Dive Brief:

• WM has agreed to acquire a controlling stake in the U.S. business of plastic recycler Avangard Innovative, according to a Tuesday announcement. The transaction is expected to close in “late 2022,” pending regulatory approval, and the business will operate as an independent entity called Natura PCR.
• Natura PCR will largely focus on processing commercial plastic film and shrink wraps, with a goal to produce 400 million pounds per year of postconsumer resin “in five years.” This will begin at an existing Avangard facility in Waller, Texas, with new processing capacity planned in the Midwest.
• "WM's controlling interest in Natura PCR positions us to grow and scale rapidly in the emerging PCR space," said WM CEO Jim Fish in a statement. "WM's core material supply capabilities, with the head start and knowledge provided by Avangard's U.S. business, will help Natura PCR quickly deliver circular options to WM's customers as an important component of our continued growth strategy in recycling.”

Dive Insight:

This transaction marks the latest move by a major hauler and MRF operator to get more directly involved in the plastics recycling system beyond collection and sorting. In the release, WM said it “expects to receive investment returns comparable to its previously announced automation investments in single-stream recycling.” 

North America’s largest waste and recycling company has long talked about wanting to have a greater stake in reducing plastic pollution, with talk of a possible role in addressing ocean plastics at a 2019 event. But until recently, it wasn’t entirely clear what that would entail at scale beyond WM investing in its existing network of single-stream MRFs, setting targets to recycle higher volumes of plastic, or making smaller moves, such as investing in uniforms or collection carts made from postconsumer recycled plastic.

Then earlier this year, WM announced a joint venture with Tailwater Capital to expand its stake in Continuus Materials. That company uses mixed plastics and mixed paper to create a roofing material called Everboard. Following a pilot site in Iowa, Continuus is now working to scale up production with new facility infrastructure in other states.

WM’s latest venture with Avangard is expected to focus on materials that include “films and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers.” Recycling rates for these categories remain quite low, especially for materials like grocery bags and packaging film that rely on retail drop-off systems.

WM processed 516,717 tons of plastic during 2021, but that data isn’t broken out by material type. A 2020 report, produced following engagement with shareholder advocacy group As You Sow, said at the time “the only plastic that WM exports is high-grade, source-separated commercial film to reputable high-quality end markets.”

Natura PCR, an existing entity within Avangard, describes itself as the largest producer of postconsumer LDPE film in the Americas. Dow is among the top customers for Avangard’s PCR material, and the announcement noted that the chemical company had also been working closely with WM on plastic issues. While the Natura PCR process is described as “mechanical recycling of film and flexible plastics,” the Avangard facility in Waller also has a chemical recycling component. According to Plastics Recycling Update, the company previously intended to “cohabitate” a chemical recycling system at that location through another joint venture with Honeywell.

"This transaction helps the business quickly scale operations, maximize source feedstock and meet the continued rise in demand for environmental additives, such as recycled plastic resin," said Avangard CEO Rick Perez in a statement.

This news is among the latest examples of U.S. MRF operators becoming more directly engaged in secondary processing for plastics. Earlier this year, Republic Services announced plans to begin building its own “polymer centers” to process PET. The first facility is expected to open in Las Vegas next year.