KINGSPORT, Tenn. (WJHL) — It hasn’t been on time or on budget, but Eastman Chemical Company leaders are convinced the company’s molecular recycling facility here represents the tip of what will be a lucrative and change-driving spear.
“Whenever you do anything like this, you don’t get too bent out of shape,” Scott Ballard, president of Eastman’s plastics division, told News Channel 11 just weeks after the company announced it was finally generating revenue with its recycled dimethyl terephthalate (R-DMT). Like its petroleum-sourced cousin DMT, that’s the building block for a huge variety of plastics from Eastman’s Tritan (think Camelbak water bottles) to hard plastic parts of tools like drills.
“This is a long-term win for the world and for Eastman,” Ballard said inside Eastman’s multistory glass-walled corporate office. “And so we’re committed to pushing that thing through and we still feel good about all those demand drivers because if anything, we’re headed in the right direction.”
Ballard’s “demand drivers” include consumer, corporate and regulatory trends all pushing for less plastic waste, more recycled products and a reduction in the amount of greenhouse gases emitted during goods production.
Eastman said it would deliver on all three counts when, with much fanfare, it announced in January 2021 it would build a “plastic-to-plastic molecular recycling facility” in Kingsport. Since then, the company’s announced it will build additional facilities in France and at Eastman’s Longview, Texas plant.
The methanolysis process it uses breaks difficult-to-recycle waste plastics down into their original molecular state to create R-DMT. Standard DMT, including that produced by Eastman, uses paraxylene, an aromatic hydrocarbon derived from petroleum — and according to Eastman the new process emits 30% less greenhouse gas overall compared to the standard production method.
“What we’re seeing is more and more brands finding lower carbon footprint, circular material as a value proposition that their consumers and their customers care about,” Ballard said. “They’re able to win shelf space at retailers, they’re able to win better prices, better market share, all that sort of thing, and their success is our value proposition.”
When it announced the project, Eastman hoped to invest about $250 million and have the facility “mechanically complete” by the end of 2022.
Mechanical completion actually came a year later, at the end of 2023, with startup activities carrying over into the first quarter of this year, Eastman Chief Technology Officer Chris Killian said.
“We were in the middle of the COVID timeframe where we’re doing engineering design and some of the early specification,” Killian said. “The supply chain crisis that followed … resulted in both some capital cost escalation as well as some time delays on equipment receipt.”
“Any time you’re doing something truly new to the world like this technology is there’s a greater degree of complexity, a greater degree of uncertainty, a greater degree of risk than when you’re just simply expanding and modifying something that you’ve done for a decade or even more.”
Like Ballard, though, Killian sounded sanguine if not downright zealous about the present and future for Eastman’s efforts to get ahead of the curve on turning waste plastic into a highly desirable product.
“Why not repurpose carbon that’s already been extracted from the environment, give it an infinite life in either packaging or durable applications over and over and over again,” he said.
“That to us both not only is environmentally the right thing to do, but it’s the right thing to do from a business perspective to create value for our employees, for our customers and for society.”
Now the fits and starts are past and Eastman is churning out R-DMT, meeting customer demand and expecting that demand to catch up quickly with its production capacity. The Kingsport plant can convert 110 metric tons of plastic waste annually, getting about 90% of that volume out the back end in new product. Additional facilities are being built in France and at Eastman’s Longview, Texas plant.
Last fall, Eastman set a public target for the recycled plastic facility to yield $75 million in earnings before income taxes, depreciation and amortization (EBITDA) during 2024. Even though Eastman leaders thought startup would come sooner when they made that prediction, Ballard said “we’ve got sales and marketing teams out there that are working really hard to still deliver on it.”
Ballard said demand “never shows up immediately” when a new process comes on line. But he added that “the strength of the value proposition” is accelerating demand. He said his generation cares more about sustainability than the one before it, and that younger adults care more than any generation before them.
“We like to use the words ‘showing the world what’s possible,'” Ballard said, using an oft-repeated phrase at the company. “We’re not just showing what’s possible from technology perspective but it’s also from an ecosystem perspective, from a business proposition perspective and the more success we have, the more people will follow us.”
A number of signs point to a high profile for Eastman as production ramps up. When CEO Mark Costa announced Eastman would build a 200,000-ton molecular recycling plant in France, the country’s ministers for ecological transition and industry weren’t the only dignitaries present — French President Emmanuel Macron himself was on hand. Companies like Estee Lauder, Procter & Gamble, L’Oreal and Danone had signed letters of intent for multiyear supply agreements.
Then earlier this year, the U.S. Department of Energy announced it would provide up to $375 million in grant funding to help the company make a third molecular recycling plant in Longview be much “greener” than the Kingsport facility.
“A solar farm integrated with a cutting edge thermal battery technology that will allow us to deliver process heat and energy to that facility at very very low, near zero carbon implication,” Killian said in describing plans for Longview. “So recycled content plus low-carbon products. What the market wants, what consumers want and what regulatory bodies want we can deliver with this technology.”
The attention — and the federal investment that’s allowing Eastman to add carbon-reducing elements in Longview that Ballard said they wouldn’t be able to afford without grant money — point to a future in which Eastman is a thought leader of sorts.
“We’re having the opportunity to have influence in places and on issues that we really haven’t been consulted before,” he said. “Our thoughts are being considered as a lot of regulations are being written, leading brands are setting their own corporate policies — it’s a very exciting thing for our team.”
Some questions apparently remain on the demand side, at least in Europe. Eastman CEO Costa admitted to an investor during a late April call that some European companies related to the French project were relying on lower cost PET for their packaging.
That Normandy facility isn’t due to come online until at least 2026, though, and Costa sounded confident that regulation would continue requiring higher recycling rates and recycled content rates in both Europe and the U.S.
“It’s just taking us longer to work through these contracts,” Costa said during that call. “I’m confident in the end, these brands will focus on what is the correct thing to do for the U.S. and Europe’s waste issues, but it’s just taking us longer to negotiate the contracts than we expected.”
Ballard exuded confidence. Noting that one of Eastman’s plastics strategies “is to catalyze change greater than ourselves,” he said other companies in other regions are “trying to do the exact same thing that we’re doing, and that’s great.”
He said the company took a risk putting an estimated $2 billion in capital into the three facilities without “waiting for all the regulations to be defined.” He said he hopes that risk will yield rewards for Eastman’s employees, including the 90 people who operate the new methanolysis facility in Kingsport.
“The more successful we can be in winning favor with our customers, that helps us win favor with investors,” Ballard said. “The more funded we are, the more opportunities we create for our employees to be financially rewarded, to have jobs that they go learn something new in, to move into leadership roles themselves.”
Eastman stock is trading at just under the $100 mark and its 50-day moving average is up about 20% from the beginning of the year.
Courtesy : wjhl.com
