BARCELONA (ICIS)--UK-headquartered chemical recycling group Plastic Energy plans to spend €300m to build 10 production units across Europe and Asia over the next two years as it ramps up production to around 240,000 tonnes/year.
The company – which already has two sites functioning at commercial scale in Spain – hopes to build the first of these new projects in Tenerife with completion scheduled for the third quarter of 2020. In December it signed a deal with SABIC to build a unit in the Netherlands expected to start up in 2021.
The plants can be configured to produce a variety of products including heavy fuel oil, diesel, and a naphtha-like product called Tacoil.Current Plastic Energy facility in Spain. Source: Plastic Energy
The initial focus for the other new sites will be Europe’s largest economies followed by expansion to southeast Asia, particularly Indonesia.
After the new plants are complete - each with capacity of 20,000-25,000 tonnes/year - the company will have 12 plants with a total production capacity of at least 240,000 tonnes/year.
Chemical recycling of plastics is an industry in its infancy and the company is keen to help create this new sector by locating the units in other countries.
Established in 2012, Plastic Energy was an early entrant into the chemical recycling of plastic. Its first commercial-scale plant started up late in 2016 at Almeria in Spain. In November 2017 the second unit began operations in an industrial park near Seville, also in Spain.
Investment in the first two plants totalled over €40m with more than €80m being spent so far on technology development.Carlos Monreal. Source: Plastic Energy
CEO Carlos Monreal (pictured) said: “Repsol is the only customer in Spain – they have been buying full production since 2015. Because the capex is so high you can’t go into this without a partner to buy the offtake.”
The 10 planned plants will cost around €30m to construct and have similar characteristics and operations to the existing units. They process mixed domestic household waste plastic which cannot be mechanically recycled.
Plastic Energy receives mixed municipal waste and initially uses a mechanical process to remove some contaminants such as paper, carton and glass. After isolating mixed plastic of any colour and type the temperature is raised close to 300 degrees Celsius to gasify the material.
“We distil to generate the final product depending on what the customer wants. Pyrolysis by itself will only produce a very heavy oil with a low market value. We use four technologies – sorting, pyrolysis, cracking of hydrocarbon chains and distillation,” said Monreal.
The units can be configured to produce Tacoil which can be used as a cracker feedstock.
“The challenge is that each customer has different requirements and it’s a very lengthy process to get validation. Another cut we get is diesel but we try to minimise that in Europe,” said the CEO.
He explained that in Europe the company may receive a gate fee from councils to take the municipal waste. Here, the only other options are landfill or incineration and they have a cost. He does not expect to receive a gate fee in developing markets.
Plastic Energy’s third plant, in Tenerife, will be located outside the island’s landfill site. The company plans to make a decision on using an EU contractor to construct the plant in April, possibly UK once there is more clarity about the Brexit process.
Monreal wants the production from the unit to be kept and used on the island rather than exported. “A petrochemical plant will be the offtaker and we are having two different discussions with a decision before June this year. Working on an island has different characteristics - we want to keep the output on the island, that’s why we are having two different discussions.”
Plastic Energy is still not turning a profit but Monreal hopes to break even this year. He is the main shareholder and together with other individual shareholders has invested close to €100m in the company since its inception. Debt gearing is currently less than 7% of the €100m, according to Monreal.
A mixture of debt and equity from existing shareholders plus potentially a new institutional investor will be used to finance the €300m required for the company’s expansion plans over the next two years.
“We are not clear yet on the best partner - we could partner with a chemical company but there would be limitations as there are very few companies with global reach. If we can avoid anyone within the value chain to be a shareholder we will. Somebody independent would be best,” said Monreal.
Click here to see regulatory targets and a list of chemical and mechanical recyclers on the ICIS Circular Economy topic page.
Interview article by Will Beacham