A speculative article in the mainstream media alluding to the possible closure of Qenos' resin production facilities – which Qenos has not confirmed – has raised concerns over the impact this could have on Australia’s plastics circularity ambitions. PKN invited comment from industry experts, stakeholders, and government.
A recently published article in The Australian (29 February) indicated that Qenos is considering the closure of its LLDPE and HDPE resin manufacturing facilities in Botany, NSW and Altona, VIC respectively by the end of the year, citing a leaked internal email that suggested ongoing losses at the plastics manufacturer as a driver for the decision.
The Botany facility has been out of action since the collapse of its cooling towers in February last year. The plant rebuild had been progressing apace, and was reportedly close to completion. However, the company has given verbal confirmation to customers (who spoke to PKN off the record) that the rebuild is now “paused”.
PKN reached out to Qenos' CEO Stephen Bell who declined to comment on speculation.
[Ed's note: To clarify PKN’s position, we are not attempting to fuel the rumour here, but we cannot ignore that the speculation has nevertheless stirred up the industry because of the far-reaching implications, not least of which is the thwarting of Australia’s hopes of a robust circular strategy for the plastics supply chain.]
EXPERTS WEIGH IN
At the Society of Plastics Engineers ANZ conference in October last year, the point was driven home by experts in the room, including Helen Millicer, director of One Planet Consulting, that Australia is one of only two jurisdictions in the world that can reach high rates of circularity in plastic, the other being Europe.
“This is a very rare and privileged position we must not squander,” Millicer tells PKN. “However, we will only realise this if Australia retains its two resin manufacturing plants, run by Qenos and Viva.”
Millicer contends that in the same way Viva benefited from significant government support in 2021-22 to upgrade its plant to achieve improved low emissions fuel production, so Qenos should benefit from support of policies and funds to achieve circularity in polyethylene production and cut its emissions from virgin fossil gas consumption.
“Indeed, if Australia reconfigures its policies and programs for low emissions and circularity instead of linear high waste and costs, and provides confidence to hundreds of companies across our plastics supply chain, each of these two operations could, with processing adjustments, receive and process over 100,000 tonnes of plastic waste per year,” Millicer says, noting there are roughly five tonnes of GHG emissions for each tonne of virgin plastics, whereas it is closer to one-to-one with advanced chemical recycling.
Prof Ed Kosior, CEO and founder of Nextek, and a widely respected expert on plastics recycling, shared his views with PKN.
Attuned with Millicer's view, he says one of the key repercussions of a shutdown of Qenos’ facilities would be the absence of chemical recycling routes.
“Without a local manufacturer of virgin resins, Australia will be without local companies to champion the need (via EPR) to recycle the resins made locally within Australia. Any new investments to make hydrocarbon streams (gas and oils) from difficult to recycle plastics – such as the unsolved issue of what to do with plastic films [soft plastics] – will have no local market for their technology and for their hydrocarbons. We will have a bow without an arrow. Solutions without a buyer. No way to conserve hydrocarbons and reduce our consumption of crude oils and virgin plastics,” Kosior says.
Of course, without a locally sourced supply of resin, plastic converters reliance on imports of resin would increase. One packaging converter PKN spoke to, who chose to stay off the record, voiced concern about the increased lead time to test and trial imported materials. He cited a current scenario in which one of his customers had already progressed trials on packaging using Qenos polymers, but it would have to start from scratch if the resin is not going to be available going forward. He expressed frustration that despite repeated requests for information about the progress of the Botany facility, he has only had verbal confirmation that the project is paused.
Lack of standardisation of the resins being imported also pose a challenge. As Kosior says, “The range of resins coming into Australia will almost certainly increase requiring more work to qualify these materials for local applications. Technical back up will not be present to resolve any problems. Any shifts in foreign exchange will shift the cost of resins, and the need to look for new suppliers and start a further round of qualification tests will place a further burden on local manufacturers. Any conflicts in the geographical regions of supply could rapidly switch off the supply of imported resin creating more supply chain challenges within Australia.”
The scenario under discussion would also lead to a lack of standardised resins for production and recycling, says Kosior, who explains that when plastics are recycled into new applications there is usually a target for the resin properties that is a function of the properties of the virgin resin and the recycled resin.
“For food grade recycling, the composition of the additives in plastics need to be tightly controlled and approved by the USFDA or EFSA to be put onto the Australian market,” he says. “Any shifts in the supply of imported resins into Australia has the potential to initiate changes the processing settings for the convertors and the shifted recycled resin properties will require additional testing and refinement by recyclers in order to meet their market technical requirements.”
And then there’s cost. Plastic converters will have the added expense of carrying more inventory of resin to mitigate the risk of supply chain interruptions.
“There might be scenarios where resins could be in short supply to converters making them vulnerable to being replaced by imported products. Don’t forget that a lot of HDPE is used for critical infrastructure, such as water pipes designed for 100 years-plus service, telecommunications ducting; and LLDPE is used for electrical insulation on wiring and cables. And then course the wide applications of both resins in the critical area of food packaging. Lack of supply of these materials should be strategically important to government as well as businesses,” Kosior says.
Plastic converters PKN spoke to concur with all the points Kosior has raised, and recognise too that this will undermine our local expertise in polymer production.
Kosior says, “The potential closure of Qenos plants would further dismantle another sector of the Australian manufacturing industry and dissipate the concentration of chemical and engineering expertise that Australia has maintained for over 60 years. This loss will ripple through the manufacturing industries that rely on technical solutions and modifications, which are currently possible with local manufacture of the plastics resins. There will be no further careers in this sector and our young bright scientists and engineers will need to look elsewhere for meaningful and rewarding technical and commercial careers.”
He adds, “Australia also no longer makes automobiles or the subcomponents, nor designs the parts to perform to stringent standards. We no longer make rubber or the tyres that use the rubber for the cars we drive. We no longer make PVC used in every drainpipe in Australia, nor the PET used in nearly every clear beverage bottle. These are forerunners of the closure of this sector of the plastics industry, which will leave Australia vulnerable – technically, economically, and strategically – to the winds of any change.”
GOVERNMENT POSITION
PKN also reached out to the Federal Government's Department of Climate Change, Energy, the Environment and Water (DCCEEW). A department spokesperson reinforced DCCEEW’s position that Australia’s domestic plastic sector is important for circularity in plastics, and that because we have plastic resin manufacturing infrastructure here, “we can shoot for circularity for certain polymers within Australia”.
The DCCEEW spokesperson said Government is investing $250 million in new or upgraded recycling facilities under the Recycling Modernisation Fund (RMF), including through the $60 million Plastics Technology stream. In addition to 66 plastics recycling projects already funded under the RMF, the Plastics Technology stream – currently under assessment – will target advanced and innovative technologies and initiatives across the hard-to-recycle plastics system. Further plastics projects under the RMF are due to be announced this year.
As PKN readers are aware, Environment Ministers have committed to “transition Australia from a 'take, make, waste' economy toward a more resilient and regenerative circular economy that maximises the value of materials and minimises waste and pollution”.
And, for the first time, Australia is set to mandate obligations for packaging design as part of a new packaging regulation the Government is developing. This will include mandatory packaging design standards and minimum recycled content thresholds.
But without local resin manufacturing, this will be difficult to achieve for PE packaging applications. If the speculation turns out to be true, Australia will be taking a major step backwards in our quest for plastics circularity.
