ResourceCo and Cleanaway open Wetherill Park PEF plant

The largest resource recovery and Processed Engineered Fuel (PEF) plant in Australia has been unveiled at Wetherill Park in Sydney.

Owned in a joint venture between resource recovery company ResourceCo and Cleanaway, the plant is licensed to receive up to 250,000 tonnes a year of dry commercial and industrial, and mixed construction and demolition waste, to recover commodities including metal, clean timber and inert materials, with the balance converted into PEF.

Over its lifetime, the plant is expected to abate more than four million tonnes of carbon emissions.

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Cleanaway’s customer base and waste supply in NSW will help drive volume to the facility to divert waste from landfill.

PEF is used as a substitute for fossil fuels in both domestic and offshore markets in the production of cement.

The plant will supply Boral, Australia’s largest construction material company, with PEF for its Berrima cement kiln as a substitute for coal.

Chief Executive Officer Sustainable Energy at ResourceCo Ben Sawley said the new plant will divert up to 50,000 truckloads of waste from landfill, while also reducing reliance on fossil fuels such as coal and gas.

“It will replace over 100,000 tonnes of coal usage per year alone and will take the equivalent of 20,000 cars annually off the road in terms of greenhouse gas emissions,” Mr Sawley said.

“We’re committed to playing a key role in Australia’s future sustainable energy mix, by reducing waste and lowering carbon emissions through production of a commercially viable sustainable energy product,”

“The opportunity to tap further into this market is huge and it makes good sense, both environmentally and economically,” Mr Sawley said.

Cleanaway Chief Executive Officer Vik Bansal said this is an important new resource recovery solution in New South Wales that creates a landfill diversion option for commercial and industrial, residual recycling, and some construction and demolition waste.

“Investment in resource recovery and innovative waste to energy solutions is essential to making a sustainable future possible, and one of the ways we’re delivering on our Footprint 2025 strategy,” Mr Bansal said.

Cleanaway and ResourceCo’s Wetherill Park facility

The project was supported by a funding from the Clean Energy Finance Corporation (CEFC), which had committed $30 million in debt finance to support development of the plant, as well as an additional plant at a second Australian location still to be identified.

CEFC CEO Ian Learmonth said the priority in managing waste must be to reduce the amount waste produced in the first place.

“With what remains, we need to invest in proven technologies to repurpose it, including as alternative fuels. By turning waste into PEF, this facility is showing how industrial processes can reduce their reliance on fossil fuels,” he said.

“We can also reduce the amount of waste materials going into landfill, an important factor in cutting our national greenhouse gas emissions,” Mr Learnmouth said

CEFC Bioenergy and Energy from Waste Sector lead Henry Anning said the CEFC was working with the waste management sector to increase energy efficiency and energy generation, as well as reduce carbon emissions.

“With Australia’s waste sector facing considerable disruption, now is the time to adopt new ways of doing business,” Mr Anning said.

“With the right investment in proven technologies, companies can turn our urban and industrial waste into new energy sources, creating an important revenue stream while also reducing landfill gas emissions.

“In Australia there is a growing commercial opportunity for resource recovery, reinforced by tightening state government landfill regulations. We are working alongside waste companies to invest in long-term infrastructure that can make a lasting difference to the way we handle our waste,” he said.

Cleanaway to enter into JV with ResourceCo

Cleanaway has entered into a binding joint venture agreement with ResourceCo to acquire a 50 per cent interest in ResourceCo’s Wetherill Park facility.

ResourceCo’s new Wetherill Park facility has the capability to divert 250,000 tonnes of waste per annum, reducing emissions and saving costs for businesses in the long-term – more information on that here. 

Located in western Sydney, the facility receives dry commercial and industrial waste. After extracting any commodities suitable for recycling, the balance of non-recyclable waste is converted into Process Engineered Fuel (PEF) that will be used as a substitute for fossil fuels in domestic and offshore cement kilns.

According to an ASX statement, the investment provides Cleanaway with a further waste disposal solution in NSW and forms an integral part of its Footprint 2025 strategy.

Waste processed by the facility includes residuals sourced from the Cleanaway Sydney transfer station, currently under construction, and other recycling facilities, in addition to commercial and industrial customers with source-separated collection systems.

The purchase price for the 50 per cent interest comprises a $25 million payment at completion plus an earn out of up to a further $25 million payable in two instalments over two years once the facility generates agreed earnings before interest, taxes, depreciation and amortisation targets.

The joint venture, to be branded “Cleanaway ResourceCo RRF” is part financed by a $10 million loan facility from the Clean Energy Finance Corporation, with additional funding from the New South Wales Environmental Trust.

The transaction is expected to be complete during the first quarter of financial year 2019, subject to satisfaction of customary conditions precedent and commissioning and performance standards.

Cleanaway Chief Executive Officer and Managing Director Vik Bansal said the investment plays a key role in the development of the company’s post collections footprint in NSW and its overall Footprint 2025 strategy, which encompasses the development of prized waste infrastructure assets across Australia.

“This facility is the only one of its kind on the East Cost of Australia and enables us to increase waste internalisation rates, and importantly, to offer an advanced resource recovery solution to our customers,” Mr Bansal said.

Cleanaway releases FY18 half year results

Cleanaway has released its FY18 half-year results, reporting “strong organic growth”, with revenue up 8.4 per cent.

In a statement, the company said all operating divisions have increased revenue and earnings, with a strong cash conversion, while ramp-up and mobilisation of new major contracts is in progress. The sale of another closed landfill site in Victoria has reduced the landfill remediation provision by $5.4 million, the company said.

Cleanaway also provided an update on the acquisition of Toxfree Solutions, which it said is anticipated to be completed during the second quarter of 2018.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) was reported to be $154.2 million, a 2.8 per cent increase on the 2017 half-year results. Net revenue sat at $722.2 million, a 7.4 per cent increase on 2017 half-year results, while gross revenue sat at $785.5 million, an 8.4 per cent increase. Net profit after tax rose by 60.7 per cent compared to the same period to $45 million.

“Each of our three operating divisions – solid collections, solids post collections and liquids and industrial services – increased revenue and earnings in the period,” Chief Executive Officer and Managing Director Vik Bansal said.

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“During 1H18 we started the roll-out of a number of major new contracts.

“Development of our resource recovery footprint continues. During the half we commenced construction of our Sydney post collection which we expect to have completed by the first half of FY19.”

In its underlying divisional performance, Cleanaway’s solids collections and solids collections division reported increased revenue and earnings.

Compared to the previous corresponding period, net revenue for solids collections increased 9.3 per cent to $441.7 million. Solid post collections saw net revenue increase by 15.3 per cent to $107.9 million.

The liquid and industrial services division had a net revenue increase of 3.2 per cent to $214.7 million.

Mr Bansal said the acquisition of Toxfree was a transaction unanimously recommended by the Toxfree board, in the absence of a superior proposal. He said it is a strategically compelling transaction that will enhance the company’s capabilities in solids, liquids and industrial services, accelerate the implementation of its Footprint 2025 strategy, and provide a leading position in the attractive medical waste sector.

“To support the acquisition, we also undertook an equity raising that raised approximately $590 and was completed in January,” Mr Bansal said.

“We remain optimistic of receiving all the necessary approvals for the acquisition to be completed sometime during the second quarter of CY2018.”

Integration of the Toxfree business is expected to deliver about $35 million in annual synergies, released over a two-year integration period. Cleanaway completed a 3.65 non-renouncable pro rata entitlement offer at $1.35 per new share in conjunction with the Toxfree announcement. About $590 million was raised and 437.3 million new shares issued.

Discussing the outlook for FY18, Mr Bansal said recent major contract wins have established a firm base for revenue growth in its solids business, adding that the company remains optimistic of continuous improvement in the liquids and industrial services business.

“The cost disciplines we have in place, along with the further initiatives being implemented across the company, should result in both the solids and liquids and industrial services segments further increasing operational earnings in FY18.”

Commenting on the recent changes to the Chinese importation of recycling material, Mr Bansal added:

“The major issue within the industry is the level of contamination from the recyclable material collected from the municipal councils. This is commingled waste and has a much higher level of contamination than the waste received from the commercial and industrial sector.

“Cleanway’s exposure to the sale of these municipal sourced materials is minimal. However, we are in discussions with relevant municipal customers to mitigate any issues.”