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LUDWIGSHAFEN, GERMANY—German chemical giant BASF AG of Ludwigshafen is negotiating a licensing agreement for its plastics recycling technology with Veba Öl AG, a subsidiary of German firm Veba AG.

The discussions are aimed at establishing whether Veba Öl, which already recycles post-consumer plastics at a plant at Polttrop, Germany, can benefit from using BASF expertise.

News of the talks coincides with BASF's decision to close its trial 30.5 million pound-per-year feedstock recycling plant at Ludwigshafen.

BASF announced that its work on the trial plant is complete, and that the company decided against going to the next stage, a full-scale recycling plant of at least 330 million pounds per year.

According to a BASF spokesman, the firm found it would cost about $450 million to build a commercial-scale plant, but the company would have a difficult time sourcing sufficient waste feedstock to supply the operation.

According to the spokesman, negotiations between BASF and Veba Öl have been under way for several months. He said BASF is not seeking a full partnership but wants to license its technology.

The Veba Öl plant has a capacity of about 176 million pounds per year.