Coca-Cola Amatil Ltd. will start construction on a PET reprocessing plant within three months, the result of a decision to manufacture its own recycled-content PET bottles in Australia.
The firm is building a PET bottle preform manufacturing factory in Sydney, and is finalizing the purchase of a site for the reprocessing plant, also in Sydney.
Colin Whyte, environmental affairs manager for the Sydney-based firm, would not disclose the estimated cost of the two facilities, but said it was ``a multimillion-dollar investment.'' CCA is a subsidiary of Atlanta-based Coca-Cola Co.
Whyte said the factories mean CCA will be able to distribute its product throughout Australia in a broad range of recycled-content bottles. CCA currently buys recycled-content 1- and 11/4-liter bottles from outside suppliers.
The recycling plant will purchase post-consumer PET bottles from Australian recycling collection systems and convert them to resin.
Existing PET bottle suppliers, including ACI Petalite, a division of Continental PET Pacific Pty. Ltd., will be hit hard by CCA's decision, as contracts that expire next April will not be renewed.
Murray Hine, general manager of Melbourne-based Continental PET Pacific, said ACI will lose 75 percent of its business. Continental PET is a unit of BTR Nylex Ltd.
Hine will not say how much money ACI will lose. However, the Australian industry produces 1.4 billion recycled-content PET bottles a year and, of those, CCA buys about 75 percent from ACI Petalite and other suppliers, such as Adelaide-based Southcorp Holdings Ltd.
The ACI plants are using up inventory, and recycled resin production at the firm's factory in Wodonga, Australia, will plummet to 6.6 million pounds from 26.4 million pounds a year, Hine said.
In January, BTR Nylex formed Continental PET Pacific to achieve economies of scale in PET production, in the wake of CCA's decision, Hine said. The joint venture includes two Australian companies, one in New Zealand and two in China.
Although ACI will rely on increasing business from Melbourne-based soft drink manufacturer Cadbury-Schweppes Pty. Ltd. to shore up operations, the firm recognizes those volumes will not make up for lost CCA business, Hine said.
CCA will manufacture PET bottles using a minimum of 25 percent recycled material when it begins production next year, but it expects to boost that percentage in the future, Whyte said.
``We will increase that level over time because the technology we have developed will allow us to have a higher recycled content,'' he said. ``A lot will depend on the guaranteed supply of material.''
CCA already has raised recycled-material content from 25 percent to 40 percent in its multilayer bottle production, Whyte said.