PP recycler PureCycle sees Ohio plant as springboard for growth

Ironton, Ohio — PureCycle Technologies Inc.'s years-long effort to commercialize solvent-based recycling technology for polypropylene is virtually complete.

And the company's CEO believes that lessons learned from the company's flagship Ironton facility will serve the company well as the firm looks to replicate locations elsewhere — both in the United States and internationally.

PureCycle's journey, from an idea patented by consumer products company Procter & Gamble Co. to a full-fledged production site in Ironton, has had its share of ups and downs. That's for sure.

CEO Dustin Olson readily admitted the realities of the last few years during an on-site interview. But he also believes production in Ironton will wipe away any long-standing questions about the viability of the company and serve as a springboard.

PureCycle uses a solvent-based technology to purify polypropylene, stripping away the fillers and additives and odors along the way to create a virgin-like resin branded Ultra-Pure Recycled, or UPR, plastic by the company.

To follow PureCycle is to understand the company has missed a series of promises to begin production over time. And Olson said that's on him.

"This has been a struggle. I'm not going to lie. I have underestimated the timing for this plant. Some of that ... I should have seen, some of it was out of the blue," Olson said.

"I always give the information to the best of my ability every time. Sometimes I'm right. Sometimes I'm wrong. On this project I would say I leaned on the overoptimistic, but then things happened that prevented us from achieving that," he said.

"There's no doubt that the original dates were hyper aggressive. I think everybody recognizes that. And we've been chasing it," he said. "I think that missing dates is not good. I've got to do a better job."

Delays included parts for an extruder being blown up in Ukraine due to Russia's invasion of that country as well as other more mundane supply chain issues. Olson also pointed to what he called minor engineering mistakes.

"You put all that together and you end up where we are. But at the end of the day, we're doing it the right way. I told everybody we're going as fast as we can to finish the project and then we are going to slow down on the startup. We're not going to rush through startup," he said.

"I'm not going to pressure people for pounds. We're going to do it the right way. We're going to learn through it. We're going to grow through it. We're going to develop through it and then we'll end up with a plan. And at the end of the day when we start making pellets and continue to grow little by little every day and we show what we can do all the noise of the past I think is going to go away," Olson said.

And there has been noise. PureCycle, in March 2021, became a publicly traded company and traded as high as $32.69 on its first day of trading. The stock soon took a hit when Hindenberg Research, which shorted the company's stock, issued a report questioning the company. These days, the stock is tradeing for around $7 per share, give or take, and has had a 52-week high of $10.95 and a 52-week low of $4.44.

Ironton is just the first of a handful of locations PureCycle hopes to develop in the years ahead. The company has its eyes set on Augusta, Ga.; Antwerp, Belgium; South Korea and Japan.

Plans for the Augusta plant are farthest along with the company indicating May 31 that the Augusta Economic Development Authority has approved the project to move forward on authority-owned land. PureCycle already has committed some $220 million to purchase equipment for the site that has an estimated price tag of $550 million to $650 million. "We've bought a majority of the long-lead equipment: all the extruders, all the equipment is purchased is on its way," Olson said.

Augusta's estimated cost compares to PureCycle's Ironton price tag of about $361 million, which ended up being about 50 percent higher than an earlier $241 million budget and far more than the $120 million estimate when PureCycle first unveiled plans in 2017.

While costing more, the Georgia location will have higher capacity to process more used PP and Olson believes the company will actually be able to construct that location more cost efficiently because of the lessons learned in Ohio.

"There is no question there are things we'll do differently for Augusta and Europe and SK (South Korea). Now that we can walk around and see the facility, we're going to make improvements. There's no question we'll be able take components of this operation out and replace it with something easier. And that's going to help our capex (capital expenditure) per pound a lot," Olson said.

"There's no doubt and I think it makes sense that this will be the most expensive plant we ever built," he said. "But going forward, we're going to have the capability to rally bring that cost down because of learnings from this facility.

"We believe that when we begin making pellets we'll eliminate the perceived tech risk and then it will come down to a just pure financial discussion about the project validity," Olson said. Production in Ironton also will provide the company with the ability to raise additional money to fund future sites, the CEO said.

Olson describes the PureCycle construction model as a "copy-paste" approach where future facilities will largely replicate what's been built in Ironton. PureCycle uses modular construction where portions of the Ironton plant were built at in Beaumont, Texas, before they were shipped and assembled in Ohio.

Continuing to use this modular approach will allow PureCycle to construct portions of the upcoming plants simultaneously in a controlled environment, a move that cuts costs compared with onsite work. "Doing it at one site creates synergy," Olson said.

"We are becoming experts in the solvent-based purification of plastics. We believe there's a really nice place in the long-term market for that because it's low cost, it's high yield and a very good carbon footprint and high quality. All of those things, in one form or another, beat the competition, so it puts us in the right spot," Olson said.

The company uses an alkane solvent to clean the PP, which is in liquid form and under pressure during the process. Olson declined to say exactly which solvent the company uses, but it has been widely reported to be butane. Solvent is being loaded into the system, PureCycle said May 30, one of the last steps before production can begin.

The Ironton site, on a portion of fa ormer Dow Inc. plant, is now fully staffed with some 75 workers. On a recent sunny day, the employees were attending to last-minute details as the plant prepared for production.

Adjacent to the PureCycle plant is a separate Americas Styrenics LLC polystyrene plant that also is on former Dow grounds. PureCycle built the commercial scale PP recycling facility from scratch as well as an enclosed pilot plant that served to prove the P&G concept. The company was able to utilize some former Dow buildings on site, saving some money along the way.

The Ironton site includes space to store incoming used PP as well as a separate prep facility that features both a dry and wet processing. Rigids are typically sent through wet processing and flexible are densified and prepared on the dry side.

PureCycle has been storing used PP on site in both silos and in super sacks on the ground in preparation for production. The CEO estimated, in the recent interview, there was probably about 3.5 million pounds of used PP awaiting a new life.

With an expected annual capacity of about 107 million pounds, that's about two or three weeks of feedstock once the facility is running around the clock.

PureCycle picked the Ironton location due to its proximity to the nearby Ohio River, which leads to the Mississippi and the world, Olson explained. And despite missing earlier projected start dates, the CEO maintained PureCycle's construction project still is faring better than other COVID-19 era projects that have been delayed much longer. The company, when first announced in 2017 by former CEO Mike Otworth had hoped to be operational by 2020.

"We've got a feedstock story that's really good, a landfill and incineration diversion story that is really good," Olson said. "Not only is PureCycle something that the recycling community that can get behind, I think that this is such a positive good news story that the country can get behind it. There's enough hard out there, enough hate out there, enough noise out there that it's good to get behind something that feels good. And I think that PureCycle is that story."