With an ever-growing demand for recycled-content packaging from consumer product brand owners, the world's largest PET maker is investing at least $1bn (€900m) to meet that upcoming need.
Indorama Ventures Public Co. Ltd. has established what it calls a separate vertical within the company's structure to combine all the company's recycling assets.
"And we've allocated a budget of $1bn (€900m) to recycling so that by 2025, when the brand owners want 25% content in packaging, ILV will be able to deliver," CEO Aloke Lohia said on a recent quarterly conference call. "IVL is the largest PET company in the world. So all the brand owners are talking to us on whether we understand the importance."
"They're wanting to keep PET as a main packaging choice. We also see more plastic packaging diverting towards PET packaging. So that is good news for us. We just have to ensure that we can deliver 25% recycling content," Lohia said.
Along with the $1bn (€900m) total mentioned on the conference call, the CEO told Reuters the company plans an additional $500m (€451m) investment to help its customers meet 25% recycled content rate.
News of Indorama's bigger push into recycling comes at a time when chemical and virgin resin companies increasingly look to get involved in that segment of the market.
Pressure from both governments and consumers are causing these large firms to take a more holistic view of market.
Indorama, just earlier this year, purchased a PET recycling facility in Athens, Alabama, from Custom Polymers PET LLC. That location has a capacity to reprocess about 34,000 tonnes of material each year. The acquisition joined existing Indorama recycling facilities in Mexico, Thailand and Europe.
The company viewed acquiring the Alabama site as a launching point for its deeper involvement in recycling.
Indorama is known as a virgin PET maker, but Lohia believes embracing recycling will not harm that portion of the business. That's because the move will increase the company's profile as demand for recycled-content packaging grows.
"It does not disrupt anything at the IVL front. Actually, it helps IVL gain more recognition and improve its profitability," he said on the conference call.
Lohia believes container deposit rules will "become much more viable globally" and increase the number of bottles collected for recycling. That will help push recycling rates higher and provide more material for new packaging.
Indorama, based in Bangkok, Thailand, makes both feedstocks for PET and PET resin itself. The company also makes fibres as well as packaging, including preforms, bottles and closures.
The company began in 1994 as the first worsted wool yarn producer in Thailand. That business, still operating, now is a niche for the plastics giant.
Indorama also recently announced the purchase of the chemical intermediates and surfactants of Huntsman Corp. in a $2bn (€1.8bn) deal.
The company expects to be "quiet" during the next 18 months — except for recycling assets — in terms of future acquisitions as it digests the Huntsman deal. "We'll be concentrating on M&As revolving the recycling space," Lohia said on the call.