Why Minnesota Food and Ag Companies Are Investing in a Recycling Plant
Earlier this month, a group of big-name Minnesota companies, including Cargill and General Mills, announced the development of a new $24 million plastic recycling plant in Rogers.
The companies all belong to MBOLD, an initiative launched in 2020 by economic development group Greater MSP to address major food and ag industry challenges. Several MBOLD companies are providing $9.2 million in debt financing to the facility, which will be operated by a recently launched company called Myplas USA. Myplas will turn recycled plastic into pelletized resins that can be used to produce new plastic film. Besides MBOLD companies’ investments, the state of Minnesota is kicking in $1.4 million in loans and grants for the facility. The recycled resins will be sold primarily to Charter Next Generation, a Milton, Wisconsin-based flexible film manufacturer.
So why are MBOLD companies making this sizable investment? Why does this deal make good business sense for them?
A collective effort
The story begins about two years ago. MBOLD members were looking for ways to “focus our collective energies,” says MBOLD managing director JoAnne Berkenkamp. “One of the issues that rose to the top was plastics and packaging. Many of our members have aggressive goals for packaging innovation, for reducing waste, for increasing recycling, and for reducing greenhouse emissions in their own operations and supply chains.”
Many companies, including MBOLD members, “have made commitments to increase their use of recycled plastic resin in their packaging and other materials,” Berkenkamp says. The challenge: Only about 5 percent of flexible films is currently being recycled. As a result, “demand for recycled resin is likely to significantly outstrip the supply by dozens of times,” she adds. “That’s why it’s important that more and more companies have that film recycled on a regional basis and expand the supply . . . and reduce the need for virgin plastic.”
A regional facility is a crucial element of this vision. “Geography matters with recycling,” Berkenkamp says. “Every mile that you transport something to get recycled chips away at the environmental benefit” because of the greenhouse-gas emissions trucks generate. True, Charter Next Generation doesn’t have a location in Minnesota, but it is close by in Wisconsin.
When at full capacity, the Myplas USA plant expects to recycle nearly 90 million pounds of low- and high-density polyethylene (PE) packaging and film each year. Though this would be a fraction of the more than 12 billion pounds of flexible packaging and plastic films used in the U.S. annually, supporters of the initiative cite studies showing that recycled PE resins have the potential to significantly reduce the greenhouse gases and water consumption associated with the use of virgin material.
For MBOLD members, “the underlying ambition is to create a regional ecosystem of business engagement to help a circular economy thrive,” Berkenkamp says. Simply stated, the circular economy model offers companies using PE film an opportunity to recycle plastic waste and then use plastic packaging made from this recycled material.
Opportunities on both sides
The deal also represents an opportunity for Myplas USA, whose corporate parent, Delaware-headquartered MRI Investments Inc., operates South Africa-based plastics recycler Myplas Ltd. According to Myplas USA CEO Andrew Pieterse, plastics recycling is a “mature industry” in South Africa, and Myplas and its parent had been seeking ways to expand abroad. The U.S. began looking attractive in 2018, when China instituted its “National Sword” policy banning importation of America’s plastic waste. While coastal areas in the U.S. began developing plastic recycling programs, there was very little recycling capacity in the Midwest. In early 2021, an MBOLD member who’d heard about Myplas connected the company with the Minnesota group.
Myplas USA will begin transforming a former distribution facility in Rogers into a recycled resin production facility in September, with resin pelletizing likely to begin in May 2023. The company expects to employ about 100 when it opens; Pieterse says that as the plant expands from two to six production lines over a three-year period, its headcount will reach nearly 300.
One of the MBOLD investors in the Myplas facility is Marshall-based Schwan’s, whose retail food brands include Freschetta and Mrs. Smith’s (the company also has an extensive foodservice business). In making the investment, “our goal is to get to the point where we will be part of that circular economy by incorporating recycled resin into our films,” says Julie Simonson, Schwan’s vice president of R&D product innovation.
Getting the Myplas plant up and running is just the first curve in the circle. The film that uses recycled resins needs to meet U.S. Food & Drug Administration specifications for materials that come in contact with food. Specs differ depending on the packaging application—frozen-food or shelf-stable, for instance. Flexible films incorporating recycled PE need to be tested to make sure they meet food safety requirements. “We are working with Charter Next Generation to assess the feasibility” of the film it will produce, Simonson says.
What about economic benefits? How do the costs of recycled and virgin resins compare? According to Pieterse, that used to be a rather easy question to answer: High petroleum prices made recycled resin more economical, and lower prices made virgin resin a better deal. But with consumers and governments clamoring for more use of recycled plastic in packaging, “prices have started decoupling,” Pieterse says. Recycled resins aren’t necessarily cheaper even when oil prices are skyrocketing, as they are now.
Still, MBOLD members see business advantages that go on beyond cost considerations. “We believe firmly it is the right thing to be doing,” Simonson says. Helping create an environmentally beneficial circular economy “is where we see the benefit of this initiative.”