In Pakistan the government has authorized setting up a plant to recycle old and torn copies of the Qur'aan.

Answer

It is haraam. It is sacrilege. When a kaafir disrespects and insults a copy of the Qur'aan, a futile hue and cry is created. But when Muslims themselves dishonour and insult the Qur'aan, then it becomes acceptable. Pakistan is an impure state. It is Napakistan, hence the commission of such a dastardly act of sacrilege. Torn and unusable copies of the Qur'aan Majeed have to be respectfully folded in cloth and buried. There is no shortage of space in Pakistan to bury the Qur'aans.