Public Companies in the Plastic Recycling Space
Dec 29, 2022
Dec 29, 2022
Plastic recycling, as it stands today, is woefully inadequate. The types and volumes of plastic are expanding rapidly, while the technology to recycle the material hasn’t changed much over the past 20 years or so. It is estimated that about 9% of plastic is recycled. Some of that could be attributed to consumer and business reluctance to recycle, but not much. It is also estimated that about 80% of plastics are not practically recyclable. In the United States, most facilities only accept plastic types 1 and 2, with maybe half accepting type 5. The other types are not getting recycled, at all.
There is a push to create a circular economy for plastics, driven by governments and consumer products companies alike. The potential for an adaptable, affordable, scalable recycling system is enormous. Here we will take a quick look at several public companies involved in the quest to maximize the recycling of plastics.
Aduro Clean Technologies
Aduro Clean Technologies Inc. (CSE: ACT) (OTCQB: ACTHF) (FSE: 9D50) is based in Ontario, Canada and has developed a patented water-based chemical recycling system based on its Hydrochemolytic™ platform technology. Aduro’s system has proven (on a small scale) capable of processing a broad range of plastic feedstocks. These include polyethylene (plastic #s 1, 2, and 4), polypropylene (plastic #5), and polystyrene (plastic #6, or styrofoam). Aduro has completed assembly of its R2 plastics reactor, designed as a customer engagement unit to demonstrate the technology’s capabilities and to further refine its ability to handle highly contaminated versions of these plastics.
The R2 unit is a predecessor to the R3 unit scheduled for completion in 2023. R3 is a small commercial scale pilot project and will serve as the official start of Aduro’s commercialization stage. Aduro is also working with Shell through its Shell GameChanger program, designed to boost development and commercialization of innovative technologies by sharing technical and business expertise, and funding, with earlier stage companies. Aduro is concurrently commercializing its technology in the oil refining industry as it is capable of turning heavy tar-like bitumen into lighter, more valuable and easily transportable forms of oil. Aduro stock currently trades around $0.67/share with a market capitalization of about $38 million. Its one year low was $0.40 on May 23, 2022, and its one year high was achieved on November 7, 2022 at $0.77.
Cielo Waste Solutions
Cielo Waste Solutions Corp. (TSXV: CMC) (OTCQB: CWSFF) is based in Alberta, Canada, and is developing an R&D facility there to prove its concept of turning garbage into diesel fuel and naphtha (an oil used for a variety of solvents). As recently as summer 2021, the company was touting its thermal catalytic depolymerization technology as a catch-all solution for all manner of waste, including all types of plastic, old tires, organic food waste, and newsprint. The plan was to build two new facilities to complement its initial demonstration unit, with many more to follow.
The stock reached a high of CN$1.55/share on July 11, 2021, equating to a market capitalization in the neighborhood of CN$790 million, following a precipitous six month rise. By the end of the year it was trading around CN$0.20 and currently sits around CN$0.06. There have been major delays in the completion of the demonstration facility and the technology is still in the process of being proven on a pre-commercial scale. Cielo is now focused on wood biomass as its major feedstock, with hopes to move to railroad ties and organics in the coming year. The plastic recycling story has faded into the background, but may yet be resuscitated.
PureCycle Technologies, Inc. (NASDAQ: PCT) has licensed plastic recycling technology developed and owned by Procter & Gamble. The patented solvent-based purification technology is designed to transform polypropylene (plastic #5) waste into plastic that can be recycled and reused multiple times. The company’s initial purification plant, located in Ironton, Ohio, is scheduled to begin production in Q1 2023. A second facility planned for Augusta, Georgia is in the financing stage, and there is an agreement to build another facility in South Korea down the road.
The technology appears to be an improvement on current thermal processes used to recycle the plastic, and #5 plastic is currently recycled at very low rates while being the second-most widely produced plastic. There is hope here for a scalable and efficient process to boost #5 plastic recycling, though there is no mention of the technology’s ability to handle any other type of plastic. PureCycle is pre-revenue, with sales expected to be generated next year by its Ironton plant. The company is currently valued with a market capitalization of approximately $1.05 billion with a stock price of about $6.40. The stock hit a one year high of $10.63 on August 8, 2022 after recovering from its one year low of $5.39 on February 7, 2022.
As you can see, we are in the relatively early stages of introducing better plastic recycling technologies to the market. The valuations achieved by PureCycle and Cielo certainly speak to the need for and potential of improved plastic recycling solutions. Aduro hasn’t received that type of attention from the market as of yet. Private companies Licella Holdings and Mura Technology (somewhat related companies) have both received significant investments in their own recycling technologies. KBR recently committed $100 million to Mura (in addition to previous investment), and is now an 18.5% owner of the company. The presence of companies like Shell, Dow, Exxon, and KBR as partners in these plastic recycling technologies demonstrates the value of the efforts to develop and introduce them.
Investors are encouraged to keep an eye on the companies in this space, including the ones mentioned here, as they seek to commercialize innovative solutions to the global crisis of plastic pollution.