Advantages of opening production
- Constant Growth of Waste and Demand for Recycling Factories.
- An additional income for accepting garbage from individuals, small/medium/large businesses (agricultural holdings, large industrial enterprises, including chemical, construction industries, etc.) or from a regional garbage collection operator.
- Financial assistance from the governmental: benefits; surcharge for each recycled ton of waste; loans; subsidies; grants; special taxation conditions.
- In addition to the manufacture of pyrolysis end products (pyrolysis oil, pyrolysis gas, semi-coke), MSW recycling produces a wide range of various products.
Choosing a site for the future recycling plant is a responsible and difficult step that predetermines the financial success of the project. Therefore, one must take a very careful and reasonable approach to choosing a country/region. Below are some prerequisites for a successful and long-term business:
— governmental assistance (free land rental; loans on favorable terms; public private partnership; grants; subsidies; reduced tax burden, etc.);
— a well-developed logistics infrastructure including a network of roads, railways, and sea routes;
— an advantageous geographical location for future interested buyers/consumers of MSW recycling products (pyrolysis oil, methanol, plastic, etc.). Potential partners are large chemical, agricultural, and construction enterprises.
Our team’s major short-term objectives:
- To select the region for the plant.
- To come to agreements with local authorities, who are most interested in solving this problem, and to win their support.
- To find intending consumers of fuel and lubricants obtained by pyrolysis.
- To consider cooperation/partnership with the existing landfills interested in high-quality recycling; otherwise, to consider an alternative garbage collection program with plastics and tires sorting using our own motor vehicle fleet.
- To search for new/promising high-margin sales channels: manufacture of a new value-added product (plastic pelletizing; glass recycling, etc.; that is, we sell not half-stuff, but a finished product).
- To establish production facilities with most of the costs compensated by cheap pyrolysis electricity.
Financial Outlook and Investment proposal
Setting up such production facilities requires $7,500,000.
94 per cent of this amount will be used to purchase and install equipment.
This investment will be used to:
— find a proper land plot with the necessary infrastructure, logistics, and sale markets;
— enter into agreements with government agencies regarding licensing, rental terms, benefits, co-financing, etc.;
— resolve the emission issue;
— find new potential markets for pyrolysis products;
— consider alternative sources of income (paper, metal, glass, pelletizing shop);
— an enterprise/a plant recycling 73,000 tons of MSW per year;
— after launching, the plant will produce pyrolysis oil, methanol and other types of products sorted for sales (metal, paper, plastic, glass).
Installation period: 8 to 10 months.
Warranty period: 10 years.
Payback period of the project
Currently, it is impossible to calculate the cost of the final product, as everythings depends on the MSW morphology and tax liabilities in the country of the production.
Given that electricity and water will be free (obtained in the pyrolysis production process), the main expenditure items will be personnel wages, insurance payments, and tax liabilities. The latter can be calculated only after a region is chosen. As for the wages, 90 people are enough for the production with an average salary of $750 per month, or $810,000 per year.
Based on our experience in the Russian Federation, the cost of recycling 1 ton of MSW is between $15 and $20.
That is, recycling 200 tons (MSW recycled per day) requires about $4,000; while daily revenue from pyrolysis products is $58,000.
Based on the above, the project payback period will be 2 years.
Under this project, the investor will get 75% of net profit until the full return on investment (about 2 years). After the investment is returned in full, the investor will get 20% of the future profit.