Umincorp teetering on brink of bankruptcy

While it is no secret that the European plastics recycling market is struggling, this was once again brought forcibly home by the situation at Dutch recycler Umincorp.  For Umincorp, the future looks grim. The company, which last week requested and was granted a suspension of payment, has shut down the facility it opened in Rotterdam in 2022. It is currently keeping its Amsterdam plant running, hoping for a restart.

Umincorp has developed proprietary technology that enables it to process industrial and household plastic waste into high-grade recyclate and to achieve high levels of purity. Called Magnetic Density Separation (MDS), it involves separating plastics in the waste stream using a magnetic fluid - an approach that the company says doubles the recovery rate compared to traditional sorting and recycling technologies, at lower cost and with higher accuracy.

The problems facing Umincorp have more to do with economics, however, than with technology: virgin plastic raw materials are simply too cheap. And with the new production facilities that have recently come on stream in China and the US, there is a more than ample supply to meet current demand, which means prices are not likely to rise anytime soon.

Recycling companies are finding it increasingly difficult to compete. Umincorp is not the only one to have hit hard times. Veolia closed its PET recycling plant this winter in Germany due to erratic market conditions. The company was unable to conclude too few long-term contracts. The recycling capacity of that factory was approximately 36,000 tonnes of PET bottles per year.

The high cost of energy and recent pay raises have been contributing factors. In the Netherlands, steep wage increases were concluded through collective labour agreements, with wages increasing by 6,1 percent in the third quarter of 2023, compared to the same period in 2022.

Rules and laws are in the making to promote and increase the use of recycled materials. The Netherlands is seeking a mandatory use of a minimum percentage of recycled content in new plastic products and packaging, which will rise to 30% by 2030. That might just be several years too late for mechanical recyclers like Umincorp.