Republic Services, Ravago may build more plastics recycling centers

Indianapolis — Republic Services Inc. already plans to spend $500 million dollars to create a network of four plastics processing hubs around the country, but the company is considering an even deeper push into recycled resin.

The head of the Phoenix-based trash and recycling company is saying Republic Services could add an additional one or two processing hubs beyond the initial approach, depending on how the business unfolds.

"The reality is we could sell out the Polymer Center two or three times over like that," Republic CEO Jon Vander Ark said, snapping his fingers while standing in the company's new PET recycling facility in Indianapolis recently. "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 a fair price for it."

And that gives the company confidence about possible expansion beyond initial plans.

"There's certainly a case where we end up with five or six facilities [geographic hubs] because we're good at it. The market demands it, and if the market is there we will invest," Vander Ark said.

Republic Services has teamed up with Ravago to create a two-pronged approach to plastic recycling.

Current plans are to create four hubs around the country that feature plastic sortation and PET flake recycling operations in one building owned by Republic Services called a Polymer Center. A second nearby or adjacent operation jointly owned by Republic Services and Ravago Holdings America called Blue Polymers recycles high density polyethylene and polypropylene into pellets from containers separated out from PET at the Polymer Center.

Ravago has a majority 55 percent stake in Blue Polymers while Republic has a 45 percent position, Vander Ark explained. That is because Republic Services wanted to have plenty of skin in the game for that portion of the business but also wanted to lean on Ravago's expertise in recycling those resin streams.

Republic Services is taking a new approach to plastic collected from curbside collection. The company, historically, has performed initial separation at a network of about 80 material recovery facilities around the country. These MRFs are designed to separate plastics, paper and metal collected from customers, baling the materials before selling them off for further processing by different firms.

But Republic Services is spending hundreds of millions of dollars to get further into the plastics processing business by leveraging its steady stream of material collected at the curb. The Indianapolis locations — both the Polymer Center and Blue Polymers — cost a combined $180 million to construct.

"We're producing a world class [PET] flake. Resources are not going up, but population demand is. And so we're there to meet market demand. We think this is a perfect example of circularity in action," Vander Ark said.

"The business case was built predominantly on the back of what we collect," he said. "There's absolutely a case."

Plastics reprocessors typically rely on resin collected and sorted by others in what has been a segmented approach to recycling. But Republic Services is combining collection, sortation and reprocessing to create a new business model.

Having control of used plastics collected at curbside removes supply uncertainty from the equation, the CEO said.

Along with the Indianapolis operations, where the Polymer Center and Blue Polymers operations are in new buildings adjacent to one another, Republic Services previously opened a Polymer Center in Las Vegas. A Blue Polymers location currently is under construction in Buckeye, Ariz., to pair with that site.

Republic Services also has just closed on another site in the Northeast, but the company is not revealing that location just yet. Because of difficulty finding suitable land in that region of the company to site two large processing facilities, the Blue Polymers portion of the tandem will be located within a couple of miles or so of the Polymer Center. And the fourth geographic location in the initial plans, to come later, will be somewhere in the South.

The potential fifth or sixth geographic locations would be in other parts of the country as Republic Services is using what is known as a hub-and-spoke approach to feed plastics from multiple company MRFs into these centralized locations.

That is a business approach common for solid waste management companies, which collect trash and recyclables in many different municipalities and then route those materials to a singular landfill or MRF.

"One step at a time," Vander Ark said. "We're now setting the tone for the United States. We're doing something nobody has done. And as we do that, others will follow."