Without a revenue stream or a full-scale recycling plant, Itec Environmental Group Inc. has been a company marked mostly by curiosity during its seven-year history because of its exclusive rights to a proprietary technology that produces no toxic byproducts and uses no water to recycle plastic containers.
But all that changed last week. The Riverbank, Calif., company announced a deal with Waste Management Recycle America LLC to secure a substantial long-term supply of PET and high density polyethylene from the Houston-based company and to acquire WMRA's only two plastics processing plants.
``Those two facilities are state-of-the-art plastics separation facilities with new state-of-the-art sorting equipment,'' said an industry source.
The Chicago plant opened less than a year ago, and the Raleigh, N.C., facility opened three years ago.
Neither plant fit into the long-term strategy of WMRA, which announced in July that it intended to divest itself of businesses with revenues totaling $900 million that were nonstrategic or underperforming. WMRA recycled 5.8 million tons of waste in 2005, but only 229,000 pounds of plastics.
``The facilities are not a significant portion of our operations,'' said a company spokesman. ``We will continue to handle and sort plastics, but not process it'' if the deal is consummated.
Itec said it hopes to complete the deal by June 30.
The announcement comes just as Itec is set to start production this week at its first full-scale recycling plant in Riverbank. Previously, it had operated a research and development site in nearby Oakdale, Calif.
``We are testing our optical sorting equipment and expect to begin producing'' clean recycled flake and selling it at market prices by the end of April, said Chief Executive Officer Gary DeLaurentiis.
He said initial production will be 2,100 pounds per hour and he expects the plant to reach full capacity of 8,800 pounds by year's end. The site will be able to produce 65 million pounds of PET flake at full capacity. He said the plant will employ four 12-person crews that will work 12-hour days.
By contrast, he said Itec will ``pelletize everything'' at the two WMRA plants it plans to acquire, which he said have annual capacity of 90 million pounds each. However, one industry source suggested the capacity at the two WMRA plants is closer to 50 million pounds.
DeLaurentiis said Itec has invested close to $5 million in equipment for the Riverbank plant and the company will need to invest $15 million for equipment at each of the WMRA plants to enable them to use Itec's proprietary Eco2 technology.
He would not disclose terms of the agreement. DeLaurentiis said Itec has engaged Houston-based investment banking firm Sanders Morris Harris Inc. as its financial adviser and to secure financing for the acquisition.
Acquiring the facilities and securing a steady supply of mixed plastics from WMRA ``will allow us to expand much faster than we could if we were building plants on our own and trying to secure in the marketplace the amount of scrap'' needed to operate those facilities, he said.
DeLaurentiis said more expansion is planned for the future. ``We plan to build more plants around the country near where supplies are,'' he said. ``We can zoom through the permitting process'' because there are no ground water issues.
The Eco2 technology is a closed-loop system that Itec said removes all contaminants and odors from the finished flake. The company said it costs 30 percent less to operate its system than conventional systems. It first licensed the technology from Honeywell Federal Manufacturing and Technologies Inc. in 2000, and last year signed an exclusive deal for sole rights to the technology for the life of the patent.
Itec said its technology can be used to recycle motor oil bottles, including the residual oil, as well as HDPE and PET containers. The technology will work for containers that held pesticides, detergent, shampoo, bleach, milk, water and soft drinks, as well as 5-gallon paint buckets.