Plasticrecyclates:ThenewgoldLeveragingnewdynamicsinrecyclingregulationsandtechnologiesMANAGEMENTSUMMARYPlasticrecyclates:Thenewgold/Leveragingnewdynamicsinrecyclingregulationsandtechnologies•Plasticsarehighlyversatilematerialswithunlimiteduses.But,asconsumptionrises,theypresentasustainabilitychallengebecauseoftheirfossil-fueloriginandmismanagementofwaste•Recyclingofplasticwasteisakeylevertoreducevirginplasticproductionandcutplasticlittering,landfillingandincineration,thusalsoreducingemissions•Currently,around10%ofglobalplasticwasteand25%ofEuropeanUnionplasticwasteisrecycled.Ratesarelowduetopoorconsumerawareness,limitedregulationoutsideoftheEUandpoorcollectionandsorting(infrastructure)•However,twokeyfactorsarenowdrivinganewmomentuminEUplasticsrecycling:–EUrecyclingtargetsarebeingtightened(forexample,55%ofplasticpackagingtoberecycledby2030,recycledcontentincreasedandmorecollectionschememandates)andregulationisbeingexpandedtocovernon-packagingplastics–Newdigitaltechnologiesandthescalingupofnewrecyclingprocesses(advancedmechanicalandchemicalrecycling)areimprovingyields,qualityandthevalue/priceofrecyclates•Basedonthisnewmomentum,plasticrecyclateshavethepotentialtobecomethe"newgold"withstrongvolumegrowthandveryattractivemargins•Companiesalongtheplasticsvaluechainmustactnowtotakeadvantageofnewopportunities,suchasharnessingthesustainabilitytrendandsecuringupstreamfeedstockanddownstreamprofits•M&Apresentssignificantopportunitiesforplayersacrossthevaluechain,withmanyindustryplayersrecentlymovingtoconsolidateorintegrate•Actionstoexploittheopportunitiesincludepushingforimprovedseparate-sourcecollectionschemes,investinginadvancedtechnologies(sorting,chemical)andscoutingforpartnershipsalongthevaluechainCoverphotoKoron/gettyimagesPAGECONTENTS4Introduction41ThesustainabilitychallengeWhyplasticsneedcleaningup72PlasticregulationsTargetsareaneffectivewaytoincreaserecycling113NewdynamicsRegulationsandnewtechnologiesaredrivingchangesinrecycling134ThenewgoldFeedstockvolumeandqualitygrowthwillboostrecyclateprices155SeizetheopportunityActnowtosecurefeedstockandprofitpoolsPlasticrecyclates:Thenewgold3Introduction1/ThesustainabilitychallengeWHYPLASTICSNEEDCLEANINGUPTheyarehailedasoneofthegreatestinventionsPlasticshaveexcellentfunctionalcharacteristics,ofalltime.Strong,light,cheap,safeanddurable,makingthemsuitableforabroadrangeofplasticsarefoundineverythingfrombottlesandapplications.Theyareusedtopackagebillionstoystowaterpipesandcarcomponents.Indeed,theirofgoodseveryday,arethekeycomponentinmillionsversatilityhasmadethemubiquitous.ofproductsandevenhelpedtakemantotheMoon.Buttoday,itistheiroil-basedoriginandenvironmentalButthere'salsoaproblem.Plasticscreateenormousimpactthatistalkedaboutmorethanpotentialuseamountsofwasteandgeneratearound4%oftotalcases.manmadeCO2emissions.Andtheiruseisonlyexpectedtogrowinthefuture.EMISSIONSANDWASTEPlasticsaccountforaround2billiontonsofCO2-Recyclingofplasticwasteisakeylevertoimproveequivalent(greenhousegas,GHG)emissionsperyear,wastemanagementandreduceplasticemissions.Whilearound4%oftheglobaltotal.IntheEU,theymakeupcurrentlyonlycapturing10%ofglobalplasticwaste,9%ofemissionsduetothebloc'spositionasaleadingthemomentumbehindrecyclingisstrengthening.producerandconverterofplastics.Twonewdynamicsaredrivingtheshift.First,theriseinenvironmentalconcernshasledtoatighteningofThematerial'sCO2footprintisdrivenbythreekeysustainabilitytargets.Second,theintroductionofnewfactors:theenergy-intensiveprocessofproducingresinssortingandrecyclingtechnologiesisimprovingthefrompolymers(thebuildingblocksofplastics);theeconomicsofrecyclingandcreatingnewprofitpools.energy-intensiverequirementsofconvertingplastics(forexample,injectionmolding);andemissionsfromtheTheresultisthatplasticrecyclateshavethepotentialopenburningorincinerationofusedplastics.Emissionstobecomethe"newgold".Butwhatdoindustryplayersneedtodotosecureashareoftheprize?Inthisreportstemfromacrossthevaluechain.Awelookatthesustainabilitychallengesbehindrecycling,thenewdynamicsdrivingitandhowcompaniescanPlasticwasteisanothermajorenvironmentalissue.profitablyexploittheupcomingbusinessopportunitiesCurrently,around50%ofglobalplasticwasteissenttoaroundplasticsrecycling.landfill,20%incinerated(waste-to-energyconversion)andanother20%litteredorburnedintheopen.Just10%isrecycled.Plasticpackagingtakesaround250yearstonaturallydecompose.Thismeanslittering,onlandandinwater,representsaparticularlychallengingenvironmentalproblem,especiallyforwildlife.RISINGDEMANDDespitethesechallenges,demandforplastic,particularlyinpackaging,isexpectedtoremainstrong.Thematerialischeapandconvenientforconsumers,andburgeoningpopulationsaredrivingconsumptionandwaste.Atrendtowardslightweightpackaging,smallerpacksandpackaging-freeproductsindevelopedcountriesshould4Focuslimitthevolumegrowthpercapita.ButtheoverallglobalThisstudyfocusesonthelatter.ThemainbenefitsofdemographicandwealthexpansionwillcontinuetodriverecyclingarethatitcutsGHGemissionsbyprolongingvolumesindevelopingcountries,andthereforeplasticthelifecycleofplastics,anduseslessenergy-intensivereprocessingratherthanmakingplasticsfromvirginwastegrowth.Bmaterials.However,nomatterwhattherawmaterial,plasticsrecyclingisnoeasymatter.Thekeyleverstoaddressplastic'ssustainabilitychallengesarethethreeRs–reduce,reuse,recycle.A:ThechallengePlastic'sGHGemissionsstemfromproduction,conversion&incineration–recyclingreducestheCO2footprint71%51bnEnergytonsGLOBALCO2eEMISSIONS4%BYORIGINPlastics25%Industry,agriculture,otherPLASTICCO2FOOTPRINTACROSSVALUECHAIN[KGCO2e/KG]ProductionConversionUsephaseCollectionEndoflifeTotalRecycling2.01.40.150.15-0.753.0Landfilling/2.01.40.150.150.13.8litteringIncineration2.01.40.150.152.05.7Source:ClimateWatch,WorldResourcesInstitute,NOOA,COMET,OECD,RolandBergerPlasticrecyclates:Thenewgold5B:PlasticeconomyGlobalplasticvolumeshavegrownatGDPgrowthlevelsandareexpectedtocontinuetogrowinEuropePLASTICSPUTONGLOBALMARKET[MTONS]+2.4%461CAGR10%2011–2021F3634205%11%10%4%2%Otherregions5%5%8%3%MiddleEast&NorthAfrica4%4%14%3%Sub-SaharanAfrica8%8%2%South&CentralAmerica16%15%19%1%Europe1%NorthAmerica23%20%40%5%Asia33%38%PROJECTIONFOREUROPETO2030[MTONS]+1.4%p.a.736520112016202120212030Source:OECD,PlasticsEurope,RolandBerger6Focus2/PlasticregulationsTARGETSAREANEFFECTIVEWAYTOINCREASERECYCLINGKeytechnologiesrequiredtorecycleplasticshaveapplicationssuchasconsumerandtransportationbeenaroundfordecades,evenifsometypesofpackaging,consumerproducts,textilesandelectronicsplastics–likefilmsandfoams–havesofarbeen(packagingaccountsformostplasticwaste).Butthisdifficulttoprocess.However,currentlyonlyabout10%meansthat30%ofplasticwasteinEurope,mainlyofglobalplasticwasteisrecycled.fromtheconstruction,automotive/manufacturingandRegulationstotackleplasticwaste,suchasrecyclingagriculturalsectors,isnotcoveredbyanyregulatorytargetsandcollectionschemes,havebeeninplacesincetargets.the1990s,inparticularinEurope.Today,around70%ofplasticwasteisinsomewaycoveredbyEUregulationsSonotonlyistheworldalongwayfromhavingadesignedtoimprovesustainability.Theseincluderecyclingeconomy,buttherearealsohugegapsintheregulatoryframeworksdesignedtogetusthere.Why?CC:LongwaytogoIn2020,30megatonsofplasticwerecollectedintheEU,ofwhichonly24%wasrecycledCOLLECTEDPLASTICSWASTETREATMENTOFEU27+31PLASTICS~80%(6MT)EU27+312020[MTONS,%]WASTEIN2020[MTONS,%]EU14%Other24%(7MT)recyclingRecyclingrate:4%Agriculture76%(23MT)2020PLASTIC5%HomeapplianceIncineration&landfillRECYCLATESAND~30%5%ElectrotechnicalSOURCES6%Automotive[MTONS,%]6%Construction60%PackagingEU~20%recycling(1MT)rate:~10%30MT30MTFromotherFromplasticplasticspackaging1UK,CH,NOSource:PlasticsEurope,RolandBergerPlasticrecyclates:Thenewgold7"Thelowoilpricebeforeplastics.Packagingisnormallydisposedofwithinayear,Russia'sinvasionofwhereasplasticpipesinbuildings,forexample,canbeinUkraineincentivizedplacefor50years.Thisfastturnoverresultsinsignificantproductionanduselittering,seenandunseen,withasubstantialimpactonofvirginplasticrathertheenvironment.thanmoreexpensiverecyclates.CompaniesWhilehigherthantheoverallrateofrecyclinginpreferredthelower-costtheEU,the30%figureforpackagingisalongwayoffbutlesssustainablethetargetssetinthePackagingandPackagingWastevirginoption.”Directivein2018.Theyaimforatargetof50%by2025and55%by2030.OliverHerwegPartnerTHEPROBLEMSWITHRECYCLINGSowhat'sholdingbacktheEU'srecyclingrate,andthoseIn2020,24%oftheEU'splasticwastewasrecycled,withofotherregions?Thereasonsaremyriadandrelatedtotherestgoingtolandfillorincinerated.Theratewasshortcomingsacrosstheentirevaluechain:higherforplasticpackaging,at30%.ThisisnosurpriseasalmostalloftheEU'splasticregulations–forexample,1.Previousrecyclingtargets(forexample,23%recyclingonrecyclingtargets,minimumrecycledcontentinnewrateforplasticpackaging)weresetdecadesago,andproducts,etc.–havesofarfocusedonpackaging.Therefocusedalmostexclusivelyonthecollectionandrecyclingarethreemainreasonsforthis.ofrigidplastics(mainlybottles)fromhouseholds,aswellasfilmsfromtheindustrial-commercialstreamFirst,packagingmakesup60%ofplasticwastein(retailers,warehousesandfactories).theEU.Second,ithasaveryshortturnaroundrate(timebetweenconsumptionanddisposal)comparedtoother2.ThelowoilpricebeforeRussia'sinvasionofUkraineincentivizedproductionanduseofvirginplasticratherthanmoreexpensiverecyclates.Intheabsenceofrecycledcontenttargetstocreatedemandforrecyclates(andclosetheeconomicloopinthevaluechain),companiespreferredthelower-costbutlesssustainablevirginoption.3.Theseparate-sourcecollectioninfrastructure,forexampleforlightweightfractionordepositschemesfordrinkspackaging,isstillweak,especiallyinSouthernandEasternEuropeancountries.Thisforceshouseholdstodisposeofthemajorityofplasticswasteintheresidualstream.Lessthan20%ofthiswastecanberecovered.8FocusD:MismanagedDisposal,collectionandsortingarekeyshortcomingsintheEUplasticsrecyclingvaluechainREGULATOREUEUCOLLECTIONSORTING10MTRECYCLINGPRODUCERSCONSUMERS9MTSEPARATE7MT56MT54MTWASTE14MT15MTRECYCLATES(24%)30MTLossesMIXEDWASTE6MT15MT1MT3MT20MTINCINERATION,LANDFILLUpto10MT(!)23MTLITTERING&OPENBURNING(76%)EUPLASTICS"INSTALLEDBASE"Note:Allfiguresare2020Source:PlasticsEurope,RolandBergerPlasticrecyclates:Thenewgold94.Inadditiontothelimitedinfrastructureinmany"Inlightofthecountries,consumersarenotyetdisciplinedorincreasingpressurecoachedenoughtocorrectlydisposeofplasticsinfordecarbonization,specializedcollectionschemes,evenwheretheyareEUplasticregulationsavailable.areexpectedtostronglydrivefuturerecycling5.Althoughprofitmarginsinrecyclingandconversiondynamicsforplasticareupto15%,marginsincollectionandsortingarematerials.Thiswillcreateverylow,ataround2-5%.Thisisbecausecollectionmultiplechallenges,butistypicallycarriedoutbyproviderswhoalsocollectalsoholdsopportunitieslow-valuegeneralwaste.Thishasresultedinlimitedformarketstakeholders.”investmentincollection.Butwiththeincreasingvalueofplasticrecyclates,whichrequirehigh-qualityDragosPopafeedstock,thedynamicsareexpectedtoshift.Principal6.Inthepast,wastesortinghasnotattractedsignificanttechnologyinvestment,duetothelimitedapplicability/demandforsophisticatedsolutions.Butwithincreasingdemandforhigh-qualitysortingoutput,advancedtechnologieshavebeendevelopedtoallowforgranularsorting(forexamplebypolymer,gradeandotherpackagingattributes).Thiscreatestheprerequisitesforhigh-qualityrecyclatesandthussubstantialvalueaddedfortheentirevaluechain.7.Recyclingcapacityhashistoricallybeenlimitedtomechanicalrecyclingofrigidplastics(mainlydrinkspackaging)andbasicmonolayerfilms,thusonlycoveringasmallpartoftherecyclingpotentialinEurope.DDespitethesechallenges,andinlightoftheincreasingcontentinapplicationssuchasautomotiveareinthepressurefordecarbonization,EUplasticregulationsarepipeline.Thiswillcreatemultiplechallengesbutalsoexpectedtostronglydrivefuturerecyclingdynamicsholdsopportunitiesformarketstakeholders.forplasticmaterials.Forexample,inadditiontothePackagingandPackagingWasteDirective,theSingleUsePlasticDirectivehasa90%collectiontargetforplasticbottlesby2030.Andtargetsforminimumrecycled10Focus3/NewdynamicsREGULATIONSANDNEWTECHNOLOGIESAREDRIVINGCHANGESINRECYCLINGTheriseinthenumberandforceofregulationsnewDRSsystems,whichbuildonthosealreadyinplacehascatalyzedanewsetofdynamicsinEUplasticsinEUcountriessuchasGermanyandSweden,willdriverecycling.Collectionandsortingisakeyexample,recyclingratesforPET-basedplasticsabove80%.Inwiththenumberofspecializedcollectionchainsforaddition,thestricterenforcementofseparate-sourceplasticpackaginggrowing.SevenEuropeancountriescollectionofplasticsacrosstheentireEU,coupledwith–Poland,Romania,Portugal,Hungary,Austria,Greecetherecycledcontenttargetsformostpolymers,willandtheUK–havecommittedtointroducingdepositfurtherdrivetheamountofqualityplasticsfeedstockreturnschemes(DRSs)forplasticbottlesby2025.Theavailableforrecycling.EE:GoodintentionsThenumberofEUcountriesplanningspecializedcollectionchainsforplasticpackagingisrisingCONTRIBUTIONTOPLASTIC1%Other3PACKAGINGWASTEBYCOUNTRYANDSTATUSOF15%France20%GermanyMID-TERMPLANSFORDRSSCHEMES4%Other115%Italy18MT3%Netherlands1%Greece2%Sweden1%Bulgaria2%Norway1%Denmark2%Austria11%Spain2%Hungary3%Portugal2%Belgium2%Ireland3%Romania2%CzechiaSeparate-sourcecollectionandDRS8%Poland1%Other2Separate-sourcecollection1Finland,Baltics,Croatia,Slovakia2Slovenia,LuxembourgDysfunctionalseparate-source3Cyprus,Maltacollection,butDRScommitted4However,DRSsystemsexpectedtobecometoby2025mandatoryintheEUby2030(ifplasticsDysfunctionalseparate-sourcerecyclingratesachievedare<90%)collection,noDRScommittedtosofar4Source:Eurostat,RolandBergerPlasticrecyclates:Thenewgold11Butperhapstherealdrivingforcebehindthenewcurrentrecyclingsystems.Chemicaltechnologies,momentuminrecyclingisthedevelopmentofahostofmeanwhile,arestillemergingbutholdgreatpromise.innovativetechnologies.Bothtypeswillbenefitfromimprovedsorting,andthetwocanbecomplementary.NEWSORTINGTECHNOLOGIESGovernmentsandindustryplayerslikeDRSsystemsInmechanicalrecycling,plasticwasteiscutintobecausetheyaregenerallybasedoncollectingverypolymergranulateswithoutalteringitschemicalorsimilarproducts,typicallyPET-basedplasticbottles.Thispolymericstructure.Theprocessislessenergyintensivehighlightsafundamentalweaknessinplasticsrecyclingthanchemicalrecycling,potentiallymeaninglowerCO2–theinabilitytoefficientlysortmaterials.Sortingplantsemissions.Itrequireshigh-purity/granularsortedplasticaregenerallylimitedintheirsortingquality,efficiencyfeedstock,whichcaninthefuturebeproducedusingandyieldbecausetheyarereliantonoldsystems.Thetheadvancedsortingtechnologiesdescribedabove.poormarginsinvolvedinsortingsuggestsomemayhaveEnhanced/advancedmechanicalrecyclingcombinesbecomevictimsofunderinvestment.high-qualityfeedstockwithhotwashingandodorizationprocessingstepstoproducehigh-qualityrecyclates.ButnewdigitalsortingtechnologiesareemergingThesecanevenoriginatefromthehouseholdstream,thatenablesubstantialimprovementsinyieldandqualityandthusenableashiftawayfromdowncycling(suitableofrecyclates.Processautomation,forexample,drivesonlyforlow-qualityapplications)intoaclosed/open-looprecyclingvolumes,whilenewsortingcapabilities,suchchain(applicationsofsimilareconomicvaluetotheasobjectrecognitionordigitalwatermarks,offersortingoriginalfeedstockoftherecyclate).bycolororpolymer,enablingclosed-loopsystems.SuchtechnologieshavethepotentialtoincreasecurrentChemicalrecycling,ontheotherhand,breaksdown"sortedforrecycling"ratesby10-20%.Theresultisplasticpolymerchainsintotheirconstituentmonomers,fewerlosses,better-qualitysortingandrecyclates,andthebasehydrocarbonsusedtomakeplastics.Thishasthereforehigherrecyclateprices.severaladvantages.Forexample,itallowsformixed-wastestreams,meaningcontaminationislessofaproblem,Thesesystemswillrequirechangesalongthevalueandpermitstherecoveryofhigh-qualitypolymers.chainatbrandownerandsorterlevel(forexampleHowever,chemicalrecyclingrequireslargevolumesintegratingdigitalwatermarksintheirplasticpackaging),andhighCAPEX,andisveryenergyintensive.Whileaswellassignificantinvestments.ButtheyalreadyhaveaitsCO2footprintisthereforelessfavorable,chemicalhighmaturitylevelandthepotentialtobecomeagamerecyclingwillbecriticaltofurtherdriverecycling,asitchanger.allowstheprocessingofplasticsthatarenotsuitableformechanicalrecycling.ADVANCEDMECHANICALANDCHEMICALRECYCLINGTECHNOLOGIESNewsortingtechnologiesare,however,redundantwithoutefficientsystemstoactuallybreakdownoldplasticandcreatenewplasticfromit.Twotechnologiesexist–mechanicalandchemicalrecycling.Mechanicalrecyclingiswellestablishedandisthemainstayof12Focus4/ThenewgoldFEEDSTOCKVOLUMEANDQUALITYGROWTHWILLBOOSTRECYCLATEPRICESWhiletheEUtargetsonrecyclingaredrivingrecyclingvolumesof8%.Packagingrecyclingwillgrowrecyclatesvolumes,capacityisstrugglingtofromalargebase,whiletherecyclingofotherplasticskeepup.Toachievethebloc's55%targetwillgrowfromasmallbase.Thesamecanbesaidoftheforplasticpackagingrecycling,recyclatevolumeswillgrowthpotentialofmechanicalandchemicalrecycling.havetoalmostdoublefrom~6MTin2020to~11MTinToprocesstheincreasedvolumeoffeedstock,andtaking2030.Otherplasticrecyclatevolumeswillneedtotripleintoaccountprocesslosses,recyclingcapacitieswillneedfrom~1MTto~3MT.Thisgivesrespectivegrowthratesof~7%and10%,andoverallannualgrowthofplastictorisebyatleast150%.FF:CapacitygapNewdynamicswilldrivefeedstockvolumesandquality–EUrecyclingcapacitywillneedtojumpby150%PLASTICSWASTEEU27+31ANDRECYCLEDVOLUMESRECYCLINGCAPACITYPROJECTIONSEU27+31[MTONS][MTONS]CAGRCAGR2020-20302020-203033.51.3%25.09.4%19-1.7%22.08%29.5NEW203022.4EURECYCLINGTARGETFORPLASTIC+150%PACKAGING55%3.39.6%7.5%10.211.26.9%10.11.33.0>40%5.82030202020300.12020PlasticpackagingOtherplasticPlasticwasteincineratedMechanicalrecyclingChemicalrecyclingwasterecycledwasterecycled&landfilled1UK,CH,NO–basedoncurrentlevelofrecyclinglossesSource:PlasticsEurope,OECD,RolandBergerPlasticrecyclates:Thenewgold13WHYRECYCLATESAREWORTHMORERussia'sinvasionofUkraine.TheyarenowexpectedtoThepricesofvirginplasticsaredirectlyrelatedtotheexperienceacorrectionintheshortterm.However,thepriceofoil,theirbasematerial.Recyclates,althoughpricedifferentialbetweenvirginplasticsandrecyclatesmadefromplasticwasteandnotdirectlycorrelatedisexpectedtoincreaseassustainabilityawarenessgrows,withday-tradeoilprices,havebeentradingslightlyrecyclingtargetsbiteandnewtechnologiesimproveabovevirginpricesinrecenttimes.Thisistheresultofrecyclatesquality.Thisalsomeansbiggermarginsforasustainabilitypremium,wherebypricesforrecyclateshaveincreasedduetohighersustainabilityawarenessproducers.Gandtargets.Forexample,significantmark-upshavebeenestablishedonhigh-purity,food-graderecyclates.Giventhispriceeffectandthesubstantialincreaseintheirvolumes,recyclatesareexpectedtobecomethePricesforvirginplasticsarelikelytohavepeakednewgold–indemandandwithgrowingvolumes,evenin2022asaresultoftheenergycrisisthatfollowedifcurrentpeakpricesgraduallyfallinlinewithdecliningoilandvirginplasticprices.G:NewgoldPricesforrecyclateshaveincreasedandareprojectedtoremainwellabovevirginpricesHISTORICPETVIRGINANDRECYCLATEPRICEFORECASTFORPETVIRGINPRICEEVOLUTIONVS.OILANDRECYCLATESEuropeanpricesforplasticCrudeoilprice∆RPET[EUR/t][EURperbarrel]VS.2,500180VIRGIN160=2,000140120+13%1,5001002,000801,8001,942601,600401,4001,804201,2001,00001,0001,7651,596Q150020220Q1Q1Q1Q1201920222026FQ120182019202020212017rPET,food-grade,EUR/trPET,non-food-grade,EUR/tVirginPET,food-grade,EUR/tCrudeoilprice,EUR/barrelSource:S&PGlobalPlatts,ICIS,CzarnikowGroup14Focus5/SeizetheopportunityACTNOWTOSECUREFEEDSTOCKANDPROFITPOOLSWithalargevolumeofhigh-valuerecyclatesthebiggerearnersarereliantoncollectorsandsorterstosettohitthemarketinthecomingyears,ensurethesupplyofplasticwastefeedstock.Theprofitnowisthetimeforindustryplayerstoact.levelsofintegratedwasteplayersaredilutedbytheirbroadCompaniesneedtodefinehowtopositionthemselvescoverageofthevaluechain.Marginsforallplayerswilltoleveragetheopportunities,thenexecutestrategicincreaseassortingtechnologyadvancesandvolumesofmeasurestoexploitthem.higher-purityrecyclatesrise.HTHEOPPORTUNITIESAsnotedabove,profitlevelsvaryaccordingtotheactivityThisveryfragmentedmarketoffersmultiplealongtheplasticsrecyclingvaluechain(2-5%EBITmarginsopportunities,dependentonthecompany'scurrentforcollectorsandsorters;upto10-15%forrecyclersandpositionandbusinessfocuswithintheplasticsvalueconvertersduetothehighpriceofrecyclates).However,chain.Keyobjectivesofsuchexpansionstrategies,typicallyimplementedviaM&A,are:H:ProfitpoolsHighermarginsinrecycling&conversion–marginupsideincollection&sortingasfeedstockprovider2-3%BRAND(INTEGRATED)PROS1OWNERSRETAILERS(FMCG,automotive,…)PLASTICCONVERTING/CONSUMERCOLLECTIONSORTINGRECYCLINGPRODUCERSPACKAGINGPRODUCTION2-3%3-5%uptoupto15%15%5-7%INTEGRATEDWASTEMANAGEMENTPLAYERSAvg.EBITrange1ProducerResponsibilityOrganizationsSource:RolandBergerPlasticrecyclates:Thenewgold15"Thereisgreatpotential•Expandownvalueaddedtoactivitiesthatdriveforallstakeholderswithinsustainabilitytheplasticsrecyclingvaluechain.Weseea•Harnessgrowthdynamicsfromcurrentsustainabilitybroadrangeofstrategictrendactionstodrivebusiness,strengthenmarket•Securerawmaterialfeedstockandsetupclosed-looppositionandmaximizesystemsmargins.Thesearebasedaroundexpanding•Accessprofitpoolsindownstreamprocessescollectionchainsand•Driveownmarketshareprocessingcapacities,leveragingnewManyindustryplayersacrossEurope,fromproducerstechnologiesandtoPROsandmultinationalstoregionalplayers,haveconsolidation."alreadymovedtotakeadvantageoftheselivelyM&Adynamics.OliverHerwegPartnerRecentexamplesinclude:ALPLAGroup,theAustrianpackagingplayer,acquiringtherecyclersTexplast16FocusandBTBRecycling;theThaiPETrecyclerIndoramaconsolidatingbytakingovertheCzechrecyclerUCY;andaverticalintegrationdealbetweentheSpanishrecyclerCircularResourcesandGermanPRODerGrünePunkt.M&Aactivityisonlyexpectedtoaccelerateinthefuture.WHATPLAYERSNEEDTODOItisclearthatthereisgreatpotentialforallstakeholderswithintheplasticsrecyclingvaluechain.Sohowcanplayersexploittheopportunities?Weseeabroadrangeofstrategicactionstodrivebusiness,strengthenmarketpositionandmaximizemargins.Asoutlinedinthetableoverleaf,thesearebasedaroundexpandingcollectionchainsandprocessingcapacities,leveragingnewtechnologiesandconsolidation.IExactfocusareasforstrategicdevelopmentwilldependonthestakeholdertypeandspecificpositioningandbusinessmodel.Butwhateverformittakes,playersneedtobeawarethatthetimeframetoexploitupcomingopportunitiesislimited,andfirstmoversarelikelytocapturemostofthevalue.Definingasoundstrategicagendanowiscriticaltofuturesuccessinthissmallandfragmentedindustry.I:StrategicleversCompanieshavemultipleoptionstoactdependingontheirpositioningandbusinessmodelACTIONSTOEXPLOITPlasticConvert./BrandPROsWasteCollectorsSortersRecyclersRECYCLINGOPPORTUNITIESproducerspackagingowners&mgmt.producersretailersplayersPushforadditionalspecializedcollectionschemes(GelbeTonne,DRS,…)Invest/adopt/integrateadvancedidentification&sortingtechnologiesExpandcapacitiesincollection,sorting&recyclingDefinetargetpositioninrecyclingprocesstechnologies(i.e.,mechanical,chemical)ScoutforM&Aandpartneringopportunities(feedstock,marketshare,profitpools)Source:RolandBergerPlasticrecyclates:Thenewgold17ConclusionRecyclingofplasticwasteisakeylevertoreducevirginplasticproductionandcutplasticlittering,landfillingandincineration,thusalsoreducingemissions.Currently,around10%ofglobalplasticwasteand25%ofEuropeanUnionplasticwasteisrecycled.Ratesarelowduetopoorconsumerawareness,limitedregulationoutsideoftheEUandpoorcollectionandsortinginfrastructure.However,twokeyfactorsarenowdrivinganewmomentuminEUplasticsrecycling:First,EUrecyclingtargetsarebeingtightened.Forexample,55%ofplasticpackagingwillhavetoberecycledby2030,andregulationisbeingexpandedtocovernon-packagingplastics.Second,newdigitaltechnologiesandthescalingupofnewrecyclingprocesses(advancedmechanicalandchemicalrecycling)areimprovingyields,qualityandthevalueofrecyclates.Basedonthisnewmomentum,plasticrecyclateshavethepotentialtobecomethe"newgold"withstrongvolumegrowthandveryattractivemargins.Companiesalongtheplasticsvaluechainmustactnowtotakeadvantageofthesenewopportunities.Actionstoexploittheopportunitiesincludepushingforimprovedseparate-sourcecollectionschemes,investinginadvancedtechnologiesandscoutingforpartnershipsalongthevaluechain.18FocusCREDITSANDCOPYRIGHTCONTACTSPHILIPDUNNEPartner,UnitedKingdomOLIVERHERWEGphilip.dunne@rolandberger.comPartner,Germanyoliver.herweg@rolandberger.comFERNANDOLOPEZDELOSMOZOSPartner,SpainDRAGOSPOPAfernando.lopezdelosmozos@rolandberger.comPrincipal,CircularEconomyEuropedragos.popa@rolandberger.comAKIOITOSeniorPartner,GermanyGUNDULAPALLYGlobalLeadofMaterials&ProcessIndustriesPartner,Austriaakio.ito@rolandberger.comgundula.pally@rolandberger.comKAI-STEFANSCHOBERFREDRIKGRANSeniorPartner,GermanyPartner,NorthernEuropeGlobalCo-LeadofMaterials&ProcessIndustriesfredrik.gran@rolandberger.comkai-stefan.schober@rolandberger.comERWINDOUMAJAN-OLIVERSESTAKPartner,NetherlandsPartner,Germanyerwin.douma@rolandberger.comPackagingMachineryjan-oliver.sestak@rolandberger.comSEBASTIENMURBACHSeniorPartner,Francesebastien.murbach@rolandberger.comWewelcomeyourquestions,commentsandsuggestionsWWW.ROLANDBERGER.COM03.2023Thispublicationhasbeenpreparedforgeneralguidanceonly.Thereadershouldnotactaccordingtoanyinformationprovidedinthispublicationwithoutreceivingspecificprofessionaladvice.RolandBergerGmbHshallnotbeliableforanydamagesresultingfromanyuseoftheinformationcontainedinthepublication.©2023ROLANDBERGERGMBH.ALLRIGHTSRESERVED.ROLANDBERGERistheonlymanagementconsultancyof23_2026_FOCEuropeanheritagewithastronginternationalfootprint.Asanindependentfirm,solelyownedbyourPartners,weoperate51officesinallmajormarkets.Our3000employeesofferauniquecombinationofananalyticalapproachandanempathicattitude.Drivenbyourvaluesofentrepreneurship,excellenceandempathy,weatRolandBergerareconvincedthattheworldneedsanewsustainableparadigmthattakestheentirevaluecycleintoaccount.Workingincross-competenceteamsacrossallrelevantindustriesandbusinessfunctions,weprovidethebestexpertisetomeettheprofoundchallengesoftodayandtomorrow.PUBLISHER:ROLANDBERGERGMBHSederanger180538MunichGermany+49899230-0
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