Aussie Start Up Plastech looks to address growing Australian Recycling Issue:
Plastech recycling ltd Investment overview:
What does Plastech do:
Plastech is a Green technology company that owns plastic products manufacturing firm, Newtecpoly, and the plastic recycling technology firm, PolyWaste Technologies.
The Polywaste Technologies melter transforms low-cost used plastics into a homogeneous substance that can then be transformed into high-quality plastic products for sale. The company (Polywaste Technologies) has manufactured & patented an extrusion technology that they believe lowers the time taken & resources needed to transform used plastic into a reusable plastic product.
Patented extrusion technology: typical extrusion is a time, energy & labor-intensive process that requires blending, drying, shredding (of plastic waste) before the plastic can be fed into the extruder. Polywaste technology, majority owned subsidiary of Plastech circumvents the preparation phase of plastic waste, allowing for plastic waste product to be fed directly into the extruder. Considering most plastic extrusion is done overseas, the process can reduce processing costs by up to 60% over the conventional method. This produces a domestic solution to the growing recycling issue present in Australia. A big plus for Plastech is the securing of the intellectual property of the extrusion manufactured product, therefore giving them complete control as to how they introduce this to market.
So how does Plastech plan to make use of this technology (and generate revenue)?
The company has plans to generate revenue in the following ways:
Individual licensing agreements: the right to use the Polywaste Technology can be sold to plastic product manufacturers. NewTechpoly will receive circa 20% of the of the license and royalties payments generated by the companies using the license.
Master licensing Agreements: The rights to sub-license the PolyWaste Technology. For example a company would like to manufacture the PolyWaste melters & then license them out. This would generate lower revenue for PolyTech, however they would incur significantly less due to not having to actually create the melter.
Research & Development and Manufacturing Activities: Once licenses have been issued by PolyWaste, the licensee’s will need ongoing support in the way of training. PolyTech also expects income to be generated from potential licensees looking to see if they can utilize PolyWaste Technologies through full scale trials.
Newtecpoly closed loop revenue stream: Newtecpoly a wholly owned subsidiary of PlasTech produces & sells eWood. A material generated from recycled plastics that can be used to replace concrete, steel, brick, fiberglass and other virgin plastics in many applications.
The company plans to use $50,000 over two years from the maximum subscription of $1.6m for investment in sales, marketing & distribution. With none of the funds being used for sales & marketing if the minimum subscription amount of $600,000 is hit.
What are the economic factors that could contribute to the success of Plastech:
Positive: China’s ban on importing Australian recycling:
Mid 2018 China made the decision to cease the purchase of overseas recycling (Blue Sky/National Sword program) which has put significant pressure on the Australian recycling industry. 36% of all plastics collected in recycling activities were exported to China in 2017, this is according to the Blue Environment report commissioned by the Australian Governments Department of the Environment and Energy. India has also made moves to reduce the amount of plastic & recycling that they receive from Australia. This is not mentioned in the PlasTech offer document but could be a key causal link in the increase in demand for their service in the years to come.
Negative: Reduction in construction & Infrastructure spend Australia wide:
There has been a significant downturn in total private & public sector construction as reflected in ABS data. With the trend estimates in the value of both private & public work being down 3.6% from September to December 2018 & 5.1% down from the previous years total construction spend. The offer document states that the “demand for extruded plastic products is closely related to the volume of building, construction and mining projects within the economy. Increases in either private or commercial development will drive demand for water, sewerage and drainage pipes as well as telecommunications and electrical conduits”. There is potential that a lack of construction demand could hinder PlasTech’s expansion projections.
Speculation: Australian recycling subsidisation:
There has been increasing awareness and sentiment that Australia has a growing recycling issue that we need to address immediately. With China & India reducing the waste they are importing, and the world becoming more waste conscious, Australia will have to turn to the domestic market for solutions to the problem. There is increased potential for domestic companies such as Plastech to receive R&D incentives & subsidies for addressing this issue.
Feel good factor
With this investment there are significant ethical and social impacts that generate a positive outcome for Australia. The two main outcomes are through the obvious recycling of materials & reduction of emissions, but the second comes from the increased job creation in Australia. There are approximately 9.2 jobs for every 10,000 tonnes recycled in Australia compared to 2.8 for export according to the Chief executive of the Waste Management Association of Australia (WMAA) Gayle Sloan. With the reduction of emissions, virgin polymer usage & the creation of Australian jobs, Plastech gets a very green tick of approval.
As always one should always do your own research before looking to make any investment decisions. Crowd Source Funding by its nature is high risk & you should always read the offer document before making an investment.
If you wish to know more about Polytech’s capital raise, please visit https://www.crowd88.com.