NOVA Chemicals will provide financing to Merlin Plastics to help the reclaimer produce food-contact recycled HDPE. Then, NOVA will buy up to 30 million pounds of the PCR per year.
NOVA, a Calgary, Alberta-headquartered virgin plastics giant, announced the deal with Merlin Plastics on Sept. 1. Based in British Columbia, Merlin has recycling facilities in that province and in Alberta, and its parent company, Merlin Group, has stakes in recycling facilities in Ontario, Oregon and California.
The agreement marks NOVA’s first foray into buying PCR and offering it for sale to its customers. According to a Q&A document provided by NOVA, the company is currently negotiating PCR purchasing with other reclaimers, in addition to Merlin. NOVA intends to offer post-consumer HDPE, LDPE and LLDPE for sale to its customers in commercial quantities beginning next year.
“This partnership with Merlin and our forthcoming suite of PCR-containing resins will help meet our customer and brand owner needs and expand high-quality PCR supply for use in consumer packaging,” Luis Sierra, president and CEO of NOVA Chemicals, stated in a press release.
Merlin Plastics, Canada’s largest plastics recycling company, operates a plastics processing facility in Delta, B.C., which is near Vancouver. The Delta plant produces non-food-contact recycled HDPE, LDPE, LLDPE and PP, as well as RPET covered by an FDA letter of no objection (LNO) for use in food and drink packaging
NOVA will provide financing for a multi-million-dollar equipment project to boost Merlin’s capabilities in Delta so it can produce recycled HDPE that will be able to obtain an FDA letter, according to NOVA. Details of the financial arrangement were not disclosed.
Cleaning and decontamination equipment is needed to produce PCR that can achieve an LNO. The letters assure plastics converters that the FDA is convinced the recycling technology can reduce plastics contaminants to 0.5 parts per billion or less in food or drink packaging.
According to NOVA’s Q&A document, the company anticipates Merlin will obtain an LNO during the first half of 2021.
In exchange for providing the financing, NOVA will have rights to secure a supply of food-grade HDPE PCR from Merlin for the next five years, according to the Q&A document. The agreement stipulates NOVA can purchase up to 30 million pounds annually, but the company plans to ramp up to that annualized rate over several years.
A number of other global chemical companies are already selling recycled plastic to their customers. Earlier this year, Dow Chemical announced an agreement to purchase recycled PE pellets from reclaimer Avangard Innovative.
Other virgin plastics companies have outright acquired plastics reclaimers so they can offer PCR to their customers. As recent examples, Indorama Ventures acquired California PET reclaimer Green Fiber International in December 2019 and Alabama-based PET recycling facility Custom Polymers PET in January 2019. In February 2019, DAK Americas acquired Perpetual Recycling Solutions’ PET recycling facility in Indiana. DAK is now spending tens of millions of dollars to upgrade that plant to provide food-grade RPET. And in June 2019, Far Eastern New Century bought Ohio-based PET reclaimer Phoenix Technologies.
In its recent Q&A document, NOVA stated it is not actively pursuing the opportunity to purchase any existing reclaimers and is, instead, looking at off-take agreements with North American PCR producers.
