A long-awaited plastics recycling project in Pennsylvania is getting a major funding boost from the federal government.
It has been four years since International Recycling Group announced plans for a large-scale plastics recycling facility in Erie.
But the proposed project has been delayed due to financial issues.
That's now changed as the company received a conditional commitment of a $182.61 million loan guarantee from the U.S. Department of Energy Loans Program office. That will cover more than half of the estimated $300 million price tag for the project, according to IRG.
CEO Mitch Hecht admits the project has had its ups and downs over time but sees a clear pathway toward construction and production with the new loan guarantee.
"So even though it took us a very, very long time to get the project to the point where the funding was available and the funding was ready, I was always encouraged along the way personally to keep going because I never had any company look at this business plan and say, 'This won't work. This isn't the right approach,'" he said.
"I think the federal government has finally recognized that they need to step in to help move the needle on plastic recycling, so they made these funds available," Hecht said.
The scope of the project, over time, also has increased as organizers realized the need to include the entire plastic recycling process at a single location.
IRG originally planned to process PET, high density polyethylene and polypropylene flake from other recyclers to then create recycled resin pellets. But IRG, along the way, decided to instead take on the entire plastics recycling process at the facility. That involves receiving bales of used plastics that are then cleaned, flaked, extruded and cut into pellets. Those pellets are then used by processors to make new products.
The company has purchased land that formerly housed an International Paper mill in Erie and will construction new buildings to house the plastics recycling operation, Hecht said.
IRG expects to reprocess 160,000 tons of used mixed plastics each year to capture 100,000 tons of PET, HDPE and PP for reuse.
Other plastics will be diverted to a steel mill in Northwest Indiana where they will be used as a partial substitute for coke, a source of carbon needed in the steel-making process. Carbon in plastics allows for a decreased use of coke, made from coal, and lower greenhouse gas footprint.
The use of carbon in steelmaking is part of a so-called reduction process that eliminates oxygen and impurities from iron ore to allow for its transformation into steel. So the plastics recycler is branding this diverted waste plastic as "CleanRed" — short for reduction.
If IRG can put the rest of the funding in place by the end of this year, Hecht expects to break ground in early 2025 with construction expected to take 18-24 months. That means plastics recycling could begin by the end of 2026.
Securing the federal loan guarantee should make other investors more comfortable with the project, he said.
A portion of the DOE loan guarantee will be used to construct what is being called an injection system tower at the steel site in northwest Indiana, the federal government said.
A key to making the project financially viable is the diversion of unwanted mixed plastic away from the Erie location at little or no cost through the avoidance of disposal fees. "That dramatically overhauls the economics of mechanical recycling," he said. "You turn the economics on its head, and you can produce a very low cost PCR [post-consumer] pellet."
Hecht said he had the idea of bringing the use of waste plastics for steelmaking to the United States after seeing reports of the activity in Europe and Japan. He said steel producers in the United States have been reluctant to adopt the approach due to quality concerns and perceived risk.
But the process has been proven elsewhere, and IRG has partnered with one willing steelmaker to give the idea a shot in America. Hecht declined to reveal the identity of the steelmaker in a recent interview, citing a confidentiality agreement.
Using less coke in the process would reduce greenhouse gas emissions by 550,000 tons annually. Using CleanRed to replace 14 percent of the coke used at the steel mill's blast furnaces would cut GHG emissions by 24 percent, the company claimed.
IRG said building of the new recycling plant will create 334 construction jobs in Erie and 30 in Indiana to build a system to inject the plastics at the steelmaker's site in Indiana. Once operational, the two locations would employ 221.
Plastek Group, an Erie-based plastics processor and mold maker, as well as Erie Insurance Group were both early funders of the project when they invested $9 million in the project early on. They both remain involved, Hecht said.
