the p.e.t. company has the time for bottle-to-bottle ...burchamintl.com/papers/petpapers/pet...

The P.E.T. CompanyHas the time for bottle-to-bottle

recycling finally come of age?

The Packaging Conference 2008February 4-6,2008

MGM Grand Las Vegas

By Floyd D. FlexonPresident and CEOPlastic Environmental Technology LLC(The P.E.T. Company)

Has the time for bottle-to-bottlerecycling 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 Q1 2009• Phase II – additional 60 MM lbs annual capacity operational Q3 2010• 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

Modesto, CA

• The manufacturing footprint is modeled after the Amcor Packaging’s Beaune, France facility

• Beaune has been operational since Q3 2002• 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)

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

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

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 StateLegislatures 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

The U.S. PET Recycling Rate

Source: NAPCOR

U.S. PET Recycling Rate Compared to Europe

Source: NAPCOR, PCI

Municipal Solid Waste Generated in U.S.

Source: EPA

U.S. Recycling of Municipal Solid Waste

Source: EPA

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?

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 Q4 2007 was less than 75% of the total PET collected

Source: NAPCOR

• 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 bottle-to-bottle

The China Factor

The Modesto ReclamationPlant

Feeding the Wash Line

The Pre- Wash

Automatic Sort

Manual sort

Wet Grinding

Float/Sink and Washing

Flake Drying

Centrifuge

Second Flake Grinder

Water Filtering

Controls

Flake Silo Storage

PET Bottle-to-Bottle Technology

PET Flake from Wash Line

1. Ring Extruder

Silo

Melt decontamination

Solid state drying

Melt filtration

2. Pelletizing 3. Solid State Reactor

Finished Product

FDA Qualified PET Pellet

Crystallizing

Silo

Solid State Polymerization Reaction

Sortex Flake Sorting

30 | | | © Bühler

Ring Extruder

Minimise Hydrolysis

Minimise Degradation

Maximise Decontamination

Solid-state Degassing Melt-phase Degassing

B

Decontamination of PET Flakes

• 12 co-rotating, closely intermeshing screws

• The screws are positioned ina circle and are stationary

Advantages:

• More degassing efficiency• Higher throughput• More cost efficient• Better product quality• Shorter extruder length

Extricom system

The Buhler Ring Extruder

Extricom system

Ring Extruder

Ring Extruder

Direct Crystallization Process Steps

USG

UWG

Post-consumer PET meltafter extrusion

Post-consumer PET pellets after direct crystallization

Crystallization & Drying• Direct crystallization• Drying• Process gas : air

Granulation• Under water (UWG) or • Strand (USG)

• Low cost, continuous process

large energy reductionminimal space requirementspositioning in line with extrusion simple start-up and shut-down proceduresuninterrupted operation during extruder maintenancewith cold product.

• High product quality

tight temperature control homogeneous crystallizationminimal residence timenon-sticking crystalline structure on pellet surface

Superior Crystallization with Direct Crystallization

Post-consumer PET pelletsafter direct crystallization

Polycondensation• Roof type reactor

With integrated preheating zone• Process gas : N2

Cooling• Fluid-bed heat exchanger• Process gas : air

Food grade PET pellets

SSP Process Steps

NPU

Gas Purification• Removal of reaction

products and contaminants

Polycondensation• Increasing IV• Removing by-products• Process gas : N2

Cooling• Cooling after SSP process• Process gas : air

N2 make-up

H

H

SSP Gas Cleaning withScrubber

Gas Purification• Water Scrubber • Desiccant Bed• Filter

1 2 3 4 5 6 7 8 9 10 11 12

DI/D

O

DI/D

O

DI/D

O

DI/D

O

WinCC

Control System

The Basic Economics

Plastic Environmental Technology LLCThe P.E.T. Company

• 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