UK recycler and waste management firm Viridor said it will pay around £90mn ($108.6mn) to acquire Norwegian chemical recycler Quantafuel.
Viridior said that Quantafuel's pyrolysis process for recycling mixed plastic waste is "explicitly designed to tackle plastic film waste", so it can contribute to the firm's commitment to deliver "full circularity in all four major plastics by 2025." LD/LLDPE film waste, one of the four major plastic types found in municipal waste, is recycled in lower proportions than rigid plastics, Viridor said, with less than 10pc of the 400,000 t/yr of plastic film waste placed on the UK market currently recycled.
The bid has been approved by the Quantafuel board, and Viridor said it will "provide additional capital to support Quantafuel's current development projects". This will include a 250mn kroner ($24.2mn) loan to ensure that Quantafuel has sufficient financing during the offer period, Quantafuel chief financial officer Christian Nilsen said.
Quantafuel operates a 20,000 t/yr pyrolysis unit in Skive, Denmark. All four lines were operational at the end of 2022, it reported, after it was redeveloped since the original start up in 2020. But the plant is yet to generate positive cashflow for a full month, Quantafuel said, with "overall up-time and consequently low production volumes" the main challenge.
Chief executive Lars Rosenlov said 548t of plastic waste were processed at Skive in January, or around 33pc of nameplate capacity.
The company plans to build pyrolysis plants in Dubai and in the UK. The early engineering study for the Dubai plant is nearly complete, it said, with the project continuing to look financially attractive despite a rise in expected necessary capital expenditure. It expects to make a final investment decision on the 80,000 t/yr plant in the second quarter of 2023. The UK plant, which would comprise a 110,000 t/yr sorting plant and an 80,000 t/yr pyrolysis unit, received planning permission last month and Quantafuel expects to begin construction later this year.
Quantafuel also operates a 20,000 t/yr mechanical recycling plant in Kristiansund, Norway, and is constructing a 160,000 t/yr sorting facility for mixed plastic waste in Esbjerg, Denmark, which it expects to enter operation in early 2024.
Desperate for capital
Quantafuel is "desperate" for financing, which it needed to secure by the middle of the second quarter to avoid running out of cash, its chief executive Lars Rosenlov said in a frank statement alongside the firm's fourth quarter 2022 results presentation on 28 February.
"The financial market conditions are not in favour of growth companies like ours, and our two main shareholders, KIRKBI and BASF, have confirmed that they are not willing to participate in an equity increase or debt financing", he said.
The firm had spent "significant time" identifying the correct option.
"Viridor is the only company that has come up with a realistic, long term solution for us". Quantafuel said Viridor's offer provides a solid strategic and financial fit, because the UK firm can provide "extensive waste management market experience and financial support".
Nilsen confirmed that the board, management team, BASF and KIRKBI had signed irrevocable pre-acceptances of the offer.
Waste management experience
Viridor's position as a waste management firm and operator of energy recovery facilities (ERFs) is likely to give it an advantage in sourcing plastic waste, otherwise destined for landfill or incineration, as feedstock for Quantafuel's facilities.
"This partnership… will help drive the decarbonisation of our ERFs by taking plastic wastes away from the non-recycled waste stream and enable us to grow the breadth of our plastic recycling offering", development director Richard Belfield said.
Feedstock availability is often cited as a probably challenge for the chemical recycling industry. Quantafuel recently started a joint-venture company, Polynate Circular Plastic Solutions, with Norwegian waste management firm Geminor, intended to provide feedstock to its various sites. Other chemical recycling firms have integrated upstream into waste management and sorting capacity, such as ExxonMobil and LyondellBasell with sorting firm Cyclyx in the US.
