INSIGHT: South and Central America markets need high-quality recycled plastics resin

HOUSTON (ICIS)–For decades, South and Central American markets have perceived recycled resins to be low-quality and low-price materials. But this is expected to change as both global and local brands set sustainability targets, which include, among others in the region, the use of high-quality recycled content in their packaging.

As demand for recyclates grows, investment is needed to strengthen supply. Overall, the recycling sector is still informal in South and Central America and waste pickers play an important role in the supply chain, which would benefit greatly from professionalisation and transparency.

The ICIS Recycling Supply Tracker (RST) records almost 200 recyclers in South and Central America with a combined installed capacity of nearly 1.5m tonnes/year of recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE), and recycled polypropylene (R-PP). The region includes 20 countries in which Brazil, Argentina, Colombia, Honduras, and Chile are among the top five.

The region’s average plant size is about 7,000 tonnes/year as over 90% of the players are small businesses with a capacity below 20,000 tonnes/year. Medium and large recyclers represent only 9%, as shown in the following chart.

Additionally, less than 30% of the recyclers are responsible for 70% of the total recycled capacity of the region.

Polyolefins represent over half the recycling capacity in South and Central America, although R-PET is the largest resin type alone with an annual capacity of over 600,000 tonnes.

R-PET is predominantly sourced from post-consumer waste while polyolefins come from slightly more post-industrial feedstock than post-consumer.

Although few recyclers in South and Central America have obtained a Letter of No Objection (LNO) from the United States Food and Drug Administration (FDA) for use of recycled plastics in food contact applications, most companies in the region follow the process of local agencies to get approval for food-contact. Examples of local agencies are the National Health Surveillance Agency (ANVISA) in Brazil, and the National Food and Drug Surveillance Institute (INVIMA) in Colombia. Almost 30% of the capacity identified in the RST in the region is capable of producing food-grade recycled polymers, the majority of which is post-consumer R-PET.

In the meantime, virgin resin producers have been taking the opportunity to expand portfolios into circular plastics while aiding to strengthen recyclates supply. The growing global trend is also becoming a reality in South and Central America:

Producer	Partner/ Recycler	Resin	Location	Capacity (tonnes/year)	Year
Alpek Polyester	Ecopek	R-PET	Argentina	16,000	2014
Indorama Ventures	AG Resinas	R-PET	Brazil	9,000	2020
Dow Chemicals	Boomera LAR	R-PE	Brazil		2020
Braskem	Valoren	R-PE, R-PP	Brazil	14,000	2021
Esenttia		R-PE, R-PP	Colombia	10,000

Besides resin producers, other stakeholders throughout the plastic value chain have been collaborating to address sustainability in a country level.

In April 2019, Chile was the first country in Latin America to join the Plastics Pact Global Network and the third country in the world, after England and France. The Chilean Plastics Pact is led by Fundación Chile and the Ministry of Environment, in alignment with the vision of the Global Commitment launched by the Ellen MacArthur Foundation. The Pact has four commitments by 2025:

1. Take action to eliminate plastic packaging and single-use utensils that are problematic or unnecessary by redesigning and innovating.
2. 100% of plastic containers and packaging must be designed to be recyclable, reusable, or compostable.
3. 1/3 of domestic and non-domestic plastic containers and packaging must be effectively recycled, reused, or composted.
4. Plastic containers and packaging must have among their different formats an average of 25% of recycled material.

Source: Chilean Plastics Pact

Chile is currently the only Latin American country that has joined the Plastics Pact Global Network but not for long, as Brazil also has plans to take part with a potential launch in 2021. Additionally, Brazil has other initiatives around the circular economy area.

Founded in 2018 by the Brazilian Plastic Industry Association (ABIPLAST), the Cooperation Network for Plastics (Rede de Cooperação para o Plástico in Portuguese) aims to involve all links in the extended plastic chain to facilitate dialogue and development of the circular economy.

Likewise, Exchange 4 Change Brasil is a global knowledge transfer network dedicated to influence the circular economy transition in Brazil. Its approach involves working together with international collaborators, sharing knowledge, and developing multi-stakeholder projects adapting global solutions to the Brazilian reality, cultural aspects, and country priorities.

From the regional perspective, the Latin America and the Caribbean Circular Economy Coalition was launched in February 2021. Its main objectives are to create a common and integrated regional vision and to be a knowledge sharing platform, while contributing to the transition to a circular economy and achievement of the Agenda 2030 and Paris Agreement. This is multi-stakeholder and multi-sectoral cooperation, and plastic circularity is among the topics prioritized in its first year. So far there are four countries directly involved in the Coalition: Colombia, Costa Rica, Dominican Republic, and Peru.

Despite all those efforts, the South and Central America region has still a long way to go, especially in terms of regulations and the role of governments.

Several municipalities in different countries have recently implemented plastic bans on single-use plastics without clearly guiding the industry and consumers on how to proceed.

Also, although most countries have their own solid waste policies, they either do not propose clear solutions to the current challenges or are often not well implemented.

Potential regulations on minimum recycled content or Extended Producer Responsibility (EPR) are still far from becoming a reality in the region.

Insight by Paula Leardini

ICIS has recently published an insight with a focus on North America regarding the need of investment to secure recyclates supply as demand grows in the region.