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Petstar PET Recycling Plant, Mexico




Key Data


Petstar is a division of the Houston-based recycling services company Avangard Innovative. It is located at the industrial park Parque Industrial San Cayetano, on the outskirts of Toluca city, the capital of Mexico state. The plant was officially commissioned in April 2009 after 14 months of construction. The estimated cost of the plant was $33.48m.

The new plant is built over an area of 250,000ft².  It has a large manufacturing space of 150,000ft² and was built to double its existing capacity. It began operating at 80% capacity and reached full capacity in June 2009.

The plant recycles 64 million pounds of PET into food-grade recycled PET resin which is sold to the domestic soft-drinks bottling industry. It is currently producing more than 48 million pounds of food-grade resin annually. It is also the largest bottle-to-bottle recycling plant in Latin America.

The recycling plant aims to improve the living conditions of children working in the waste landfills and to reduce the incidence of child labour in the Mexican waste sector. For this purpose, Petstar initiated a social responsibility programme to eradicate child labour and send these children to school. This is being done by reimbursing the families with their children's lost income which they would have earned had the children worked collecting waste bottles.

The plant employs 70 direct and 25,000 indirect workers across the supply chain in addition to expanding the collection activities of Avangard.

"The Toluca plant recycles 64 million pounds of PET into food-grade recycled PET resin which is sold to the domestic soft-drinks bottling industry."

Financing

The Petstar Toluca plant received a loan of $24.5m from International Financial Corporation (IFC), a division of the World Bank. Around $8.5m of A class loan and $5m subordinated C class loan were contributed by IFC. The remaining $11m was mobilised by IFC in the form of a syndicate loan from Canadian investment bank, Cordiant Capital.

IFC also provided advisory support towards the social responsibility programme.

Process

Petstar sources the bottles from the wholly owned subsidiary Avangard Mexico which started collecting PET bottles in 1995. The subsidiary is also the largest collector of post consumer and industrial plastics in Latin America. It collects PET bottles from over 1,300 suppliers. In 2006, it sourced 74,000t of PET.

The resin produced is similar to the virgin resin which enables easy moulding.

Sponsors and contractors

The project was sponsored by an environmental services company Promotora Ambiental SAB (PASA), which holds 55% of the Petstar shares. The remaining shares are held by the international capital advisory bank IMG Investments (12%) and the Petstar management (33%).

The first wash line was supplied by Amut North America. It opened in January 2009. The extrusion equipment was supplied by a Swiss firm named Buhler AG and was brought into operation in March 2009.

Benefits

Mexico is the world's second-largest consumer of PET bottles. A Mexican consumes an average of 61.8 gallons of bottled water a year resulting in a total of 750,000t of PET bottles. Only 17% of the collected bottles are recycled and the rest is exported to the US, India and China for the production of fibre.

"Petstar is currently trying out various methods to manage the increasing demand for recycled bottles."

The high volume of PET bottles and their non-biodegradable nature was causing a waste disposal problem throughout Mexico.

The plant has influenced a change in Mexico's waste management sector by converting the post consumer bottles into usable and valuable manufacturing input.

The Petstar plant has also set a benchmark for the private sector recycling business in Mexico by adopting an advanced recycling technology generally used in the developed countries.

By meeting the local product demand, it has replaced petroleum-based virgin materials and is also contributing to the state tax revenues.

Future

Petstar is currently trying out various methods to manage the increasing demand for recycled bottles. According to the company's estimates, the bottlers plan to make bottles with a 10-25% of recycled content.

The company is planning to invest a further $15m to add a second wash line and an extrusion line to increase the capacity to 88% by January 2011.

The Petstar recycling facility at Toluca in Mexico.
The Buhler ring extruder.
The Amut washing line.