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Innovative new technology for creating value from mixed waste plastic

Periodic Reporting for period 1 - mixedplasticvalue (Innovative new technology for creating value from mixed waste plastic)

Reporting period: 2015-07-01 to 2015-12-31

Impact Laboratories Ltd have undertaken a six month study of the European plastics recycling market. The purpose of the feasibility study was to identify the possible need and possible market for a new plastic separation technology which will enable the EU to meet the recycling targets set by the European Commission. In addition to meeting these goals, the study sought to identify who would pay for the technology and the appetite of the industry to the technology.

The technology developed by Impact Laboratories Ltd is designed to separate mixed polyolefin (PO) plastic material (Polypropylene and Polyethylene). In a Deloitte report published in 2015, titled “Increased EU Plastics Recycling targets”, it was concluded that the cost of the European Union was €750/tonne for a specialised facility to recycle PP and PE (page 37). The European union produces 25.8MT of waste plastics each year, with a typical waste plastic made up of 60% PP & PE, resulting in a possible economic cost of €3,000,000,000 (billion) to the EU. The revenue from the material generated is estimated at €2.3 billion Euro, and there is therefore a net cost to the EU of €700,000,000.

Our technology, BOSS (Baffled Oscillation Separation System) is a low cost solution for separating the mixed PO material, which has the potential to reduce the cost to the EU to just €750,000,000, resulting in a NET economic benefit to the EU of €1.6 billion Euro.

During the course of the feasibility study, Impact Laboratories Ltd spoke to a total of just under 100 recyclers, equipment manufacturers and agents throughout the European supply chain. The study explored the market size and cost of recycling plastics in Europe and compared this to the available literature and reports published on plastic recycling. The study further looked into the challenges affecting plastics recyclers, and how these could be mitigated with the technology developed by Impact.
Our study concluded that there was currently an estimated 3800 plastic recyclers across the EU. Western European countries had a higher proportion of plastic recycler, than when compared to Eastern Europe. Based on the European Commission plastic recycling targets, around 12,000 European plastic recyclers will be required by 2025.

We found that there were two distinct types of recyclers across the European Union, and this was consistent across the European Supply chain, however with a different ratio of recycler types in different EU states. The first type of recycler identified was an independent recycler. These independent recyclers were highly specialised in a particular type of plastic, buying, or collecting plastic from distinct sources. They would remove a certain ‘value’ from the waste plastic, and sell the remaining plastic onto a 2nd processor. The 2nd processor would then remove their value and pass onto a 3rd. There could be many different layers in the chain as value was removed. In all cases these processors would then sell the ‘value’ plastic to a compounder, who would pelletise the plastic before selling onto a manufacturer. This complicated supply chain was heavily interwoven and highly specialised.

In central Europe, we found the minority of recyclers followed this supply chain, whereas in Northern, Eastern and Southern Europe this was the most common type of supply chain. This supply chain however created numerous issues when introducing a new technology, which we studied in depth.

The first of these was a fear of supply chain disruption. It was considered that our technology was ‘disruptive’ and a key consideration before purchasing was the question “what happens when my supplier buys this?”. There was a real fear from these recyclers that the ‘value’ would already be taken out of the material before it was sold to them by someone further up the value chain. This would render their business obsolete.

The 2nd concern was the ability to sell the volume of material created. Their demand was purely driven by the compounders, who, in turn, were lead by market manufacturing demand. As such, a large, sudden increase in the availability of recycled material is unlikely to be felt immediately by the manufacturers. This would lead to an oversupply into the compounders, who would reduce the price they pay for the recycled plastic. There is therefore likely to be a ‘disruptive’ period while prices and supply/demand stabilise. In the long run it was discovered that this ‘over supply’ would lead to recyclers taking lower value plastic, which currently goes to landfill, and extracting the value from this. The NET affect was a lower cost feedstock for plastic manufacturers in Europe, and a reduction on plastic going to landfill. However, it would take a period of 6 – 12 months for the supply chains to balance themselves, and therefore incentives would have to be offered to convince these recyclers in the interim period.

Coupled with the supply chain issues, these recyclers were highly secretive about their processes, and it would be unlikely they would advertise their use of a new technology (which they would want to keep to themselves). This would therefore make promoting the technology more difficult, and uptake slower.

The 2nd type of recycler, most common in central Europe, was a ‘vertically integrated’ recycler. This is a recycler who was taking a plastic waste stream from source, either from a post industrial or post consumer stream. This recycler therefore had a secure supply of plastic, and was not susceptible to someone further up the supply chain purchasing new technology. The recycler would remove all the value from the plastic (all that is commercially viable) and discard the rest (usually for EFW). The value plastic was then either moulded into a new product, or more commonly pelletised or compounded. This pellet was then made available to local
The result of the feasibility study is that Impact Laboratories Ltd have created a 24 month forward plan to commercialise the baffled oscillation technology throughout the EU. Our study concluded that the technology was of benefit to all regions within the EU and our project plan has taken this into account.

We will mitigate the risks that the recyclers feel they face by proving the technology commercially in a number of commercial demonstration plants throughout the European Union, working with recyclers who we have built relationships with during this phase 1 feasibility study. As a result of these demonstration plants, Impact Laboratories Ltd will be able to generate substantial revenue, while creating 76 jobs for every 5 units working within the European Union. The technology will help the EU meet the goals of the Horizon 2020 programme by significantly reducing plastic to landfill, while helping the EU bridge the ‘cost’ gap between recycling and the revenue realised. Not only does our technology help make Europe greener, but it will help many recyclers get rich in the process. The technology will change the market place in the EU, changing recycling plastic from a ‘green’ activity only, to a green and profitable activity.