Issue
Is used oil 'de-mineralised' for the purposes of item 5 of the table in subregulation 4(1) of the Product Stewardship (Oil) Regulations 2000 (PSO Regulations) where metallic and non-metallic contaminants are removed only by a filtration process?
Decision
No. Used oil is not de-mineralised for the purposes of item 5 of the PSO Regulations (item 5) where metallic and non-metallic contaminants are removed only by a filtration process.
Facts
An entity uses oil in the operation of its plant and equipment.
After use the oil becomes contaminated with water, metallic and non-metallic substances.
The entity recycles some of the contaminated oil.
Under the recycling process the water is removed by distillation and the metallic and non-metallic substances are extracted by a filtration process.
Reasons for Decision
Section 9 of the Product Stewardship (Oil) Act 2000 (PSO Act) provides that an entity is entitled to a product stewardship (oil) benefit for the sale or consumption of recycled oil that the entity has recycled in Australia.
The amount of benefit is calculated in accordance with the table in subregulation 4(1) of the PSO Regulations.
Item 5 provides a benefit for recycled oils that are high grade industrial burning oils, that have been filtered, de-watered and de-mineralised.
Item 5 can be contrasted to item 6 of the table in subregulation 4(1) of the PSO Regulations (item 6) which provides a benefit for low grade industrial burning oils that have been filtered and dewatered.
The term 'de-mineralised' is not a defined term of the PSO Regulations. The Australian Oxford Dictionary , 2004, 2nd edn, Oxford University Press, Melbourne defines demineralise (sic) as 'remove salts from (sea water etc)'. In the context of waste oil recycling the Department of the Environment, Water, Heritage and the Arts describes (at www.oilrecycling.gov.au/what-happens.html) the processes involved in recycling oil and includes filtering and demineralisation. The description of filtering and demineralisation includes the following:
The purpose of filtering and demineralisation is to remove inorganic materials and certain additives from used oil to produce a cleaner burner fuel or feed for re-refining.
Used oil feedstock is transferred to a reaction tank (A) and mixed with a small quantity of sulphuric acid and heated to about 60oC. A chemical surface-active reagent, called a surfactant, is added to the reactor (A) and after stirring the mixture is allowed to stand. This allows the mixture to separate into two "phases" - i.e. oil and water-based or aqueous. The reagent causes the contaminants to accumulate in the aqueous phase, which settles to the bottom of the tank (A) and is drained off as slurry. This phase contains acid, used oil contaminants, including metals and some of the oil additives. The water is dried off, leaving a solid waste that must be disposed of.
The demineralised oil is filtered (B) to remove suspended fine particles (to solid waste) and run off to storage (C) as a clean burner fuel. It can be further diluted or "cut" with a lighter petroleum product (called cutter stock) to produce a range of intermediate to light fuel oils depending on the fuel viscosity requirements of the burner.
It can be seen from the above that the term 'de-mineralisation' has a particular meaning within the oil recycling industry. It can also be seen that in the PSO Regulations filtering and de-mineralising are considered to be different processes otherwise there would effectively be no difference between items 5 and item 6.
Where contaminants are removed from used oil only by filtering this does not constitute de-mineralisation for the purposes of item 5.
Therefore used oil is not de-mineralised for the purposes of item 5 where metallic and non-metallic contaminants are removed by a filtration process.