Ravago, Republic Services invest $180M in Indiana plastics recycling hub

Indianapolis — Locating a new $180 million plastics recycling complex in Indiana, Pete Keller said, just makes sense.

As vice president of recycling and sustainability for Republic Services Inc., the new location will be able to draw used residential plastics from a multi-state region not only from company-owned operations but also third parties.

"Good market for us. We've got a good presence here. Indiana is very business friendly, pro business. Just in terms of geography, this fit really nicely with our existing recycling infrastructure regionally, multi-state. There's a lot of manufacturing in Indiana. There's a lot of demand and outlets for material we will produce here," Keller said.

"And we found this parcel, it's a greenfield, we're able to collocate. We're on rail. It had all the requisite utilities. Everything fit together," he said.

The so-called spoke-and-hub strategy where multiple sites feed into a centralized location is a key element for Republic and partner Ravago Holdings Americas as the two firms build out a national network of complementary recycling facilities designed to reprocess PET, high density polyethylene and polypropylene.

Republic Services, widely known as a solid waste and recycling company, eventually wants to process north of 90 percent of all recycled plastics the company collects around the country instead of simply baling them and selling them off to other reprocessors.

The approach: Republic Services collects recycled plastics from residential customers, giving them an initial processing at their 80 or so material recovery facilities around the country where they are separated and baled.

Those bales then move to places like the company's new Polymer Center in Indianapolis, where PET containers are flaked, washed, and shipped off to end users. HDPE and PP are separated by type and color in Republic Services' building before then moving to a sister operation called Blue Polymers, a joint venture between Republic Services and Ravago, where those plastics are processed and compounded to make new recycled resin in pellet form.

Republic Services CEO Jon Vander Ark said his company is committing more than $500 million to plastics recycling.

Brand commitments, short supply and regulation are creating new opportunities, he said.

"All that comes together, and we had a thesis that the market is going to be short supplied and that price of this material is going to go up and not down. And that's what gave us confidence," he said.

"We brought people to the table. We had enough conversations with customers ahead of time, saying, 'Ok, brass tacks, will you pay?'

"And the reality is we could sell out the Polymer Center [capacity] two or three times over like that," he said while snapping his fingers. "That's how much demand there is. People want the product because it is world-class food grade flake. The demand is absolutely there. And we're getting certainly a fair price or it," Vander Ark said.

And there's another side of the project beyond the profit-and-loss statements, officials from both companies said.

"The vision is to make a difference in society. It really is. You have plastics as a bad tone in the public today. And it's not a bad thing. You can't do anything without plastics. Medical, it saves lives. It feeds people. It preserves food. It's really important in today's world globally," said Jim Duffy, president of Ravago Holdings America.

Republic is a minority partner in the Blue Polymers portion of the business model, owning 45 percent. But the company, known historically as a waste management firm, sees majority owner Ravago's expertise in handling and formulating polymers as a key to making that side of the partnership work, Keller said.

"We wanted to take a minority stake because we don't have expertise in pelletizing and blending and compounding. Our partners do," he said.

Ravago Holdings America is a unit of Luxembourg-based Ravago Group, which has a broad-based global business with more than 325 locations in 60 countries around the world, selling 7.8 million metric tons of polymers each year. The company known for distribution also has built an expertise in recycling and compounding with an annual capacity of nearly 1 million metric tons a year through 25 plants in North America, Europe, Asia and Africa.

Duffy called the opening of the Indianapolis facility "a pivotal moment not just in recycling but in the future of plastics circularity."

"Ravago's expertise in recycled manufacturing and our distribution network is enabling us to deliver sustainable solutions at scale," he said.

While the Polymer Center owned by Republic Services has been operational for a couple of months now, the adjacent Blue Polymers building at the complex is nearing completion, Keller said.

Keller said this new approach of handling recycled plastics from the curbside all the way through to processing — both flake and pellet — is unique to the business.

Duffy called the project a testament of how "two industry leaders can come together and drive real change, collaborating, innovating and transforming an industry."

Republic Services started evaluating the company's approach towards plastics recycling back in 2019 during a trip to Europe to examine new technologies. The company was repeatedly approached by people wanting to buy the firm's recycled plastic bales and send them across the Atlantic.

If companies could still make money shipping plastics thousands of miles to Europe, Republic decided to reexamine its approach that was challenged at times to make money shipping bales within the United States. And that's where the seeds of Republic Services' Polymer Center and the joint-venture Blue Polymers started to sprout. COVID-19 slowed down the process, but coming out of the pandemic, the two companies formulated a plan to blanket the United States with a network of four distinct geographic operations each containing the two interdependent sites.

Along with Indianapolis, Republic already is operating a Polymer Center to create PET flake in Las Vegas. A separate Blue Polymers site to handle HDPE and PP is under construction in Buckeye, Ariz., and is scheduled to open later this year.

Republic also just purchased a site in the Northeast, but firm is not quite ready to reveal the exact location just yet, Keller said. The Northeast, because of building density, presented some challenges in finding a large enough greenfield site with rail access. Because of these location obstacles, the Blue Polymers portion of the partnership will be located within a couple of miles but not adjacent to Republic Services' Polymer Center.

And while plans certainly are not finalized, the companies also are looking in the South for the fourth location, Keller said.

"The partnership conquers the challenges that have historically limited recycling: consistent supply, manufacturing expertise and capital, and an efficient distribution engine to reintroduce circular resin back into the supply chain," Duffy said.

This new approach creates "complete transparency for consumers, consumer packaging and everybody else involved," he said.

Republic is committing more than $500 million over time to build four polymer centers and pay for its minority stake in the Blue Polymers business.

"This is an investment in circularity. I would say historically the majority of what Republic Services has produced and sold into the market has gone into things like textiles and fabrics and construction materials," Keller said.

"We want to see that material be available for packaging manufacturing specifically. So we're thinking bottle-to-bottle and package-to-package. It's not that the market hasn't solved that in the past. It's just that we think we have a role to play on an integrated basis. And we saw an opportunity to bring material to market that historically has not existed," he said.

Vander Ark, the Republic Services CEO, agreed there is money to be made in sustainability.

"The market is there. The market is moving. People are paying for the material. We're producing a world class quality flake. Resources are not going up but population demand is. And so we're there to meet a market demand. We think this is a perfect example of circularity in action," Vander Ark said.