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Dive Brief:
International Recycling Group is canceling its plans to build a plastics recycling facility in Erie, Pennsylvania, citing a range of macroeconomic factors related to the federal government.
The IRG facility had been selected by the U.S. Department of Energy under President Joe Biden to receive a $182.6 million loan, but the status of that funding is now uncertain, the company said in a release. Tariffs on imported equipment and difficulties finding offtake partners also contributed to the project's demise, according to IRG.
At least one other major recycling project that secured a DOE loan appears imperiled. Li-Cycle reported a net loss for fiscal year 2024; It had $22.6 million cash on hand to end the year and used $106.4 million in net cash last year. It said it lacked capital to draw from its own DOE loan, which is worth up to $475 million.
Dive Insight:
The DOELoan Programs Office was supercharged by climate and infrastructure laws like the Inflation Reduction Act passed during the Biden administration. With enhanced funding, DOE was aggressive in signing deals with companies that pursued innovative solutions to energy needs, including plastics recyclers that could reduce reliance on petrochemicals or battery recyclers that could support the electric vehicle industry.
A factsheet shared by the agency under the Biden administration noted that LPO does not pick and choose which technologies to fund, but rather funds projects that pass a multi-step application process. Through fiscal year 2022, the program had provided more than $50 billion in total project investment.
So far, three major recycling projects that LPO had reached conditional commitments with have not received any funding
Redwood Materials, another battery recycler, received a DOE loan commitment in 2023 for the construction and expansion of a battery materials campus in McCarran, Nevada. But the company decided to discontinue its agreement with the federal government last year without drawing any funds, instead sticking to private funding sources, according to a spokesperson.
“We initially applied for this loan in 2021, when our company was at a very different stage of growth. Since, Redwood has raised $2 billion in private funding, and we generated nearly $200 million in revenue last year. Given our financial strength, continuing with this loan no longer provided a net benefit,” Alexis Georgeson, vice president of government relations and communications, said in a statement.
A DOE spokesperson said on Friday that the IRG facility shutdown was the company’s decision and had nothing to do with the federal agency. DOE said no funds had been disbursed from the agreement with IRG either.
“As evidenced by the office's recent disbursements, LPO has been working constructively with applicants to advance energy sources that are affordable, reliable and secure for the American people,” the spokesperson said in an emailed statement.
IRG was a recipient of funding in part because it planned to produce a coking agent, dubbed Clean Red, out of plastic products. Co-founder and CEO Mitch Hecht had previously said IRG signed a contract with a steelmaking plant in Northwest Indiana that planned to use the material.
IRG's plant in Erie was slated to take in 160,000 tons of mixed plastic waste per year and turn 100,000 tons of it into mechanically recycled plastic flake, while the remainder would be Clean Red. Hecht, whose company has been working on the technology behind the facility for more than a decade, said the project would cost more than $300 million in total.
In addition to receiving funding from the federal government, IRG also received funding agreements from state and local authorities. In a release, the company said it never accessed funds it was offered from the Pennsylvania Redevelopment Assistance Capital Program and Rail Assistance Program. The company expects to repay a $300,000 loan from the Erie County Redevelopment Authority.
IRG is also shutting down newBin, its public bin collections service in the city. The company said some collected material had been used for research purposes, but the remainder would be either sold to a recycler or sent to landfill. It said the material is stored securely and is not considered hazardous.
“Over four years ago, we brought the IRG project to Erie with the intention of creating high-paying, family-sustaining jobs and turning Erie into a leader in environmental sustainability by replacing new plastic production with reused and recycled materials gathered from homes across the region. I am personally devastated after 18 years of working to bring this vision to a reality that we have failed to overcome these challenges,” Hecht said in a statement. He declined to discuss the decision further.
Li-Cycle has also run into escalating financial difficulties. The New York Stock Exchange notified the public company of its intention to delist Li-Cycle as it could not consistently keep its stock price over one dollar.Li-Cycle is now trading over the counter. The company had previously paused construction on its $700 million Rochester, New York, hub, the centerpiece of its manufacturing operations, in 2023.
The loan from DOE could have been a lifeline for the company, but President Donald Trump has halted several funding programs for clean energy projects. Li-Cycle must also have enough equity available to be able to access its DOE loan, which remains a challenge for the company.
MasTec, which has a lien on Li-Cycle's Rochester hub, has been attempting to recover $48.7 million in construction costs at the Rochester hub since April 9, 2024, Li-Cycle reported. MasTec attempted to compel a lien foreclosure auction, but that has been paused while arbitration between the two companies continues.
“We believe we are well-positioned to support, and are aligned with, the energy priorities of the U.S. government as they look to bolster and onshore the energy supply chain through the domestic production of critical minerals,” Ajay Kochhar, Li-Cycle’s president and CEO, said in a statement accompanying the company’s earnings release. “Looking ahead, we are focused on managing our cash position while considering our financial and strategic alternatives.”
Editor’s note: This story has been updated with comment from Redwood Materials.
