Integrated Green Energy Solutions Ltd (ASX:IGE) is turning a cost into a revenue stream following China’s ban on the importation of waste plastics.
The ban increases the supply of waste plastic in countries in which Integrated Green Energy Solutions (IGES) intends to operate its patented waste to fuels process.
Rather than paying up to $50 per tonne of waste plastics for us in its plants, the company now expects to receive income of between $20 and $50 per tonne.
Forecast EBITDA increase
This is expected to result in an annual forecast EBITDA increase for IGES of between $2.3 million and $3.3 million.
The company is a leading ASX gainer, up 17% to 37 cents intra-day.
IGES is focused on converting waste plastic destined for landfill or discarded into the environment into road-ready fuels using patented waste plastic to fuels process.
Solution to waste plastic problem
The company’s process is being seen by regulatory authorities as part of a solution to the problem of waste plastics, which has been exacerbated by the ban which came into force on January 1, 2018.
This scenario is evidenced by the Dutch government granting IGES a licence for a 100-tonne per day facility in Amsterdam, which is under construction.
These changed conditions have prompted IGES to revisit and renegotiate its plastics supply chain at the Amsterdam facility.
Feedstock for new plant
Subsidiary Bin 2 Barrel Amsterdam B.V. is now executing plastic feedstock contracts for the supply of waste plastic.
The contracts are designed to provide the first 100 tonnes per day feedstock requirements to support the plant start up and then increase to a maximum of 400 tonnes based on additional approvals.
The construction project is due to be completed and road-ready fuel is scheduled to be produced by November 22, 2018.
Waste plastic is piling up
Before the ban, Britain was sending China enough recyclables to fill up 10,000 Olympic-size swimming pools.
The US was exporting more than 13.2 million tons of scrap paper and 1.42 million tons of scrap plastics annually to China, which was America’s sixth-largest export to China.
Waste plastic is now piling up in both countries with similar back-ups reported in Canada, Ireland, Germany and several other European nations.