$PCT is building the first chemical recycling plant for polypropylene plastic (which is ~30% of the world's plastic and which is recycled at ~1% rate). Their representation is their recycling process is game-changing as far as quality / cost.
High-risk business as they are pre-revenue w/ burn and debt. I'm also way outside my comfort zone with this company / industry.
Contact is director of R&D at Estee Lauder. Was pretty positive on PCT.
Highlights
-Got sample from most recent batch production at PCT. The output is basically identical to virgin plastic (95-98% there).
-The PCT product is orders of magnitude better than mechanically recycled product. Mechanical has so many issues that can only be 1-5% of new products. PCT could easily be 30% (and maybe 100% but for being cautious to make sure no product failures in the field).
-Contact needs to see 5-6 more production runs to compare output and make sure quality is consistent / improving, and then can purchase.
-Thinks PCT can sell at 100% premium to virgin [I’ll discount that].
-Not seeing anyone close to PCT at this point within chemical recycling.
-Could take some time to scale purchases as want to evaluate multiple batches to confirm quality
Notes
Background
-Director at EL for past 12 years for all personal care including packaging, materials, designs, specifications, sourcing and sustainability.
History
-Evaluated them starting in 2021 / 2022
-Most personal care / beauty care companies that are prestige started buying subscriptions for recycled plastics
-Supply managers are concerned that there will be a mad stampede for sustainable plastics once available so need to set contracts up in advance
-EL had ESG mission targets where wanted >50% of product / packaging to be sustainable and want this to be >90% over 5 years
-How close are you to this? Fairly close bc PCT is leading vendor for chemical recycling
When was last sample and what do you think of where they are?
-Were looking at lab samples in 2021 / 2022 and output was identical
-Have received samples from large pilot / small production runs within last qtr – material is identical to virgin from chemical and mechanical performance
-Sent first lot of 20 kg last time from the 1m lb batch run so now in end-pilot / production runs right now – need to evaluate 3 different batch runs to get picture of whether process is reproducable
-For new tech, might want 5-6 lots to make sure all on-spec all the time
-Is it discolored? We put pigments / dyes in packaging so slight tint is not a major issue – think will be there within 1-2 years
-Room for improvement? Sure, but only a couple percent off from virgin. Can make products 30% made from this.
-Strategy is not to use 100% bc not there yet and not enough supply.
Mechanical recycling (old way)
-Issue 1: Can only use few percent of existing recycled plastic in product bc of residual impurities / contaminants (fillers, pigments, adhesives, etc.) in mechanically recycled plastic
-Chemical / mechanical properties are different – too soft
-Result is only can mix max of 5% w/ virgin
-Pellets are also inconsistent so every batch / lot is different. Have to pilot each batch and adjust process (temperature, etc.) to work w/ the recycled lot which is a major headache compared to just using virgin. Still need to adjust process even when using only 5% mechanically recycled process.
-If you used 30% mechanically recycled plastic today, high likelihood your product would fail in the field (cracks, discolors)
-Issue 2: Can only recycle plastic a few times before they degrade from heat / sunlight. That’s why plastic out in the sun for a while start to yellow from oxidation, then get brittle. This is just from the sun. Impossible to know how many times a lot has been recycled / what percent of a lot has been over recycled – have to test the lot and see if it fails tests.
-Soda industry harmonized specs for plastic so that all vendors can interchangeably use them (clear or green) – standardized plastizers, standardizers, pigments so that recycling plant can separate all soda bottles. Helps but doesn’t address that max 5 recycling limitation.
-“This is a miracle compared to mechanical”
Chemical recycling
-Dissolve the plastic w/ solvents, go through purification process which also removes degraded plastic which has been oxidized.
-PCT at 98% there and infinitely better than mechanically recycled material today. Even being 2-3% off from virgin is still far better than mechanical.
Usage
-Could probably use PCT for 100% of materials even if not 100% the same as virgin. But there isn’t enough supply for that anyways.
-Current strategy is to use recycled materials together to push recycled content as high as possible including biosourced (use other bacterial process to create the ethylene as opposed to petro)
Regulation
-In Europe if product has <1% recycled product, then must pay penalty
-Trying to get this up to 5%
Interest in compounded product?
-Don’t think they have the capability to blend right now
-We can do it ourselves
How long till you are ready to buy / use it?
-Would give them another 1-2 years
-After first 1m run, they are evaluating product output and process efficiency (solvent recovery, etc.). Going to take some time before next production run.
-Think that after another 2 years, will be able to sell material that is almost as good as virgin
-Why does it take 2 years and not 6 months? Have only 1 facility. Regulation (EPA seeing solvent recovery) that will watch scaling.
-Scaling to multiple facilities is also difficult.
When can they sell the 107m lb at Ironton?
-Once they do 2-3 more batches that are consistent, it is sellable bc this is order of magnitude better than mechanically recycled plastic
-80-90% confident they can sell what they are making right off the bat
-We are aiming to potentially use PCT at 20% or 30% of material
Pricing
-Virgin at index of 100
-Mechanical goes for 85-90, improved (sorted beverage bottles) is 100-105
-I asked whether he had seen 70c for virgin and 85-125c for mechanical? See 20-25% premium for recycled plastic w/ higher batch quality (more sortation, etc.)
-PCT will be 200 because is new tech, demand for it, significant value-add, premium for prestige brands (EL products are 80% GM products)
-WMT products for mass market (10% GM) would pay 120
-I asked if virgin is 70c, can PCT get 90-100c? Thinks they can probably get 140c.
Who else is doing this?
-PCT is leader in chemically recycled plastic.
-Only major player out there bc of patents.
-Some others break plastic down to chemical constituents and resell Napylene – but don’t get a plastic output; or break down plastic into other materials and sell these remainders
Minimum quantities to be produced?
-1m lb is decent size for small plastic manufacturer
-Need 10m lb to fulfill some customers 30% needs
How much would you need to incorporate 5% PCT
-50k / pounds would get us to 5-10% composition
-[Think he may have misspoken as maybe he meant 50m pounds, 50k seems far too low?]
-View is that then could see if we can go to 30%
-When will you buy? Need 5-6 production trial runs. Then can start buying it.
Anything else?
-Would pay attention to what they do w/ waste.
High-risk business as they are pre-revenue w/ burn and debt. I'm also way outside my comfort zone with this company / industry.
Contact is director of R&D at Estee Lauder. Was pretty positive on PCT.
Highlights
-Got sample from most recent batch production at PCT. The output is basically identical to virgin plastic (95-98% there).
-The PCT product is orders of magnitude better than mechanically recycled product. Mechanical has so many issues that can only be 1-5% of new products. PCT could easily be 30% (and maybe 100% but for being cautious to make sure no product failures in the field).
-Contact needs to see 5-6 more production runs to compare output and make sure quality is consistent / improving, and then can purchase.
-Thinks PCT can sell at 100% premium to virgin [I’ll discount that].
-Not seeing anyone close to PCT at this point within chemical recycling.
-Could take some time to scale purchases as want to evaluate multiple batches to confirm quality
Notes
Background
-Director at EL for past 12 years for all personal care including packaging, materials, designs, specifications, sourcing and sustainability.
History
-Evaluated them starting in 2021 / 2022
-Most personal care / beauty care companies that are prestige started buying subscriptions for recycled plastics
-Supply managers are concerned that there will be a mad stampede for sustainable plastics once available so need to set contracts up in advance
-EL had ESG mission targets where wanted >50% of product / packaging to be sustainable and want this to be >90% over 5 years
-How close are you to this? Fairly close bc PCT is leading vendor for chemical recycling
When was last sample and what do you think of where they are?
-Were looking at lab samples in 2021 / 2022 and output was identical
-Have received samples from large pilot / small production runs within last qtr – material is identical to virgin from chemical and mechanical performance
-Sent first lot of 20 kg last time from the 1m lb batch run so now in end-pilot / production runs right now – need to evaluate 3 different batch runs to get picture of whether process is reproducable
-For new tech, might want 5-6 lots to make sure all on-spec all the time
-Is it discolored? We put pigments / dyes in packaging so slight tint is not a major issue – think will be there within 1-2 years
-Room for improvement? Sure, but only a couple percent off from virgin. Can make products 30% made from this.
-Strategy is not to use 100% bc not there yet and not enough supply.
Mechanical recycling (old way)
-Issue 1: Can only use few percent of existing recycled plastic in product bc of residual impurities / contaminants (fillers, pigments, adhesives, etc.) in mechanically recycled plastic
-Chemical / mechanical properties are different – too soft
-Result is only can mix max of 5% w/ virgin
-Pellets are also inconsistent so every batch / lot is different. Have to pilot each batch and adjust process (temperature, etc.) to work w/ the recycled lot which is a major headache compared to just using virgin. Still need to adjust process even when using only 5% mechanically recycled process.
-If you used 30% mechanically recycled plastic today, high likelihood your product would fail in the field (cracks, discolors)
-Issue 2: Can only recycle plastic a few times before they degrade from heat / sunlight. That’s why plastic out in the sun for a while start to yellow from oxidation, then get brittle. This is just from the sun. Impossible to know how many times a lot has been recycled / what percent of a lot has been over recycled – have to test the lot and see if it fails tests.
-Soda industry harmonized specs for plastic so that all vendors can interchangeably use them (clear or green) – standardized plastizers, standardizers, pigments so that recycling plant can separate all soda bottles. Helps but doesn’t address that max 5 recycling limitation.
-“This is a miracle compared to mechanical”
Chemical recycling
-Dissolve the plastic w/ solvents, go through purification process which also removes degraded plastic which has been oxidized.
-PCT at 98% there and infinitely better than mechanically recycled material today. Even being 2-3% off from virgin is still far better than mechanical.
Usage
-Could probably use PCT for 100% of materials even if not 100% the same as virgin. But there isn’t enough supply for that anyways.
-Current strategy is to use recycled materials together to push recycled content as high as possible including biosourced (use other bacterial process to create the ethylene as opposed to petro)
Regulation
-In Europe if product has <1% recycled product, then must pay penalty
-Trying to get this up to 5%
Interest in compounded product?
-Don’t think they have the capability to blend right now
-We can do it ourselves
How long till you are ready to buy / use it?
-Would give them another 1-2 years
-After first 1m run, they are evaluating product output and process efficiency (solvent recovery, etc.). Going to take some time before next production run.
-Think that after another 2 years, will be able to sell material that is almost as good as virgin
-Why does it take 2 years and not 6 months? Have only 1 facility. Regulation (EPA seeing solvent recovery) that will watch scaling.
-Scaling to multiple facilities is also difficult.
When can they sell the 107m lb at Ironton?
-Once they do 2-3 more batches that are consistent, it is sellable bc this is order of magnitude better than mechanically recycled plastic
-80-90% confident they can sell what they are making right off the bat
-We are aiming to potentially use PCT at 20% or 30% of material
Pricing
-Virgin at index of 100
-Mechanical goes for 85-90, improved (sorted beverage bottles) is 100-105
-I asked whether he had seen 70c for virgin and 85-125c for mechanical? See 20-25% premium for recycled plastic w/ higher batch quality (more sortation, etc.)
-PCT will be 200 because is new tech, demand for it, significant value-add, premium for prestige brands (EL products are 80% GM products)
-WMT products for mass market (10% GM) would pay 120
-I asked if virgin is 70c, can PCT get 90-100c? Thinks they can probably get 140c.
Who else is doing this?
-PCT is leader in chemically recycled plastic.
-Only major player out there bc of patents.
-Some others break plastic down to chemical constituents and resell Napylene – but don’t get a plastic output; or break down plastic into other materials and sell these remainders
Minimum quantities to be produced?
-1m lb is decent size for small plastic manufacturer
-Need 10m lb to fulfill some customers 30% needs
How much would you need to incorporate 5% PCT
-50k / pounds would get us to 5-10% composition
-[Think he may have misspoken as maybe he meant 50m pounds, 50k seems far too low?]
-View is that then could see if we can go to 30%
-When will you buy? Need 5-6 production trial runs. Then can start buying it.
Anything else?
-Would pay attention to what they do w/ waste.
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