiatives and activities that do not necessarily increasethe collection volumes of recycled PET, but contribute to the visible recycling of PET.

Our strategy with this area of work is to identify the provinces where we have a relatively smallerfootprint of support than other provinces, and to expand our support within these areas specifically.Through the ongoing mapping of projects that we have supported in the past as well as where traininghas been conducted, we ensure we are continuously expanding our network of support throughoutSouth Africa.

Our implementation strategy follows this process:

1 Identification of the Province;

2 Establish partnerships with the relevant local municipality and provincial governmental bodies, local departments for environment, tourism and economics, DEA, and any other relevant organisations;

3 Ensure work is aligned with the relevant Integrated Waste Management Plan;

4 Organise workshops in partnership with relevant authorities and organisations for collectors;

5 Identify approximately 10 collectors already collecting or who have their own businesses;

6 Organise accredited training for identified collectors;

7 Evaluate what support may be required by these collectors to assist them with equipmentand in making their business sustainable;

8 Ensure on-going monitoring and support throughout this process and beyond.

PETCO supports visible recycling in the following ways:

PET INFRASTRUCTURE AND EQUIPMENT PROVISION

PETCO supports projects through the sponsorship of infrastructure and equipment that unlockcollections, helping collectors to improve their efficiencies as well as the quantity and quality ofPET collected. We also assist with the efficient transportation of baled material. In 2018, PETCOsupported a total of 60 projects (including SMME's and cooperatives) in 9 provinces, withequipment to improve the quantity and quality of their post-consumer PET collections.

PROJECTS• Thokoza Eco Trading: Industrial platform scale and baler cable• Power Rush Trading: Volume trailer• Allumetal Recyclers: Industrial platform scale and signage board• Ndlazi Recycling and Energy Solutions: Site pavement• Mphakamiseni Energy Savings: Industrial platform scale and mobile scale• Vukuzenzele Nkoza and Recycling Secondary Cooperative Limited: 6m office container• Neo Recycling: Electronic scale system• CJU Environmental Management: Signage board• Ekhuliza Primary Cooperative: Signage board• Lakhwisha Holdings: Signage board

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• Tzaneen Municipality: 10 push trolleys• Kananelo Waste Management: Industrial platform scale and signage board• TVK Trading: Industrial platform scale• Siyaphumelela Community Development Projects: 2 signage boards• Piketberg Civils CC: H20 baling machine• Green Spot Recycling: Volume trailer and 12m storage container• Boeties Recycling: Volume trailer• InWaste Green: Volume trailer• Amsterdam Women Collectors: 10 push trolleys• Morubisi Logistics: Volume trailer• Delmas Women Collectors: 7 push trolleys• Vlottenburg Community Organisation Recycling: Volume trailer, signage board and mobile scale• Re-Living Cop 17: Volume trailer• Bagodumo Trading Enterprise: H20 baling machine• Blue Sky Recycling: Volume trailer• DEA_K1 Recycler: 5 push trolleys• Vaal Oewer Waste Pickers Association: Industrial platform scale• Seabatt: Painting and branding of an external wall• Waste Want Management: 2 volume trailers• Kruger National Park: 16 push trolleys• Lindithando Recycling: Industrial platform scale• Tsosane Waste Management: Industrial platform scale• Retrolex 128: Volume trailer• Uthando Recycling: 6m office container• Itsoseng Primary Cooperative Limited: H20 baling machine and industrial platform scale• WasteBuddies SA: Industrial platform scale• Tzaneen Recycling Craft: Industrial platform scale and 3 push trolleys• Phumolong B Recycling: Industrial platform scale• Pretoria Zoo/NZG: 4 sorting tables, 5 push trolleys, roof and signage board• Redeemed Recycling: Volume trailer and H20 baling machine• Bo-Karoo Recycling: Volume trailer and industrial platform scale• ReMmogo Recycling: Volume trailer, mobile scale, signage board and 5 push trolleys• Finito Recycling: Volume trailer and 5 push trolleys• Shadukani Recycling: 2 volume cages, signage board, industrial platform scale and 3 push trolleys• Litter4Tokens School Recycling: Signage board• JNJ Trust: Industrial platform scale• Roodeport Recycling t/a Ablewise: Signage board• Umngazi Mouth (Pty) Ltd: Industrial platform scale• Anane Transport: Industrial platform scale• SuperSpar Monument Park Waste Pickers: 2 Industrial platform scales• Cannibal Recycling: 2 Industrial platform scales• Wildlands Trust: Trolley repairs and spares• Remade Germiston: Refurbishment of roll-on bins• African Reclaimers: 100 000 recycling bags• Antiwaste: 5 000 Separation-at-Source pamphlets• Global Citizen Concert (in partnership with Kofifi Waste): 20 push trolleys• Fichardt Park: 700 branded shopper bags• Hope with Zola (in support of Maria, a waste picker): 1 push trolley• Miss Earth Event: delegate bags• Supported Plastics|SA with environmental projects and clean-up campaigns

And 27 other projects sponsored with 895 branded bulk bags.

EQUIPMENT LAUNCHES• Tzaneen cooperatives• Delmas Women Collectors• Ekurhuleni in partnership with Voting Member, Serioplast• Pretoria Zoo in partnership with the City of Tshwane and the National Zoo of Pretoria.

COLLECTOR TRAINING AND DEVELOPMENT

PETCO sees the role of training and the mentorship of collectors as being critical to improving workingconditions and the health of collectors and waste pickers as well as assisting entrepreneurs to grow andsustain their businesses. We also identify with the need to raise awareness in communities and strengthenrelationships with municipalities to encourage the establishment of kerbside collection projects andexpand existing PET collection into new areas.

We recognise the high value of fosteringand maintaining good partnerships withlocal, provincial and national government.

• FOSTERING GOVERNMENT PARTNERSHIPS

RECYCLING FORUMS

PETCO was instrumental in the establishment of The Ekurhuleni Waste Management Association (EWMA),which is a forum for regional collectors to share experiences, knowledge, and information and addressthe challenges they face together in waste management and recycling. PETCO is invited to the monthlymeetings for recycling business owners and waste pickers who work very closely with them.

PETCO TOOK PART IN THE FOLLOWING EXHIBITIONS

• Global Recycling Day• Kwalata Science Unlimited Expo• Eskom Environmental Conference/Exhibition• JHB SMME Roadshow• WasteCon• DEA and PackagingSA Graduates Event

PETCO SUPPORTED THE FOLLOWING CLEAN-UP CAMPAIGNS

• Global Recycling Day Clean-Up• Blue Lagoon Beach Clean-Up• A re sebetseng Clean-Up (in partnership with the Mayor of Johannesburg)• Coca-Cola Beverages South Africa and Global Citizen Clean-Up

(in partnership with the Mayor of Johannesburg)• Global Citizen Concert Clean-Up• Durban Harbour Clean-Up• City of Tshwane and Tswelopele Clean-Up

ENTREPRENEURS TRAININGFive accredited courses were completed in five provinces, with 320 delegates trained:• Gauteng, 44 coop members.• Free State, 9 coop members.• Northern Cape, 33 coop members.• Limpopo, 48 coop members.• KwaZulu Natal, 186 coop members.

BUSINESS TRAININGThree accredited courses were completed, in partnership with Paper Recycling ZA, in two provinces,with 165 delegates trained:• Alexandra, Gauteng• Port Nolloth, Northern Cape• Katlehong, Gauteng

SUPERVISORY MANAGEMENT LEARNERSHIP PROGRAMME• PETCO sponsored five delegates for the 12-month Programme.• PETCO further conducted 26 workshops in eight provinces with 1 445 attendees.

EDUCATION AND AWARENESS

PETCO was a partner in the following school programmes:COCA-COLA BEVERAGES SOUTH AFRICAWinners of PETCO-sponsored awards:• Businesswoman of the Year Award: Happiness Lubisi (Shodulla Waste)• Community Service Award: Amanda Mthembu (Power Rush Trading)• Youth Excellence Award: Vusi Kabinda (S and T Recycling)• Waste Collector Recognition Award - Grand Prize: Jacob Tenga (Masingo Waste)• Best PET Collector: Tshiluvhi Primary School (award sponsored by Extrupet)

SPECIAL PROJECTS AND JOINT VENTURES

PETCO received financial support from ALPLA (Boxmore) and Safripol to the value of R400 000 tospend on collection projects. We further received R150 000 from a private fund to support women'sprojects specifically in the Stellenbosch and Empangeni areas.

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• BUILDING THE RECYCLING NETWORK

The role of engaged members in an EPR scheme is crucial. Members are more likely to be active andengaged where they see a direct link between their actions, the performance of the Product ResponsibilityOrganisation (PRO) and the fees that they pay. This also results in products that are better designedto meet recycling criteria and sustainability considerations.

As a measure towards achieving an inclusive approach amongst stakeholders of PET recycling, PETCOimplements a membership scheme for stakeholders.

THERE ARE TWO BROAD CATEGORIES OF PETCO MEMBERSHIP

VOTING MEMBERSHIPVoting Membership is reserved for companies who pay levies and grants, and for whom shareholdingand voting is reserved. Percentage of shareholding in PETCO is allocated according to annual continuousmembership contributions, which is calculated every 3 years.

ASSOCIATE MEMBERSHIPPETCO created the Associate Membership Programme for organisations who are not represented inthe shareholding of PETCO but would like to become part of the PETCO family as they subscribe to ourprinciples. Our Associate Membership programme enables anyone from a not-for-profit organisationto a school, from a collector to a manufacturer, to become a member of PETCO.

ANNUAL MEMBERSHIP FEE AFFORDS THE FOLLOWING

• Information Regular newsletters provide Members with access to market intelligence, statistics,research results and PET recycling trends. Sign up* for the PETCO newsletter here:www.petco.co.za/keep-informed;

• Support Members can ensure their interests in PET recycling are supported through dialogueopportunities with PETCO;

• Networking Members can connect with other recycling and waste management industry playersand practitioners at PETCO events.

• Integrity The PETCO logo on marketing material and communications platforms provides credibilityto Members' sustainability activities;

• Value Preferential attendance at PETCO workshops, networking activities and events.

Members are also able to use the PETCO logo on their website and other marketing collateral.Email info@petco.co.za for more information on the Associate Member Programme or download theAssociate Membership brochure here: https://bit.ly/2vZeXsB.

CATEGORIES OF ASSOCIATE MEMBERS

• Reciprocal Members: Industry Associations, Recycling Associations etc.• PETCO Collections and Training Project Recipients: Collectors, etc.• Special Members: Schools, Students, Municipalities, etc.• Friends of PETCO: Consultants and small companies, Suppliers to PETCO and the recycling industry.• Industry importers: Importers of products packaged in PET.• Corporate Members: Recyclers, Waste Management Companies, Small Retailers,

Medium-to-Large companies, etc.

During 2018, PETCO signed up 22 new Associate Members, bringing the total number of AssociateMembers for 2018 to 61.

* PETCO respects the private information that is shared with us and, as such,all communication requests from PETCO adhere strictly to both the POPI and PAIA Acts.

22 23

MEMBER WORKSHOPS

PETCO hosts nationwide member workshops specifically designed to be useful to members' businessesand of benefit to their employees. These workshops help to ensure that members are up to date withthe latest offerings from government and the private sector.

PETCO hosted the following workshops in 2018:

1. Designing for the Environment(Cape Town and Johannesburg)

Truly designing for the environment is about product stewardship, forward thinking, innovation andbreaking new ground to achieve never-before-seen solutions. To design for the environment, we needto be thinking about reducing the overall impact of a product on the environment before it enters theproduction stage. Thus, it is important to dialogue between all stakeholders in the product value chainto create products that are designed more mindfully.

2.PETCO and Friends: Inspiration Sessions(Cape Town and Port Elizabeth)

The PETCO Inspiration Sessions are designed to recognise and celebrate the many innovative entrepreneurs,employers and champions of recycling in SA that do great work, both for the environment and for theircommunities.

All presentations from workshops and events can be foundon the PETCO website: www.petco.co.za/resources.

3.PETCO Industry Waste Management Plan Dialogue Sessions(Cape Town, Johannesburg, Port Elizabeth, Durban and Bloemfontein)

As part of the preparation for submission of the PET Industry Waste Management Plan, PETCO drafteda stakeholder management strategy to ensure thorough engagement with all our key stakeholders.Dialogue sessions were held around the country to present the PET Sector Waste Management Plan andto obtain feedback and comments from stakeholders. These sessions were advertised via national printtitles, digital media, as well as on the PETCO website and social media channels.

PETCO AGM

PETCO's Annual General Meeting (AGM), thepremier event on the PETCO calendar, representsthe most significant platform for communicatingwith key stakeholders.

The main purpose of the AGM is to comply withstatutory requirements. The PETCO AGM isalways very well attended by a range ofstakeholders and members who use the time toreflect on the progress made over the precedingyear and to grapple with the opportunities andchallenges looking into the future and beyond.

As part of the annual proceedings, PETCO hoststhe PETCO Awards designed to recognise andhonour the people, companies and organisationsinvolved in the PET recycling value chain in SouthAfrica, which not only contributed to advancingPET recycling, but also reflect the principles ofEPR and circular economy-thinking in theirpractices.

PETCO's 14th AGM was held on Thursday 7 June2018 at the Johannesburg Stock Exchange.

For noteworthy achievements during thecourse of 2018, PETCO was pleased torecognise and celebrate 14 recipients in

the following 11 categories:

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This category recognises a public-facing campaign that has successfully addressed a challenge aroundthe waste hierarchy, reducing reliance on landfill, increasing PET recycling, boosting reuse, or reducingwaste-generating behaviour, amongst South African consumers.

WINNER:

ThriveHout Bay, Western Cape

Thrive works to educate the schools andcommunities of Hout Bay about the five pillarsof sustainability: water, food, waste, energy andbiodiversity. Thrive conducts annual EnviroAudits in schools, and links local organicvegetable growers with local restaurants. Thriveaims to increase support for local growers, createjobs in the community, and reduce the food-associated carbon footprint of Hout Bay. Thrivefurther organises regular community clean-upsin and around the Hout Bay area.

More: www.thrive.org.za

As the Director of Thrive, Helen Adendorffoversees and guides the project's strategic

intent to educate Hout Bay communitiesabout the five pillars of sustainability.

• 1 PUBLIC CAMPAIGN OF THE YEAR

24

PETCOAWARDS

26

This category recognises a product that exemplifies the best of sustainability - designed with carefulconsideration of resources and incorporating a minimum of 10% recycled PET (rPET) content.

WINNER:

CorrusealCape Town, Western Cape

As a national manufacturer and supplier ofpackaging to a wide range of industries acrossSouth Africa, Corruseal now uses only recycledPET strapping on their products, sourced locallyfrom Cape Town-based supplier Propet. Whatis exciting about rPET strapping is that it canbe made from green plastic bottles, which havehad a limited end-use market to date.

More: www.corruseal.co.za

Says Willie Koch, Supply Chain Manager for Corruseal,"If we are not focussed on sustainability and getting

the most out of our raw materials, then we aredoomed to fail."

• 2 RECYCLED PRODUCT OF THE YEAR

• 3 BEST COMMUNITY BREAKTHROUGH INITIATIVE

This award recognises an individual or organisation whose ingenuity and perseverance have createdand sustained successful business ventures in the PET collection or recycling industry that directlybenefit and uplift the communities within which they operate.

WINNER:

Angels Resource CentreDe Aar, Northern Cape

Eddie Kampher has set up a recycling opportunityfor under-resourced communities in the NorthernCape which manages up to 8 tonnes of mixedrecyclables in a month. The Waste to Artprogramme teaches people how to sort, clean,bale and create functional furniture and art fromwaste materials. 30 entrepreneurs are now sellingto local buy-back centres, making a monthly incomefor themselves and their families. The programmeprovides homeless and unemployed people withnew opportunities, cleaning the environment whilstcreating employment, and creating better healthand safety in the communities.

More: www.angelsinc.co.za

Eddie Kampher, CEO of Angels Resource Centre inthe Northern Cape, works hard to provide homeless

and unemployed people in his community withincome opportunities in the recycling industry.

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• 4 PET-TREPRENEUR

This category recognises an individual whose entrepreneurial insight, ingenuity and perseverance hascreated and sustained a successful, growing business venture in the PET collection or recycling industry.

WINNERS:

Makhabisi Recycling and Trading CoBoksburg, Gauteng

Makhabisi Recycling and Trading is a 100%black female owned company that was startedin 2007. The business employs 60 people fromthe local community - 34 females and 26 males.Makhabisi collects 18 to 20 tonnes of PET ona monthly basis.

More: www.facebook.com/ANHAR5483/

Makhabisi Recycling and Trading, made up ofmother-and-daughter team Anna Hartebeest

and Harriet Matjila, is committed to beingan inclusive green business.

Nzima Recycle CentreHumansdorp, Eastern Cape

Nzima Recycling started in March 2007 and hada very bumpy ride since then. Luckily, Tommyand Jeanine Glad are hardworking and don't letanything get them down. Cannibal Recyclingstarted buying Nzima's recycled stock in 2016and has since played a strong mentorship role.Nzima buys in PET from landfill sites and thecommunity of Humansdorp. They started offwith an average of nine tonnes of PET in 2017and are currently doing 20 tonnes per month.They employ 14 people.

More: www.facebook.com/nzimarecycle/

Nzima Recycling, owned and run byTommy and Jeanine Glad, buys in PET

from landfill sites near Humansdorpand the local community.

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• 5 LOCAL AUTHORITY RECYCLING INNOVATION

This category recognises the importance of partnerships with municipalities and local authorities inaddressing waste reduction behaviour in South Africa.

WINNER:

Drakenstein Municipality

Drakenstein Municipality experienced a fair amountof illegal dumping and crime near their Wellingtondump. Thys Serfontein, Senior Manager of SolidWaste and Landfill Management, spent a lot oftime and effort negotiating with the informalsector and informed them - amidst much hostility

- of the support that the Municipality wanted tooffer them through a structured programme.Through perseverance, Thys eventually gainedsupport from many of those that came to theinitial meeting. He then appointed Marilyn Peters('Sussie') as the Manager of the project. To date,there are 30 people whose lives have beenchanged through this intervention.

More: www.drakenstein.gov.za

Marilyn Peters, or 'Sussie', works closely with Thysand the Drakenstein Municipality to ensure the

waste-entrepreneurs are supported. They have nowbeen approached by other municipalities to establish

similar projects around South Africa.

• 6 RECYCLING PARTNERSHIP GAMECHANGER

This category recognises partnerships that have successfully implemented game-changing initiatives,policies or programmes that advance recycling and sustainability in South Africa.

WINNER:

Fair Cape Dairies

Fair Cape Dairies changed their packaging froma white opaque PET bottle to a clear PET bottle.Once the Dairy received feedback from theirconsumers that local recyclers were no longeraccepting their opaque milk bottles, theyimmediately addressed it across their valuechain. This proactive partnership approachenabled the Dairy to shift to a 100% recycledpackaging, with little to no impact on the qualityof the product or on consumer expectation.Today, each clear bottle is made with 50%recycled PET.

More: www.faircape.com

Today, each Fair Cape Dairy milk bottle isclear (and 100% compatible with existing

recycling infrastructure in SA) and is madewith 50% recycled PET.

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WINNER:

Jocelyn Van Der Ross,Green Spot RecyclingFranschhoek, Western Cape

Green Spot Recycling is an established buy-backcentre founded in 2005 by Jocelyn in Franschhoekin the Western Cape. Jocelyn started with twopeople and now has 15 staff collecting and sortingrecyclables. Currently Green Spot Recyclingcollects PET and other recyclable materials fromthe community, a few schools, businesses andestates in and around Franschhoek. Initially theycollected about three tonnes of PET monthly.However, in November 2018, they collected oversix tonnes of plastic bottles.

More: www.facebook.com/greenspotjo

Jocelyn Van Der Ross, the very proud owner of Green SpotRecycling, collects PET and other recyclable materials

from the community, La Vie De Luc, Aquelle Mineral WaterPlant, and a few schools, businesses and estates in

and around Franschhoek.

• 7 TOP WOMAN IN RECYCLING

This category recognises the importance of women in leadership, specifically within the recycling sectorin South Africa, and aims to grow the number of female role models in the sector for future leaders.

• 8 WASTE REDUCTION YOUTH WARRIOR

This category recognises the role of youth in driving positive recycling behaviour and contributingto the awareness and understanding amongst South African consumers of issues pertaining towaste reduction, reuse and recycling.

WINNERS:

Rocco Antonio Da Silva,The Future Kids ClubCape Town, Western Cape

Rocco Antonio da Silva is a young boy with abig vision and strong determination. His aim isto clean up the environment and protect oursea life. The 9-year-old has formed a club calledThe Future Kids, which aims to create awarenessonline and conduct monthly clean-ups atbeaches in the Western Cape. When asked whyhe wanted to start the Club, he said he was tiredof seeing litter on beaches.

More: www. thefuturekids.co.za/join-the-club/

Rocco's vision for The Future Kids Club isto create awareness about pollution and

recycling, and help the youth in his area getmore involved.

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Rotondwa Musitha,Trash ConvertersLouis Trichardt, Limpopo

Rotondwa (24) is a young, hardworking womanwho collects approximately 8 - 11 tonnes ofrecyclables per month. She currently has threeemployees. She works with several localbusinesses and many schools in the area.Rotondwa is creating a culture of recycling andmotivating people in the community to see theimportance of sorting and recycling their wastebefore it reaches the landfills.

Rotondwa is passionate about makinga difference to the environment and

the country that she resides in.

• 9 EXCELLENCE IN ACADEMIA

This category recognises the importance of having peer-reviewed research underpinning strategicinterventions into the broad areas of recycling, waste minimisation and sustainability.

WINNERS:

Dr Melanie Samson,University of the WitwatersrandJohannesburg, Gauteng

Melanie Samson has a holistic approach toconducting rigorous research that is designed tosupport waste pickers, contribute to policydevelopment and implementation, and developa new generation of black South African recyclingresearchers. She is currently completing the three-year research project funded by DST's Waste RDIRoadmap and DEA, which includes facilitating aparticipatory stakeholder process to developNational Guidelines on Waste Picker Integration.These Guidelines will be a powerful resource toassist industry, municipalities and waste pickersto work together to ensure that waste pickers arebetter integrated into and derive greater benefitfrom the recycling system and value chain.

Dr Melanie Samson has conducted research on waste,waste pickers and recycling for almost two decades, and

publishes papers in international academic journals.

• 10 MEDIA SPOTLIGHT

This category recognises a journalist or media personality that has made an outstanding contributionto the awareness and understanding amongst South African consumers of issues pertaining to wastereduction, reuse and recycling.

WINNER:

Wendy KnowlerCape Town, Western Cape

Award-winning consumer journalist WendyKnowler has helped shed light on the importanceof conscious consumption and recycling. Amongstother issues relating to and affecting everydayconsumers, Wendy has a balanced approach tothe plastics issue. She has a wide following andgives the consumer an honest perspective onplastics. Her article 'Plastic can be fantastic, if it'srecyclable' highlighted the value of PET whichshe was able to understand more fully afterproactively visiting Propet.

More: https://bit.ly/2LQiLSS

Wendy Knowler is one of South Africa's mostauthoritative and respected consumer journalists.

In her 30-year journalism career, Wendy has coveredpolitics, fashion and just about everything in between

on a variety of media platforms.

31

Takunda Chitaka,University of Cape TownCape Town, Western Cape

Takunda, a 4th year PhD student, is dedicatedto better understanding the nature of theproblem of plastics in our coastal environment,and how solutions based on the principles oflife-cycle management could be developed.She was nominated for her work on the natureof the plastics found on Cape Town beaches,which was published in an internationalscientific journal in 2019. Her work is focussedon bringing clarity to the public discussionand can help stakeholders develop evidence-based solutions.

Takunda Chitaka's research focusseson the nature of the plastics found onCape Town beaches, and has recently

been published in an internationallyrecognised scientific journal.

"John is renowned for his irrepressible enthusiasm. He is always keen to help with any initiativeto clean up the environment and is a great ambassador for the plastics industry in this timewhen single-use plastics are increasingly under scrutiny."

Professor Peter RyanDirector, FitzPatrick Institute of African Ornithology,DST-NRF Centre of Excellence, University of Cape Town

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The following individual has made a significant impact on waste management and minimisationin South Africa through his work and is worthy of being recognised and celebrated.

• CEO SPECIAL AWARD:

“If it had not been for John Kieser the African Marine Waste Network would not exist. It wasJohn's idea to develop a network; it was John who persuaded UNEP, government and industryto provide start-up funds; it was John who used the support of those attending a plastics debrisconference to “invite” Sustainable Seas Trust (SST) to develop and run the African Marine WasteNetwork. It was John who introduced the SST team to the people associated with the plasticsindustry who then guided the early direction and helped build momentum.”

Dr Anthony RibbinkCEO, Sustainable Seas Trust (SST) and the African Marine Waste Network (AMWN)

WINNER:

John Kieser,Environmental Manager, Plastics|SACape Town, Western Cape

John Kieser is the Environmental Manager forPlastics|SA for the coastal provinces. He receivedhis B Tech Degree in Conservation at theUniversity of Pretoria and, on return to SouthAfrica, he continued his work on islands,specialising in research of island ecology andmanagement. It is during the time spending onSouth African and Namibian offshore islands thatJohn's interest in marine debris pollution formed.

John has been the national coordinator for theInternational Coastal Cleanup since its inceptionin South Africa 19 years ago and has startedvarious projects to address the issue of marinedebris in his appointment with Plastics|SA.

John is a champion for recycling and wastemanagement in South Africa. ThroughPlastics|SA, he assists many people around thecountry with generous donations of bags, gloves,and sun hats, amongst other things; whateverthey need to ensure plastics and other wastematerials stay out of the environment wherethey do not belong. John truly embodies'Recycling in Action', and PETCO is very gratefulto him for his hard work.

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PETCO's primary objective in working withconsumers is to increase their access toaccurate information about PET recyclingwithin the South African context, and toincrease their knowledge of recycling and themechanisms by which they can participate inthe recycling process. By increasing their accessto knowledge and information, PETCO aims tomotivate increasing numbers of consumers toparticipate in collection and recycling behaviour.

Despite a comparatively small overall budget,the total AVE (Advertising Value Equivalent)for 1 January to 31 December 2018 was R48294 995, up on the previous year of R36 130033. Given that PETCO's budget for advertisingin 2018 was R3 384 500, this is a ROI of 1 427%.

• CONSUMER EDUCATION AND AWARENESS

PETCO's #Do1Thing campaign

The campaign, which ran for 18 months endingin Sept. 2018, was conceptualised through thelens of the United Nations SustainableDevelopment Goals, specifically Goal 12: Ensuresustainable consumption and productionpatterns. It specifically focuses on how oneperson can make a vital contribution to one ofthe gravest challenges of our time - throughrecycling. The campaign was structured to bemulti-faceted, with print, social media, radioand billboard components, and supported withintensive media buying and PR support.

See AV clip of the campaign here:https://youtu.be/6ze1UpQplmk

10%

10%

10%

3%3%4%

87%

83% 87

%

87%

14%

FUNDS RECEIVED

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FINANCIALINFORMATIONHIGHLIGHTSIn order to sustain and grow PET bottle collection, consistent demand for post-consumer PETis required. Recycling is a commodity business and, as such, is prone to significant cycles.

Unlike plastics, the steel, paper, glass andcardboard used in packaging are helpedenormously by the ability of the originalmanufacturers to recycle their own materialrecovered from the waste stream. Polymermanufacturers are unable to offer such a low-cost route because of the multiple variationsin grades of the different types of polymerproduced. Companies specifically set up forthis purpose therefore carry out the recycling.

In most cases, this leads to recyclate beingproduced, which then has to compete withthe highs and lows of virgin polymer pricesand other end-uses (specifically textiles withrecycled polyester content that compete withvirgin polyester staple fibre). It is great whenthese prices are high, but when they are low,recyclate often struggles to survive. Hence thePETCO financial model.

HOW WE UTILISED OUR FUNDS YEAR ON YEAR

LEVIES GRANTS OTHER

2017 20180

10

20

30

40

50

60

70

80

90

100

2017 20182017 2018

Financial statistics as percentages of Budget vs Actual, with previous year comparison:

3%

10%

2018

UTILISATION OF FUNDS RECEIVED*

35

EQUIPMENT,INFRASTRUCTURE

AND TRAINING

RECYCLINGPROJECTS SUBSIDY

SUPPORT

MARKETING,EDUCATION AND

AWARENESS

ADMINISTRATIONAND OPERATING

COSTS

0

10

20

30

40

50

60

70

80

90

100

2017 2018 2017 2017 2018 2017 2018

6%

5%

81%

56%

**

8%

15%

12%

85%

82%

9%

8%

13%

14%

6%

6%

* As percentage of income received.** This due to favourable market conditions, with the remainder carried

over to 2019 to reduce the amount of EPR fee members paid.*** 12% funded from retained income in 2017; 19% of funds retained in 2018.

37

There is now a pressing need for PETCO torepresent the entire PET sector, includingthermoform converters and the edible oilpackaging sector, as a vehicle for fulfilling theirExtended Producer Responsibility (EPR)obligations as per the South AfricanGovernment's Waste Act.

Thermoform packaging is an issue worldwide.Several reasons exist for this situation. The mostimportant of these relate to the difficulty indistinguishing the more recyclable PETthermoform products, from the harder-to-recycleones and from thermoform products made ofother polymers. Following the encouraging resultsof PETCO's pilot project into the recycling ofclear PET thermoforms, we are now working ona plan to incentivise collectors to collect thelightweight thermoform products that conformto our “Design for Recycling” guidelines and arecompatible with the current PET bottle-recyclinginfrastructure. We believe this project will play apivotal role in allowing PET thermoformedpackaging to be recycled in the most efficientway possible. We are developing a commercialmodel for supporting PET thermoform recyclingas the recycling of these thermoforms is the finalstage for closing the loop of PET recycling; wemust find solutions for increasing the recyclingrates, especially within the context of the newCircular Economy.

Minimising waste through design for recycling isan important aspect that deserves our continuedfocus going forward. Whether it's using morerPET in beverage bottles, ensuring that beveragebottles are 100% recyclable, reducing the amountof plastic in each container (light-weighting) ordeveloping plant-based resins. Examples includedesigning bottles that can be compressed easilyto take up less space in the recycle bin. Theseare some of the ways scientists and packagingbuyers are working with innovation labs,environmental experts and packaging suppliersto develop more sustainable options.

Improving collection rates is a more complexissue. It requires partnerships with industry,local and national authorities, as well aseducating consumers about recycling.Improving the recovery and recycling rates of

all packaging requires the collective will andcollaboration of everyone.

There remains an important gap in the area ofcollection and that is improving recycling ratesamongst households and residential areas.Education and awareness about littering andrecycling remains an important element inimproving collection rates. Other priorities wouldinclude ongoing awareness and information onPET recycling to shift public opinion and to ensurethat PET is not seen as a “single use plastic”.

Successful recycling models, such asindependent cooperat ives that havesuccessfully operated in Brazil, provide aroadmap not only for higher collection rates,but also economic empowerment. PETCOencourages a fairer position for micro-collectors,to allow for more equitable distribution ofprofits, and also provides training and enterprisedevelopment for SMMEs and cooperatives inthe recycling industry. Over the next 5 years,we estimate that the number of jobs in PETCO-supported pro jects wi l l grow f romapproximately 2 400 jobs in 2018 to 3 110 jobs,thus creating approximately 710 new jobs.Income opportunities are estimated to growby 75 000.

We also need to re-think how we can offer benefitsto the PET industry from a BEE point of view.

The availability of rPET is currently not able tosupply the demand for B2B food-grade polymer.We hope that this will improve going forwardwith additional capacity coming on stream.

Price dynamics for rPET will probably be thebiggest challenge for recyclers in 2019, withreturns expected to be less than the year before.Furthermore, there is a serious over-supply ofbottles domestically in SA and this could haveserious negative long-term implications if nothandled properly.

Without a doubt, there should be a concertedeffort to phase out all PVC bottles from the SouthAfrican packaging sector. This coupled with theon-going engagements on design for recyclingwill be critical.

36

WHERE TO FROM HERE?THE OUTLOOK FOR2019 AND BEYOND

LOOKING FORWARD

Industry must seize the opportunity while themedia spotlight remains squarely on plastics.Collaboration between business, industry andlocal government, together with consumereducation in urban and rural areas, is now vitalto improve the understanding of the challengesthe plastics recycling sector faces and to facilitatea proactive approach.

The task ahead of PETCO and its stakeholders isframed by meeting the requirements of the Section28 EPR legislation and the targets and programmes

outlined in the IndWMP. These requirements arebroad and challenging; however, PETCO hasdeveloped interventions for each point in the valuechain. Some of these are continuations of whatthe organisation has been doing for many years,some expand upon existing work, and others arecompletely new proposals. The full waste hierarchyis addressed, although PETCO's focus on end-of-life solutions for PET products is on recycling.This provides the best results in terms of landfilldiversion and job creation, at the lowest cost tobusiness and broader society.

While the debate around plastics continues to intensify, our priority going forward isto ensure that all end-of-life PET is monitored, reusing and recycling this valuableresource. The plastic recycling and supply chain now needs to work beyond its legalobligations to address environmental issues and achieve improved resource use.

It will be particularly gratifying to see PETCO'smembership and support continue to grow,with free riders who are currently notmembers of PETCO - yet benefit indirectlyfrom its work - joining, and broadermembership from the thermoform, edible oiland strapping related sectors.

The IndWMP takes its cue from the EllenMacArthur Foundation's global initiative, “TheNew Plastics Economy”, where every link in thechain is committed to working in partnershipto implement real change and develop end usemarkets for recycled materials in order toachieve a truly circular economy. On-going

commitment to local end-use marketdevelopment and greater partnership in R&Dand innovation is required to support advancedrecycling technologies.

DEA has given an indicative timeline of theapproval process, which currently includesimplementation in October 2019. Following thechange in Minister and the National Electionsin May 2019, we are likely to see a delay in thistimeframe. Questions remain as to howGovernment will handle the IndWMPs and theirroll-out and how this will impact on the PETCObudget, and on bringing free-riders into theEPR scheme.

SELECTION OF PETCO’S PET PLAN INTERVENTION

DESIGN CONSUMER MUNICIPALITIES WASTE PICKERS/INFORMAL SECTOR

SMALL / MED /LARGE COLLECTORS

RECYCLERS END USE

• Reduce• Design 4 Recycling• Labelling

• Educate• Motivate• Empower• Sep at Source

• Support• Comms• Infra• Sep at Source

• Uplift• Improve Income• Equipment• Training• Recognise Service• Sep at Source

• Equipment• Training• Sep at Source

• Demand Support• Black Industrialist

• New Markets• rPET Demand from

Producers

We are in the early stages of developing a modelto accredit or recognise brand owner productsthat carry the PET EPR fee, as a way of makingbrand owners self-aware that free riders exist.

PETCO is in the process of developing a BottleGrading System that can be used to rank PETbottles available in South Africa, according toboth their recyclability and their overallenvironmental impact.

The inaugural South African Design for RecyclingIndaba was hosted on 13 March 2019 as a part ofPropak Africa 2019. Spearheaded by the World-Wide Fund for Nature (WWF-SA) and SouthAfrican Plastics Recycling Organisation (SAPRO),this event grappled with the ins and outs ofdesign to facilitate recycling of plastic packaging,the importance of guidelines for design forrecycling, the role of retailers and brand ownersin driving demand for well-designed products,and the use of recyclate, as well as the need forcollaboration in the plastic value chain in workingtowards a new circular plastics economy.WWF-SA is co-developing a Plastics Pact inSouth Africa, with support from WRAP and theEMF. This Pact will include actions and targetsand will be monitored and measured to ensureaccountability. Themes that will be covered inthe Pact include collaborative workstreams (anda Data Alliance), business advice and engagementtechnical projects and citizen campaigns.

We recognise that South Africa has an importantrole to play in the regional and circular economiesof our southern African neighbours and, in somecases, further afield in Africa. Recycling is avolumes-based endeavour, and many countriesdo not have enough packaging consumed orcollected locally to make recycling viable. Thelong-term goal for each country should be tohave local beneficiation of products, but theinterim will require solutions from establishedrecycling economies such as South Africa's, wherevolumes already support recycling.

There is an urgent need for African countries toaddress current waste management challengesand to prepare for the expected growth in wastegeneration in the coming century. This will requiresocial and technological innovation, and

investment in services and infrastructure in thewaste and secondary resources sector, neverbefore seen in Africa. The African Union hasset an ambitious aspiration that “African citieswill be recycling at least 50% of the waste theygenerate by 2023”. PETCO Kenya has beenestablished and PETCO Ethiopia and Tanzaniawill hopefully follow. Africa needs to realisethe opportunity that secondary resourcesrepresent for the continent. Diverting wasteaway from dumpsites and landfills towardsreuse, recycling and recovery, could inject anadditional US$8 billion every year into theAfrican economy, and create significant socio-economic opportunities for the Continent.There is a call for an “African Regional Strategyfor Secondary Materials Management” to bedeveloped, implemented and resourced, withclear actions and goals for countries and cities.(Africa Waste Management Outlook: Summaryfor Decision-Makers).

What we know from experts like Dr MartynDavies, Managing Director of Emerging Marketsand Africa at Deloitte who spoke at the PropakConference in March 2019, is that we cannotpaint Africa with one brush. He said that SouthAfrica can learn from Ethiopia and Rwanda whoare the “best economically managed” countrieson the continent. This is because their statesare run efficiently, and they have also reducedor eliminated corruption. An interesting statisticmentioned by him is that if a country grows at7% per annum for 10 years, they are able doubletheir GDP. He explained the importance of havingeffective delivery, which drives growth and ofcreating conducive environments for businessesto thrive. Using Kenya as an example of a countrywith an economy driven by business and notresources, he said, “Make it easy for business,make it easy for capital. Encourage business,don't beat up on business.”

Will the PET industry be able to react to thewarning signs and obstacles facing oureconomy? What does the future look like andhow will South Africa recover? These are someof the many questions that we will need tograpple with if we are to transition towards acircular economy for plastic, in which plasticnever becomes waste.

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WHAT DO OUR STAKEHOLDERSTHINK ABOUT THE FUTURE?

"Addressing plastic waste in the environment and developing a circular economy of plasticsrequires the participation of all stakeholders across the entire value chain, includingconsumers, and the long-term commitment of businesses, governments, and communities.No one country, company or community can solve this on their own.”Gert Claasen,Technology and Innovation Executive, Safripol

“Collective action and partnerships between industry, governments and NGOs can deliverinnovative solutions to a global challenge like this. The issue of plastic waste is seen andfelt all over the world. It must be addressed, and we believe the time for action is now."Asyia Sheik-Ojwang,Head of Public Affairs, Communications and Sustainability for Southern Africa, Coca-Cola Africa (Pty) Ltd.

“Having been afforded the opportunity to talk about recycling on national radio, my businesshas received massive marketing; new recyclers have made contact with us. I wish tocongratulate PETCO for their endless support.”Nokubonga Mnyango,Uthando Recyclers

“We have a unique, time-limited opportunity to make a real difference. We are all (producers,brands, retailers and consumers) responsible for the effective management of plastic waste,and recycling is one of the legs that this management stands on.”Wessel Oelofse,Executive: Polyoak Packaging (Pty) Ltd.

“The award the Mula project received from PETCO [last year], has helped add credibility tothis community project. PETCO is a well-known name in the recycling world. Keep up thegood work!”Quinette Goosen,Mula Recycle Swop Shop

“The work being done by PETCO and the convertors to educate, motivate, facilitate andempower the collectors at grassroots level is invaluable as we continue to address thelegislative, economic, academic and ecological issues.”Vivian Subramoney,CEO, Da Run Fa Chemical Fibre (Pty) Ltd.

“PETCO is doing a wonderful job throughout the country by educating and assisting ourcommunities. I therefore congratulate and wish PETCO all the best in its future endeavours.”Tshepo Mazibuko,K1 Recycling

“Recognising that business innovation sits at the heart of economic transitions, a recentinvestment to manufacture PET strapping and monofilament exclusively from post-consumermaterial, marks an important step in reviving local manufacturing in a sector that has formany years been serviced almost exclusively by imports.”Professor Linda Godfrey,Principal Scientist, Waste for Development, CSIR

39

CELEBRATINGTHE PETCOPEOPLEIt's time, once again, to acknowledge andcelebrate the incredible people behindthis year's many accomplishments. Youwill find them all listed on the followingpages, but that hardly suffices to showour appreciation for the efforts, thecreativity and, most of all, the heart theyall put into sustaining and expanding ourpresence. May the coming year bring newcircular recycling partnerships, a morestable economic environment, recoveryand further growth.

• CEO - Cheri Scholtz

• Business Development Manager - Alistair Schorn (7 August 2015 - 31 January 2018)

• Recycling Manager - Pearl Molepo (start date: 1 May 2018)

• Collections and Training Manager - Belinda Booker

• Collections and Training Projects: Regional Representative - Tlou Sebola

• Stakeholder Relations Manager - Janine Osborne

• Marketing Officer - Kara Levy (start date: 1 June 2018)

• Financial Controller - Vicki Retief

• Johannesburg Office Administrator - Vainah Mbulo

• Strategic and Business Planning - Oscar Baruffa

PETCO STAFF

PETCO CONTRACTED RESOURCES

• Accounting and Financial Consultant - Martin Niebuhr

• Levy Manager - Annette Schell

• Auditors - BDO South Africa

40

CHERI SCHOLTZ ALISTAIR SCHORN

BELINDA BOOKER

TLOU SEBOLA JANINE OSBORNE

MARTIN NIEBUHR

VAINAH MBULO

ANNETTE SCHELL

OSCAR BARUFFA

PEARL MOLEPO

KARA LEVY VICKI RETIEF

PETCO BOARD OF DIRECTORS

Our directors serve a three-year term and are elected after being nominated by the industry sectors theyrepresent. They may avail themselves for re-election.

Our board are not remunerated and pay their own expenses to attend annual meetings.

42

Non-Executive Directors

• Casper Durandt,ChairmanFranchise Technical Director, Coca-Cola Africa (Pty) Ltd.;Representing: Brand Owners

• Tshidi Ramogase,Vice ChairmanPublic Affairs and Communications Director: Coca-Cola Beverages South Africa (CCBSA);Representing: Bottlers

• Gert Claasen,Technology and Innovation Executive, Safripol;Representing: Resin Producer (third and fourth quarters)

• David Drew,Chief Commercial Officer: ALPLA Trading SA (Pty) Ltd.;Representing: Converters

• Wessel Oelofse,Executive: Polyoak Packaging (Pty) Ltd.;Representing Converters

• Greg Morse,Manufacturing Director: Coca-Cola Peninsula Beverages;Representing: Bottlers

• Asyia Sheik-Ojwang,Head of Public Affairs, Communications and Sustainability for Southern Africa, Coca-Cola Africa (Pty) Ltd.;Representing: Brand Owners

• Waseem Jeenah,R&D Packaging Development Manager, Home Care Africa, Unilver South Africa;Representing: Brand Owners (third and fourth quarters)

• Kevin O'Brien,Group Risk and Sustainability Executive, The SPAR Group Ltd.;Representing: Retailers

• Lisa Ronquest-Ross,Head of Technology, Central, Woolworths;Representing: Retailers (first and second quarters)

• Feroz Koor,Head of Sustainability, Woolworths;Representing: Retailers (third and fourth quarters)

• Chandru Wadhwani,Joint Managing Director: Extrupet (Pty) Ltd.;Representing: Collectors / Recyclers

• Linda Godfrey,Principal Scientist: Waste for Development, CSIR.Board Appointment

12 Nioro Plastics13 Pick 'n Pay14 Polyoak Packaging Group15 Purpleline Plastics16 RPC Astrapak17 RPC Astrapak Thermopac18 Serioplast South Africa19 Split Line Manufacturers20 Tsitsikamma Crystal Spring Water21 Twizza (Azores Manufacturers)22 Woolworths Holdings

1 ALPLA Trading SA2 Bizee Corporation t/a ATA Agencies3 Bowler Plastics4 Coca Cola Beverages South Africa5 Coca-Cola Africa6 Coca-Cola Peninsula Beverages7 Safripol division of KAP Diversified Industrial8 Little Green Beverages9 Mpact Plastic Containers10 Nampak Liquid Packaging11 New Age Plastics

CONVERTERS BOTTLERS BRANDOWNERS

RESINPRODUCERS

RETAILERS

Voting Membership is reserved for companies who pay EPR fees and grants, and for whom shareholdingand voting is reserved.

At end-December 2018, therewere 22 Voting Members ofPETCO, following a numberof mergers:

PARTNERS AND MEMBERS

• Department of Environmental Affairs (DEA)• Department of Economic, Small Business Development, Tourism and Environmental Affairs Free State• Department of Science and Technology (DST)• Fair Trade Tourism• Institute of Waste Management SA (IWMSA)• Let's Do It! World• National Recycling Forum (NRF)• Packaging SA and its member Associations and Product Responsibility Organisations:

· Recycle Paper ZA, formerly known as Paper Recycling Association (PRASA)· Polyco· MetPak-SA· The Glass Recycling Company· South African Vinyls Association (SAVA)· Polystyrene Association of South Africa

• PlasticslSA• SA National Bottled Water Association (SANBWA)• Sustainable Seas Trust and The African Marine Waste Network• The Waste Minimisation and Recycling Interest Group of the IWMSA (WMRIG)• Western Cape Recycling Action Group (WCRAG)

VOTING MEMBERS

43

40% 25% 20% 10% 5%

44

PETCO Associate Members are companies, organisations and individuals who do not pay a recyclingfee and, as part of the PETCO family, prescribe to our values. The Membership is valid for a year andmust be renewed on a yearly basis.

As at 31 December 2018, there were 61 Associate Members:

1 Absolutely Pure Water2 Angels Resource Centre3 aQuelle4 Barnard Corporation5 Bonke Abantu General Maintenance6 Bophelo Recycling7 Boremako Recycling8 Cannibal Recycling9 Chill Beverages International10 Clean C11 ColorMatrix, PolyOne12 D+F Sales and Services13 Da Run Fa Chemical Fibre14 Devine Brand Solution15 Diageo SA16 EcoBrick Exchange17 Extrupet18 Green Cycle19 Green Edge Communications20 Greener Pastures Recycling Company21 Greenpop Tree Planting22 Greenvolution23 Henque Waste24 HL Distributors25 IV Liquid Fillers26 Kaytech27 Kimberley Recycling28 Krones Southern Africa29 Matongoni Recycling30 Menwana Enterprise31 Milliqua32 Mountain Falls33 Mpact Polymers34 Mpact Recycling35 Mpilenhe Trading Enterprise36 National Zoological Gardens of South Africa37 Oasis Association38 Oasis Water39 Okuhle Waste Management40 Packaging SA41 Polyco NPC42 Postwink Sales43 Propet SA44 Regenize45 Remade Recycling46 SANBWA (South African National Bottled Water Association)47 Sen Li Da Chemical Fibre48 Silwana Industries49 Sustainable Seas Trust50 Tacoma Foods51 The Tembisa Self-Help Association for the Disabled52 The Joinery Fashion Concepta t/a The Joinery53 The Waste Trade Company54 Theonista Products55 The Source56 The Uitenhage Recycling Mula Swop-shop Project57 Timele Greening Project Co-Op58 Unilever SA59 Uthando Solutions and Trading60 Water Institute of Southern Africa61 WESSA

ASSOCIATE MEMBERS

South Africa has one of the highestaudited PET Bottle recycling rates in theworld. PETCO grew purchases of bottlesfor recycling from 9 800 tonnes in 2005,to approximately 99 000 tonnes in 2018.This corresponds to bottle recycling ratesof 16% and 63% respectively. The localbeneficiation of postconsumer bottleshas grown and is a valuable driver of localjob creation. Only a small percentage ofpost-consumer bottles are exported forprocessing elsewhere, if any at all.

From one recycler in 2005 to six recyclers in2018, PETCO has supported the growth of therecycling industry, resulting in over R1.2 billionof infrastructure investment in PET recycling.Thousands of entrepreneurs have been trainedand hundreds of SMMEs are supported withpersonal protective equipment, scales, cages,trailers and baling machines. PETCO has workedwith countless municipalities, schools, local NGOs,international organisations and South Africangovernment officials, as well as other ProducerResponsibil ity Organisations, to makeinterventions across the value chain and over

LET'S TAKEA MINUTETO RECAP

the length and breadth of South Africa. Theseresults have been achieved through partnershipswith business large and small, organisationsand numerous individuals, making a tangiblepositive impact on the lives of South Africans,contributing significantly to the economy andminimising the impact of post-consumer PETon the environment.

PETCO is well-placed to continue deliveringresults in this next stage of South Africa'senvironmental legislation i.e. mandatory ExtendedProducer Responsibility for packaging products.

Phone 0860 147 738Email info@petco.co.zaWeb www.petco.co.za

@PETPlasticRecyclingSA

PETCO_SA

petco_sa

PETCO South Africa