The P.E.T. Company Has the time for bottle-to-bottle recycling finally come of age?

Transcription

1 The P.E.T. Company Has the time for bottle-to-bottle recycling finally come of age? By Floyd D. Flexon President and CEO Plastic Environmental Technology LLC (The P.E.T. Company) The Packaging Conference 2008 February 4-6,2008 MGM Grand Las Vegas

2 Has the time for bottle-to-bottle recycling finally come of age? We certainly hope so, the P.E.T. Company is presently going forward to construct and operate the largest PET reclamation facility in the world -120 MM lbs of production output 100 MM lbs of finished product will be FDA qualified pellet Location: Modesto, California Why Modesto? A contracted supply of baled bottles from a collection source that is growing and a municipal power company with competitive electrical rates Phase I 60 MM lbs of annual capacity operational Q Phase II additional 60 MM lbs annual capacity operational Q Technology partners Amut (Italy) wash line Buhler ( Switzerland) extrusion, pellitizing, and solid stating Pellenc ( France) automatic bottle sorting Investment Partners Equity investment - Plainfield Asset Management LLC Debt Financing - Mizuho Bank, Ltd. $60 MM total investment

3 Modesto, CA The manufacturing footprint is modeled after the Amcor Packaging s Beaune, France facility Beaune has been operational since Q Beaune has exceeded all technology, manufacturing, and financial expectations The Modesto site is 10 acres in an industrial park built around a short haul railway A potential market of 500 MM lbs has been identified for which The P.E.T. Company will have a competitive freight cost advantage Modesto will be the low cost high quality producer based on economies of scale, state-of the-art technology, elimination of intra transport ( wash line, extrusion, and SSP all in one location)

4 Some Background When PET containers were first introduced in the late 1970 s, little consideration was given to recycling The 2 Liter PET package immediately took over from 64 oz. glass, growth was phenomenal Without any involvement from the PET bottle industry a market evolved that purchased deposit collected PET bottles Wellman, St. Jude, DuPont The formation of a trade association to address legislative issues was opposed by almost all of the PET industry NAPCOR was formed in 1987 only by the continuous pressure from soft drink companies There was a strong belief that the recycling issue was the problem of the beverage companies and that deposit laws were OK The industry believed it benefitted from deposit laws and natural market forces would take over

5 Some More Background Recycled Content Laws were passed in the late 1980 s on Newspapers Early recycling programs all collected newspapers The volatile market ONP crashed and collected newspapers were land-filled To create the needed market pull to get investment in high capital de-inking plants recycled content laws were a successful tool PET containers were attacked because they weren t recyclable and could not be made back into a PET bottle No market existed for non-deposit collected PET that would pay cash for collected PET Environmental groups and the glass industry claimed PET wasn't recyclable and couldn t be closed loop recycled Bottle-to-bottle recycled bottles (chemical recycling) were introduced by Coke in 1990, followed by Pepsi Mechanical closed loop PET recycling was qualified by FDA in 1994 (Johnson Controls) The PET Industry finally did get organized The Recycling Foundation formed at Rutgers University to develop PET recycling technology

6 Some Legislative Background During the 1980 s and 1990 s beverage container recycling was a significant issue on State legislative agendas. 9 deposit laws and 26 state recycling laws were enacted In a typical year over 400 pieces of legislation were introduced which could negatively impact PET packaging After the 1994 elections, the Republican revolution was a change not only the national scene, but also switched the majority of State Legislatures from Democratic to Republican. Introduction of packaging legislation dropped to single digits This was reversed in the 2006 election cycle with 29 of the 50 states now dominated by the Democrats. It is difficult to see what specific legislative issues might develop in the short term, but it does appear that environmental and climate change proposals will certainly have a higher priority than the past. The pendulum has swung One key metric is a package s recycling rate

7 Source: NAPCOR The U.S. PET Recycling Rate

8 U.S. PET Recycling Rate Compared to Europe Source: NAPCOR, PCI

9 Municipal Solid Waste Generated in U.S. Source: EPA

10 U.S. Recycling of Municipal Solid Waste Source: EPA

11 PET Environmental Benefits The most environmental effective option for all packing including PET is reducing the amount of package needed to deliver the same product The only other significant environmental option for PET packaging is to use recycled content For every pound of recycled PET that replaces a virgin pound of PET 67% of the energy and 60% of the Green House Gases are avoided This lower energy and GHG consumption to date has not resulted in a lower cost for food grade PCR The reasons: lack of scale, lack of up to date technology, no focus on bottle-to-bottle, lack of long term commitment Has this begun to change with the recent announcements from Coca- Cola?

12 The China factor In 2006 over 50% of the PET collected in the U.S. was exported to China According to NAPCOR U.S. reclamation capacity existing in Q was less than 75% of the total PET collected Source: NAPCOR

13 For the past ten years or more China has drive the price of post-consumer PET bales, specifically in California Chinese PET collection has taken off exceeding a recycling rate of 40% and volume exceeding the U.S. If stable fiber is growing at 3% and collection is growing at 20% worldwide at some point China will be saturated If China stops buying the only domestic market that can consume this volume is bottleto-bottle The China Factor

14 The Modesto Reclamation Plant

15 Feeding the Wash Line

16 The Pre- Wash

17 Automatic Sort

18

19 Manual sort

20 Wet Grinding

21 Float/Sink and Washing

22 Flake Drying

23 Centrifuge

24 Second Flake Grinder

25 Water Filtering

26 Controls

27 Flake Silo Storage

28 PET Bottle-to-Bottle Technology PET Flake from Wash Line Crystallizing Solid State Polymerization Reaction Solid state drying Melt decontamination Melt filtration S il o Silo 1. Ring Extruder 2. Pelletizing 3. Solid State Reactor Finished Product FDA Qualified PET Pellet

29 Sortex Flake Sorting

30 Decontamination of PET Flakes Maximise Decontamination Minimise Hydrolysis Minimise Degradation Solid-state Degassing Melt-phase Degassing B Ring Extruder 30 Bühler

31 The Buhler Ring Extruder 12 co-rotating, closely intermeshing screws The screws are positioned in a circle and are stationary Advantages: Extricom system More degassing efficiency Higher throughput More cost efficient Better product quality Shorter extruder length

32 Extricom system Ring Extruder

33 Ring Extruder

34 Direct Crystallization Process Steps Post-consumer PET melt after extrusion Granulation Under water (UWG) or Strand (USG) Crystallization & Drying Direct crystallization Drying Process gas : air USG UWG Post-consumer PET pellets after direct crystallization

35 Superior Crystallization with Direct Crystallization Low cost, continuous process large energy reduction minimal space requirements positioning in line with extrusion simple start-up and shut-down procedures uninterrupted operation during extruder maintenance with cold product. High product quality tight temperature control homogeneous crystallization minimal residence time non-sticking crystalline structure on pellet surface

36 SSP Process Steps Post-consumer PET pellets after direct crystallization NPU Polycondensation Roof type reactor With integrated preheating zone Process gas : N 2 Gas Purification Removal of reaction products and contaminants Cooling Fluid-bed heat exchanger Process gas : air Food grade PET pellets

37 SSP Gas Cleaning with Scrubber N 2 make-up H H Polycondensation Increasing IV Removing by-products Process gas : N 2 Gas Purification Water Scrubber Desiccant Bed Filter Cooling Cooling after SSP process Process gas : air

38 DI/DO DI/DO DI/DO DI/DO WinCC Control System

39 The Basic Economics

40 Together with our technology partners we are committed to be the low cost producer and high quality achiever Our product will run on any manufacturing platform and optimize any material handling system that uses virgin PET Our product represents many environmental benefits however we are depending plain economics to drive our business, our pricing is planned to be at parity or better than the domestic virgin price of PET Plastic Environmental Technology LLC The P.E.T. Company