PetStar rises to launch world's largest food-grade recycling plant

By: Stephen Downer

August 6, 2014

TOLUCA, MEXICO — From bankrupt tableware importer and distributor to the creator of the world’s largest food-grade recycling plant, it’s been an incredible 20-year ride for Jaime Cámara Creixell.

In an interview with Plastics News, the CEO of PetStar SAPI de CV, which he founded in 2006, spoke of his struggles to find financial backing for the enterprise, suffering a number of disappointments along the way.

Now a passionate recycler and environmentalist, he also expressed concern about oxo biodegradable companies’ claims that plastic materials biodegrade totally. Products sold by such companies are “not compatible with recycling,” he said.

PET recycling in Mexico is a success story, Cámara, 51, said, “and I have been fortunate to have been a part of that success.”

Cámara said 60 percent of all PET bottles sold in Mexico are recovered and recycled. In the United States, the PET recycling rate is 31 percent.

“In the conservation of the environment, I can have an influence and that has become some sort of personal mission,” he said.

In late July, Cámara received Mexico President Enrique Peña Nieto at the facility, which is 40 miles west of Mexico City. Peña Nieto was there to officially open PetStar’s second stage.

The first stage opened in 2009 and produced 40 million pounds of food-grade material a year. The enlarged plant, in which $100 million-plus has been invested to date ($60 million in the first stage and $40 million in the second), produces 130 million pounds of recycled food-grade PET annually.

The plant receives 160 million pounds of used bottles per year from its subsidiary Avangard México SA de CV. Cámara founded Avangard Mexico in 1996. It employs 800 and PetStar 300.

The recycling plant sends 100 million pounds of PET a year to the System of Coca-Cola Bottlers in Mexico, which bought PetStar in 2011. The remaining 30 million pounds of multi-colored PET is sold to outside firms.

PetStar sends only clear or blue material to PetStar’s stakeholders. These are: Arca Continental SAB de CV, the second largest Coca-Cola bottler in Latin America, which has a 49.9 percent stake, Embotelladora Bepensa SA de CV (10.06 percent), Corporacion del Fuerte SA de CV (5.04 percent), Corporacion Rica SA de CV (2.20 percent), Embotelladora del Nayar SA de CV (1.84 percent) and Embotelladora de Colima SA de CV (0.96 percent). Coca-Cola Mexico’s stake is 30 percent.

Coca-Cola FEMSA SAB de CV, one of the world’s largest bottlers of Coca-Cola products, was invited but declined to buy a stake in PetStar as it was already receiving recycled PET from another source, Cámara explained.

About half of the $100 million investment has been spent on technology, the executive said. PetStar has two Amut SpA washing lines. Extrusion and polycondensation technology comes from Bühler Holding AG of Uzwil, Switzerland, and Extricom GmbH of Lauffen, Germany. PetStar has nine storage and 10 process silos.

Cámara said he co-designed the extremely clean 50-acre complex, which operates around the clock. It uses five megawatts of electricity and will start employing wind energy in January. PetStar’s system of collection, recycling, sales and education is unique, Cámara said. “There’s a whole communication concept behind it … because we want to encourage awareness, which is key to the success of recycling.”

The Avangard part of the business operates eight collection plants across Mexico and employs 24,000 freelance waste scavengers, known as pepenadores.

The education side comprises a museum, auditorium and off-site education programs. In the town of Chimalhuacan, for example, PetStar pays for primary- and secondary-level schooling and daily meals for the 240 children of some of its scavengers.

Back from ruin

In December 1994, the Mexican government devalued the peso, triggering an economic crisis that ruined Cámara’s flourishing tableware import business, leaving 80 employees out of work.

He turned to an uncle, Ramón Creixell, owner of Avangard Industries in Houston, for help. Avangard traded in plastic scrap. Creixell invited his nephew to join the business.

“It was a time when PET was very hot,” Cámara said. “There was not enough installed capacity to meet demand, and recycling, mainly in the U.S., was booming.”

The sales side in the U.S. was handled by Creixell and his son, Arturo, and in Mexico by Cámara and Juan Carlos, his brother. “We grew very fast. We became the largest collector of post-consumer plastic in Latin America. But then we learned the hard way.”

The price of PET collapsed from 35 cents to three cents a pound. Cámara and his brother diversified by collecting high density polyethylene bottles before the Asian financial crisis struck in the late 1990s and that market collapsed also.

Cámara and his closest associates toyed with the idea of recycling PET for fiber before Cámara was offered the presidency of Aprepet AC, a Mexican organization that promotes the use of PET bottles and encourages recycling.

There he met Jordi Zinder Mundet, a leading light in Anprac AC, the Mexican soft drinks industry association. With encouragement from Zinder, he and his team produced recycled PET that has been approved for food-grade applications in the United States and Europe.

“By 2002,” said Cámara, “I knew what we had to do: promote education, lobby legislators and start collecting PET bottles [again]. The price of PET was very low and nobody was collecting it.”

At the same time, Mexican President Vicente Fox was putting pressure on the soft drinks industry to clear up the mess left by discarded PET bottles across the country.

In 2002, advised by Cámara and colleague Jorge Treviño, the industry launched Ecoce AC (Ecología y Compromiso Empresarial), a non-profit association that promotes recycling and education programs. Treviño is still Ecoce’s manager today.

Cámara was Aprepet’s president for two years. Giving up the job, he turned his attention to launching his own PET recycling company, whose original name was EcoStar, and started looking for investors.

His Uncle Ramón died in 2005 and he went into partnership with waste management company Promotora Ambiental SA (Pasa), of Monterrey, Mexico, creating PetStar in 2006.

Letters of intent were signed with PepsiCo Inc. and Groupe Danone’s Bonafont water brand for the supply of recycled PET. Funding for the PetStar facility was provided by the World Bank. The plant was finished in 2009.

But it took Pepsi and Danone/Bonafont almost a year to approve of PetStar’s food-grade material and PetStar ran out of cash.

“In 2010, we started selling to Danone and Pepsi but it was too late,” he said.

Thanks to the efforts of Arca CEO Francisco (Pancho) Garza, Coca-Cola agreed to buy material from PetStar in 2010.

“But we didn’t have much material to sell them and we still had cash flow problems,” Cámara said.

That same year Pasa withdrew its stake in PetStar. Cámara began looking for a suitable buyer of the company and the best offer he received was from Arca.

Coca-Cola insisted Arca buy the entire company and the deal went through in October 2011, after which Arca brought in investment from other Coca-Cola bottlers.

Cámara paid tribute to family, friends, business partners and others for their support and said he’s been lucky. Seven or eight of the people who worked with him importing tableware either still work with him or have just retired from PetStar. Edmundo Escobar, PetStar’s plant manager, retired last year while Jaime Gómez is Vangard’s director in Mexico.

PepsiCo and Danone’s contracts with PetStar expire at the end of 2014.