Coca-Cola/Eco Plastics enter UK R-PET joint-venture

07 March 2011 17:31  [Source: ICIS news]

LONDON (ICIS)--Coca-Cola Enterprises has entered into a joint-venture with bottle recycling firm Eco Plastics to develop a new purpose-built recycling facility in Lincolnshire, in the UK, the company said on Monday.

The plant, to be built on Eco Plastics' current site, will increase the UK's recycled polyethylene terephthalate (R-PET) food grade pellet capacity from 35,000 tonne/year to 75,000 tonnes/year when it is fully operational, expected in 2012, Coca-Cola said, although an exact date for the start-up is yet to be confirmed.

Coca-Cola added that the plant would help the group achieve its sustainability target of 25% R-PET content in all its plastic packaging in the UK by 2012.

Coca-Cola is investing £5m (€5.8m, $8.2m) into the project, it said, while Eco Plastics is investing £10m to complete the funding.

R-PET producers said that the move was a clear signal by the bottling industry that Coca-Cola intends to aggressively enter the R-PET market.

“It will impact the wider European [R-PET] market. It sends a message that the big drinks players are dead serious about the bottle-to-bottle market,” a major flake manufacturer said.

The European R-PET market is structurally tight because of an increased emphasis on sustainability measures at large corporations. Low availability coupled with strong demand has led to record high prices across the R-PET grades, which have been in place for the last six weeks.

There were fears that the new reprocessing capacity would lead to a struggle between the bottling industry and traditional R-PET players over material. This could potentially lead to a price war, they added, as buyers outbid each other to secure volumes.

Players were also sceptical that the reprocessing capacity would help Coca-Cola in its sustainability objectives and said that the difficulty was in securing post-consumer bottles and not securing reprocessing facilities.

“It’s absolutely crazy to increase recycling processing facilities. The problem isn’t getting access to the recyclers, but to have access to the [post-consumer] bottles is the problem,” an R-PET flake buyer said.

Post-consumer bottles are reliant on curb side collection rates of used PET material. Although reprocessing capacities have increased in the past two year, collection rates have been mostly static, players said. They added that in order to improve collection rates, investment in recycling infrastructure was needed. UK collection rates are at around 40-45% of post-consumer PET, according to market estimates.

“Where will the material come from? The cost of collection will be enormous,” a flake producer said.

(£1 = $1.63, £1 = €1.16)

For more on R-PET visit ICIS chemical intelligence

By: Mark Victory
+44 208 652 3214

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