Boost for ailing UK plastics recycling industry, as East London facility to come back online
New London Mayor Sadiq Khan says that waste management company Veolia’s move to acquire the plastic recycling facility left mothballed by Euro Closed Loop is “good news for London and good news for the environment”.
The purchase of the Dagenham facility was announced today (4 July) by the waste management giant, which says that reopening the plant will boost the UK’s domestic recycling capability, create 30 permanent jobs and enable the reprocessing of around 200 million plastic milk bottles that it collects annually into high-value plastic pellets.
Initially the facility will be operating at approximately a third of its capacity. During this stage, the plant will be accepting high-density polyethylene (HDPE) bottles exclusively at the rate of 15,000 tonnes processed on input, whereas Closed Loop had a 55,000 tonne per annum capacity and employed more than 90 people.
Closed Loop’s closure
Euro Closed Loop Recycling was placed into administration in May, just a year after the company, in its original form as Closed Loop Recycling, was bought out of administration by a Dubai-based investment company.
Since 2008, Closed Loop had produced food-grade recycled polyethylene terephthalate (PET) and HDPE from plastic bottle waste at the Dagenham plant, making it the UK’s biggest producer of recycled plastic for milk bottles.
However, administrators were called into the company in April 2015 after ‘unprecedented challenges’ caused by the competition from overseas buyers and the drop in the price of oil made virgin plastics cheaper for manufacturers to use than recycled ones and the dairy industry reneged on voluntary commitments to use recycled material.
Euro Capital purchased the company in May 2015 and pledged an ‘ongoing investment programme’ but announced just two months later that it was ‘on the brink of closure’ due to ‘considerable difficulties regarding the continuing viability of the business’.
The owners had said that they had been unable to find a price for the recycled HDPE product that could compete with virgin plastics, which it said had become significantly cheaper to produce. In total, more than 90 members of staff were laid off and the Dagenham plant was mothballed while the company sought a new buyer for the plant.
Veolia looking at full supply chain
The acquisition means that Veolia now hopes to be able to offer services covering the collection of waste plastics to sorting and then to processing into food-grade pellets, which others can manufacture into new plastic products. Veolia says that the facility will produce around 10,000 tonnes of food-grade HDPE pellets every year.
Estelle Brachlianoff, Senior Executive Vice President at Veolia UK and Ireland, says that the plant will work in tandem with Veolia’s Rainham materials recovery facility (MRF), which will supply the feedstock for the plant. She said: “We are excited at mastering the full supply chain by moving into this type of manufacturing. We are very interested to collaborate in this space since cooperation with the manufacturing sector, the people actually making things from recovered materials, is essential in order to be successful for the long term.”
Recycling material to make a plastic bottle, it says, requires 75 per cent less energy than using virgin materials. Over the course of the year, therefore, Veolia estimates that the facility would save enough energy to power around 20,000 homes and save 10,000 tonnes of carbon emissions.
The question over how market forces will affect the viability of the business will continue to be asked after the two iterations of Closed Loop failed to overcome the cheaper cost of virgin materials.
Prior to going into administration, Closed Loop stated that if businesses would pay 0.1p more for each two-pint plastic milk bottle, it would secure the future of the company. The marginal increase in the price of milk was acceptable to a majority of respondents to YouGov poll, which found that 68 per cent of people would pay more for milk in recycled packaging. However, there had been little movement from the dairy and retail industries in reverting to recycled plastics.
Khan praises purchase of site
Commenting on Veolia’s purchase of the facility, Mayor of London Sadiq Khan said: “I am determined to redouble efforts to increase the amount London recycles so I am delighted that Veolia has purchased this important facility.
“This plant will be able to recycle all of the capital’s empty milk bottles – a mountain of waste that would otherwise have been sent to landfill. This is good news for London and good news for the environment.”