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PetStar, a large-scale producer of food-contact-grade recycled PET resin, owes its success to a ready supply chain, industry stakeholders and innovative processing power.

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January 8, 2015
Lisa McKenna

One of the world’s largest recyclers of food-contact-grade polyethylene terephthalate (PET), PetStar, based in Toluca, Mexico, got its start as a plastics recycler from humble beginnings. Today, this integrated recycling company serves the Coca-Cola bottlers of Mexico, supplying them with the growing share of recycled PET resin that will make up its packaging this year.

Jaime Cámara, founder and CEO of PetStar, says the company is in fact the world’s largest food-grade-contact recycled PET plant in the world as measured by the U.K.-based consulting organization PCI PET Packaging, Resin & Recycling Ltd.

The company originated some 19 years ago, then known as Avangard Mexico, when it began collecting and selling postconsumer PET bottles that had been picked and sorted by waste scavengers located throughout Mexico.

Today PetStar has emerged as an integrated plastic recycling company that has the capacity to process some 3 billion bottles per year.

The demand for its products appears to be growing: For 2015 Coca-Cola has increased the recycled content targeted in its bottles to an average of 40%.

That’s good news for a company like PetStar, which supplies its recycled PET resin to Coca-Cola bottlers of Mexico.

Cámara says PetStar owes its success to a thoroughly integrated business model that contributes its outputs right back to the local community.

“Our main product is postconsumer resin of PET,” says Cámara, who adds that 100% of the company’s PET production is consumed by its shareholders and used in Mexico.

The other success story of the business is having had the ability to invest in what it calls some of the most innovative processing technology the world has seen in terms of PET recycling.

“We began this business working directly with the pickers at the landfills collecting bottles,” he says. “We created a big infrastructure to be able to service the pickers.”

In those early years, when Avangard Mexico focused on the collection and resale of postconsumer PET, the company realized that, along with collections, it could in turn recycle them too. Along the way, PetStar says it has developed some of the most innovative recycling methods while benefitting Mexico’s economy, society and environment.
 

Building a supply chain

Avangard Mexico found a ready supply in Mexico’s landfills and waste trucks. In a country where source separation is not widespread, postconsumer bottles from households are often commingled with organics and then end up in landfills. There, individuals and entire families spend their days sorting recyclable materials as a way to earn their living.

Cámara founded Avangard Mexico in 1995 at the urging of his uncle, who owned Houston-based Avangard Industries, a plastic scrap trading firm. Cámara’s business initially focused on providing postconsumer plastic bottles for sale into the export markets. That business model, however, soon would need to expand, Cámara says.

“After many ups and downs in this complex business of collection, we decided that we had this big infrastructure of collections that was an asset,” he says. “We could not survive just by trading bales. We needed to add value in order to be competitive.”

Processing of the collected PET proved to be the answer for PetStar.

“We evaluated what to do with that material and we decided the best project for Mexico would be going bottle to bottle,” he says.

Cámara says while PET bottles can certainly be recycled for other applications like fibers or sheet, bottle to bottle made the most sense for PetStar and its stakeholders in the community. A detailed evaluation of the available technologies to recycle PET bottles for use in contact with food proved it could be done on a large scale even with PET bottles pulled from landfills.

“We tested two technologies of washing and then five technologies for extruding and solid-stating and decontamination approved by the FDA (U.S. Food and Drug Administration),” Cámara says.

In the end, the company selected a washing technology made by the AMUT Group of Italy along with extrustion and solid-stating technology made by Bühler Group, headquartered in Switzerland.

The next step for Avangard Mexico was gaining the financing needed to invest in these technologies. In 2006 the company received that investment from Promotora Ambiental, a waste management services company based in Mexico.

“We partnered with them and created PetStar in 2006,” says Cámara.

When the first phase was completed, then-governor of the state of Mexico, now President of Mexico Enrique Peña Nieto, inaugurated the plant in Toluca. Peña Nieto returned in July of 2014, when the expanded facility held a grand opening in honor of the completion of phase two.

The company began selling its recycled pellet in 2009, and one of its main customers was the Mexican bottling company Arca (now Arca Continental), which purchased about 50% of the company’s volume, Cámara says.

“Arca played a very key role in the development of the early stages of PetStar,” says Cámara, noting Arca’s partnership with Coca-Cola was instrumental in PetStar’s progress and evolution.

In 2010, the company’s majority shareholder, Promotora Ambiental, decided to sell its stake in the company. Cámara was entrusted with searching for a new partner.

That partner materialized in 2011 in the form of Arca Continental, the second largest Coca-Cola bottler in Latin America, which emerged to bid on and eventually purchase 100% of the stake of PetStar, buying out all existing partners including Cámara.

Arca then invited the rest of the Coca-Cola bottling system in Mexico to join in this new venture. As a result, all of Mexico’s Coca-Cola bottlers with the exception of one also became shareholders in the business.

Today PetStar’s majority shareholder continues to be Arca Continental, and it is joined by Coca-Cola de México and its bottling companies Bepensa in the Yucatan Peninsula, Corporacion Del Fuerte in Tijuana, Corporacion RICA near Mexico City, and in the western part of Mexico, Collima Bottling and Nayar Bottling. Cámara was invited to remain with the company as its CEO.

The partners developed an aggressive plan for PetStar that called for the company to recycle 65,000 tonnes of material per year, turning it into 50,000 tonnes of recycled food-contact-grade pellet. The plan required two phases, with half of the capacity installed and commissioned in 2009 based on the initial investment.

The expansion project that PetStar completed in 2014 was adding a mirror of its phase one line, Cámara says. The company added a second AMUT washing and grinding line and a second Buhler extruder. The company also increased the size of its continuous solid state polycondensation (SSP) line.

Cámara says the extrusion and solid state process meets not only FDA standards but also the stricter Coca-Cola standards for food-contact-grade mateirals.

PetStar’s business is still based on the large infrastructure it has built in terms of working with pickers at landfills.

Predecessor company Avangard Mexico, now the collections arm of the company, still focuses on supplying PetStar with postconsumer PET bottles for its processes. As such that division now operates 800 collection points throughout Mexico and eight collection plants, with some 800 employees.

Through Avangard Mexico, the company buys collected PET from pickers thoughout Mexico, bringing it in bulk form to its collection plants where it is hand-sorted by color and to remove contamination. The plastics are then baled and transported to PetStar in Toluca, located about 50 miles west of Mexico City. However Cámara notes that the company’s collection is nationwide, using its 800 collection plants and 8 facilities.

“We collect all over Mexico,” he explains.

Baled material brought to PetStar is washed and ground using the AMUT friction washer before being extruded, converted into pellets, repolymerized and decontaminated.

“This process produces a 100% recycled material,” Cámara says.

This pellet is then sent to PetStar’s customers, the bottle producers that serve Mexico’s Coca-Cola bottlers.

These bottle producers blend the recycled resin with virgin resin, producing new bottles with recycled content that may vary from 25% up to 100% for green bottles.

“It’s a very integrated process from the pickers all the way to the shelves of the stores that are serviced by our shareholders,” says Cámara, “so it’s true bottle-to-bottle recycling.”
 

Positive impacts

Cámara points out that PetStar’s work has three major positive impacts on the regions it serves: economic, social and environmental.

Environmentally, he notes, via the collection and recycling steps, “we are removing bottles from the environment and turning them again into recycled material.” Furthermore this activity has a large impact on energy consumption, he notes. “You [save] 75% of the energy by doing this in comparison with virgin resin.”

Economically, Cámara says the company is making a difference by reintroducing the flow of bottles back in the country’s economy. He notes that PetStar is able to make a modest profit in its recycling and production operations.

“Our shareholders are not really taking too much of a discount, but they do have a slight discount on our material in comparison with virgin resin,” he says.

Finally, the social impacts of what PetStar is doing are benefitting the lives of tens of thousands of Mexicans. Cámara refers not only to PetStar’s 1,100 employees, 800 of which work for Avangard Mexico and the remaining 300 employed at the Toluca reprocessing facility.

“We give this certainty to around 24,000 pickers all over Mexico, so all these people are able to make a living out of our activity,” he says.

Part of the recently completed expansion was the addition of a museum, auditorium and viewing hall where visitors can see PetStar’s recycling process. The company also contributed along with other organizations to the creation of a child development community center in the city of Chimalhuacán, located east of Mexico City, where Cámara says many pickers live. The center offers food, education and health services to around 200 children of wastepickers.

“We depend deeply on all these pickers,” Cámara says. “They are key to our supply chain so we are concerned about their well being.”

Cámara points out the vast difference in how material is collected in Mexico, compared with more established recycling markets like the U.S. and Canada or Europe. “There you do it by public policies,” he says. “In Mexico we do it by this social involvement, a big group of people that are willing to pick the material.”

Cámara says PetStar’s pickers collect material from landfills, streets, waste trucks and public waste receptacles. While curbside recycling is beginning in some areas, he says, it’ still very limited and isolated at the present time.

In the future, he says, even with the evolution of curbside collection, Cámara doesn’t envision the development of European- or American-style material recovery facilities (MRFs) in quite the same way.

“What we see in Mexico [are] facilities with numerous hand-sorters in lieu of technology, as is common in other parts of the world.”

Cámara says the idea is to involve the country’s many pickers in an industrial setting, where they can be incorporated in the evolution of recycling in the country.

Cámara says a great deal of the company’s success so far rests with its shareholders, the Coca-Cola bottlers of Mexico.

Coca-Cola has set a target of 25% recycled content in its bottles, but that should increase in 2015, when the average recycled-content target is set for above 40%.

“This commitment to using this material is really the pulling the whole infrastructure all the way to the landfills and to these social groups,” Cámara says. “Our customers, which are our shareholders lead by Arca Continental, have committed to use our material.”

Cámara says the company collects just over 70% of the bottles that end up being used by its shareholders in the marketplace, above the 50% target set by Coca-Cola. The picking market in Mexico is an open one, in which the pickers can sell their collected bottles to any buyer they choose. But Camara says PetStar’s competitive advantage is its consistency in the marketplace and its infrastructure, service and dependability.

“We will be here for the long term,” he says. “We’ve been here for 19 years in collection with this type of investment and the commitment of our shareholders. We are going to be here for a long time, so we are able to offer them certainty.”

Even though material collected from landfills tends to be dirty, PetStar’s washing technology has the ability to handle it. In fact, PetStar’s unique collection and sorting processes are providing quality and purity that rival any highly automated facility, Cámara says.

“We control the material from the source,” he says. The material is picked by hand and then it is resorted again at sorting centers. “We produce our own bales for PetStar and that PetStar bale is very consistent in what’s in there.” Cámara says this consistency tops what is seen in typical U.S. MRF settings in terms of bale composition.

The company’s integrated structure is another boost to its strength in the marketplace, says Cámara. “This social involvement, in combination with our collections infrastructure and our ability to influence the quality of our bales, is a huge competitive advantage.”

 


The author is managing editor of Recycling Today Global Edition and can be reached at lmckenna@gie.net.