Commodity prices and a strong dollar impact Infinitus Renewable Energy Park sales
October 2015
By David Zaslawsky
Photography by Robert Fouts
These are trying times for recyclers and although the trash is piling up at Infinitus Renewable Energy Park in Montgomery, the recycled products have fallen on rough times.
The plunging price of crude oil, which fell from about $100 a barrel to $40 at one point, impacts the plastic recycled product that IREP sells. The company’s price has also dropped about 50 percent per ton as the price “is directly correlated with oil,” said Kyle Mowitz, CEO and co-founder of Infinitus Energy, which initially invested about $35 million into the 82,000-square-foot recycling center. The company has 105 employees.
The recycled paper is sent to China, which saw its once surging economy slow and that meant about a 25 percent cut in revenue. “Right now, we are in a very low commodity market,” Mowitz said.
The strong dollar has worked against Infinitus Energy and all other companies that export products, which are now more expensive overseas.
On top of all that, the company’s top two recycled products are plastics and paper, which combined account for 65 percent to 70 percent of all recycled products. Now consider that about 70 percent of the firm’s revenue comes from selling recycled products such as paper, plastics, cardboard, metals and aluminum. That leaves about 30 percent from tipping fees, which is the cost that companies, municipalities and organizations pay to deliver their waste to IREP. “We are heavily dependent on the commodity market,” Mowitz said.
The facility has been operating for more than a year and Mowitz is pleased, although higher commodity prices would bring a smile to his face. “We’re very comfortable,” he said. “You would love to be wildly profitable of course, but that wasn’t our expectation.”
There are two projects that will inject more revenue into the facility. The firm, which is based in Plantation, Fla., invested an additional $5 million for composting equipment to convert organic waste – food waste and yard waste – into compressed natural gas (CNG).
IREP is negotiating with some local companies to convert their truck fleets to CNG, which is much cheaper than diesel at $2 a gallon. Mowitz said that the City of Montgomery may eventually use CNG for its sanitation trucks and may decide to use CNG in buses as well. The goal is “putting fuel into trucks within a year,” Mowitz said.
Before the conversion to CNG, the facility is currently composting the organic waste and working with a bagging company to see if the recycled product will work in that operation.
Infinitus Energy is also looking at investing another $5.5 million in new equipment and technology to recycle a higher percentage of the waste stream. One of the technologies being considered takes paper and plastics “that we can’t recycle and turns that into a pulverized coal substitute that’s been approved by the FDA to go directly to a coal-fired plant,” he said. That’s right – creating coal here, but the technology and equipment have to get to a commercial scale, Mowitz said.
The plant is handling 135,000 tons of waste on an annualized basis, according to Mowitz. The break-even point is about 100,000 tons “in an average commodity market,” he said, but with that market reeling, the new break-even point is closer to 125,000 tons. “Our sweet spot is (150,000),” Mowitz said, adding that he expects the facility to reach that number in the company’s 2015-2016 fiscal year.
The key clients bringing waste to IREP are the City of Montgomery, Maxwell Air Force Base, Waste Management, Advanced Disposal and Emerald Cost Utility Authority in the Florida Panhandle. There are other small haulers and municipalities, but IREP officials are talking to local communities.
Even with the huge numbers, quantity is not key – it’s the quality of the recycled products that keeps their customers satisfied. “We’re getting more tons per hour through the system, so we’re getting more efficient in that standpoint, and we’re doing a better quality product out the back end while we’re doing it faster,” Mowitz said.
The plant, which is co-operated by San Jose-based Zero Waste Energy, recycles about 60 percent of the waste stream, but that figure fluctuates depending on what is brought to IREP. The range can be from 50-plus percent to 70-plus percent, according to Mowitz.
City and Recycling Center Share Innovation Award
The City of Montgomery and the Infinitus Renewable Energy Park in Montgomery partnered to recycle trash.
Now that relationship has resulted in the two winning the 2015 Alabama Innovation Award for Outstanding Public-Private Partnership. The award was from Alabama Launchpad, a program of the Economic Development Partnership of Alabama. The award recognizes job creation and technology that solve local issues or global ones.
The Infinitus Renewable Energy Park (IREP) opened last April, creating 105 jobs and greatly reducing the amount of trash that goes to the landfill. “Our mission is to deliver an integrated waste model that benefits the residents of a community in two very important ways,” Infinitus Energy CEO Kyle Mowitz said in a statement.
“First, we bring overall waste programming costs down with no capital investment required from the community. Secondly, we increase overall recovery rates, which in turn dramatically boosts landfill diversion rates.”
Montgomery Mayor Todd Strange said that the partnership with IREP “began out of necessity” because the landfill was littered with green recycling bags. “Thanks to our partnership with Infinitus Energy, Montgomery is now on the cutting edge of green technology, which has allowed us to come close to achieving recycling rates that will be amongst the highest in the nation,” Strange said in a statement.
EPDA Vice President Angela Wier said that the organization was impressed by all the nominations. “The awards are not just a celebration for accomplishment, but they also help EDPA discover companies that contribute to the diversification of the economy and the creation of high-wage careers for Alabama,” she said in a statement.
– David Zaslawsky
