Periodic Reporting for period 1 - PAPER-P (Unique technology to turn on-site paper waste from the printing industry into high-quality PHA bioplastic)
Reporting period: 2016-09-01 to 2016-11-30
PAPER-P will increase European production of PHA, which is <10% global production, and is in line with Bio-based economy principles, to replace unsustainable fossil-based by bio-based plastics, as PHA. PAPER-P intends to be a cross-sectorial technology that contribute to a cradle-to-cradle approach in line with the new EU Action Plan for Circular Economy and “Green economy”, helps to comply with EU recovery and recycling Directives, and the Landfill Directive (1999/31/EC/1999b) which sets a target 35% reduction of biodegradable waste; and promotes EU objectives related to sustainable consumption and production ('Roadmap to a Resource Efficient Europe' 2011).
The Paper-P process uses mixed bacterial cultures that produces PHA and are already present in industrial waste water treatments (WWT). We will focus on WWTPs of cheese manufactures due its sludge composition and simplicity of installation. Start selling WW-P is a strategic step to foster the following market introduction of Paper-P. Through Phase 2, we aim to: 1st) scale it up & validate a WW-P industrial plant of 1000m3/y, demonstrating target performances (TRL9). 2nd) scale up & validate Paper-P semi-industrial plant of 87,6 ton/y, 3rd) design a full-scale Paper-P plant, 4,000-ton/y. Paper-P will be launched into the EU market by mid-2019 in 5 target markets: Italy, Spain, UK, Germany and France.
BIO-PRO will increase its personnel in 8 employees, and its total sales projection will be worth €16,7M, and €1,5 M of net profit in the first 3 years’ commercialization. Paper-P profitability for Bio-pro its demonstrated with a 160% of ROI.
Main results: 1) Production and operation cost analysis: a detailed cost breakdown of Paper-P (4,000 ton/y) and WW-P plant (1,000m3/y): materials required for Paper-P (1,97M€) and WW-P plant (65,000), labor cost, installation cost, transportation, royalties (6%) and 4% of margin after general expenses during 1st year, the final selling price for first units will be 2,5M€ and 130,000€ respectively. 2) Key partners: a) University of Bologna as co-owner of Paper-P patent will receive royalties and will collaborate during ph2 execution, proving equipped laboratories for demo plants testing’s. b)Project partner: we have contacted several engineering companies that could be potential partners to develop extraction system of Paper-P, c)Softer, PHA compounder, that will test PHA samples of demo plants, d)Commercial partners: ESKO will cooperate for sales networking and distribution around Europe. Consortium Gran Terre, cheese manufacturer association, is interested in installing WW-P plants. We have received supporting letters form: PHA compounders (Gruppo Main Softer Group, Lati Industria Termoplastica and Gruppo Maip), retail and food sector companies (COOP, Loacker). And have preselected equipment’s providers, e.g.: BM srl for auger &pyrolizer, Sungen for dryers). 3) Market analysis & commercialization strategy: we will focus on 2 target markets: 1) WWTP of cheese manufacturers, as a quick & strategic approach to PHA market, 2) Large printers market. 4) Patentability study: we confirm a freedom to operate analysis and Intellectual Protection Strategy to protect technology and trademark, and extend Paper-P patent around Europe. 5) Financial plan: from a detailed 3 years sales forecast we estimate revenue of 16,7M€: 1) Paper-P sales (13,1M€) and WW-P sales (1,5M€), 2) PHA sales: Bio-pro will collect our customers’ PHA, and sell it in two dfferent ways: A) PHA from WW-P plants, we will manufactured as 3D wire, and then sold at 20€/kg (210,000 €); and B) PHA from Paper-P plants, will be sold for 6€/kg to PHA compounders (834,099 €). 3) After sales services (1,07M€) to maintain the efficiency of our technology, Paper-P (75,000€/year) and WW-P (13,000€/year). Paper-P offers economic benefits for end users, an average ROI=20% (considering market volatility), and mid-term ROI of 40% for recyclers.
Our 5 target countries account for 70%revenues of European printing industry, and 74% European cheese production. Paper-P launch will be in mi-2019, in our current market, Italy. Product commercialization in Spain, Germany, France and UK will be supported through ESKO customers network.
During our first 3 years of commercialization our objective is to sell a total of 6 Paper-P plants and 14 WW-P plants (14,6M€), provide after sales services (1,07M€), and sell produced PHA (13,1M€) either as 3D wire or PHA pellets to compounders. BIO-PROs turnover will rise first year of commercialization (mid-2019) 3,1M€, that will be 64 times higher than before ph2 project (2015-2016), when it was 47,500€/y. Thanks to Paper-P commercialization, Bio-Pro’s turnover will reach 7,85M€ in mid-2021, adding a total of 16,7M€ turnover after 3 years. Net profit during the first 3 years of commercialization will sum up 1,5M€, and will increase significantly reaching 1,4 M€ just within the 4th year. Paper-P profit margin will increase exponentially from 4% in 2019, 11% in 2021, up to 14% in the 4th year of commercialization. BIO-PRO profitability is measured and proven by ROI index, 160% (3rd year), and for a capital investor Paper-P will have a positive ROI=37%, in the 4th year. Our payback period will be short, 7 months, initial investment will be refund by the end of 2020 and let us foresee a positive cash flow on the second year of commercialization. Internal Rate of Return (IRR) calculated considering our cash flow value during first 3 years is IRR= 14%, however it will increase significantly in the 4th year, when we would obtain a IRR of 38% that shows that Paper-P is a highly lucrative business.
We expect to increase our personal in at least 8 people: 2 R&D technicians, 2 workmen, 2 proposer/ sellers, 2 administration.