Analysis: M&A waste: who is in charge?

Food waste, yard waste and agricultural by-products may be among the discarded materials for which a global secondary raw materials market is an unlikely destination. This does not mean, however, that the economic opportunities for handling these materials are non-existent. Companies like Ontario, Anaergia Inc., based in Canada, are among those offering publicly traded stocks to invest in these opportunities.

Anaergia claims to have participated in the construction of more than 1,700 resource recovery plants on four continents over the past 25 years. The company is dedicated to equipment design, process engineering, equipment manufacturing, project integration, project financing and project execution to manage part of the waste. municipal solids (DSM), wastewater and agri-food waste.

During the last completed and totaled financial quarter of the Company, ending June 30, Anaergia reported net income of $ 1.7 million (C $ 2.2 million) on $ 25.2 million (32 , CA $ 1 million) in revenue. The company cites “activity in the European, Middle East and Africa (EMEA) and North American markets” for results which improved in terms of financial losses and of only 17, $ 6 million (C $ 22.4 million) in revenue a year earlier.

Buy in the momentum

In August, Anaergia completed the purchase of the Rhode Island Bioenergy Facility, which was previously an indirect subsidiary of Orbit Energy Rhode Island LLC. Anaergia describes it as DA’s largest industrial plant for food and other solid organic waste in New England.

Johnston, Rhode Island, AD plant can process over 100,000 tonnes of organic waste each year, converting it to energy [a natural gas equivalent], fertilizers and water “while reducing greenhouse gases”, explains Anaergia.

“We are very pleased to welcome Anaergia to Rhode Island,” said Rhode Island Commerce President Jesse Saglio in connection with Anaergia’s announcement in August. “This facility will not only help the state meet its waste diversion goals, but [it will] also add new food-related jobs to our economy. Anaergia complements other recent food-related investments in the state, and this plant is helping to secure the future growth and success of this important industry.

“Our acquisition of this facility extends Anaergia’s own and operated business to the east coast of the United States,” Anaergia Chairman and CEO Andrew Benedek said at the time. “This facility enables Anaergia to invest in sustainable infrastructure that generates high-tech jobs, serves the community and extends our ability to generate carbon-negative fuel.”

Presence on the Pacific coast

Photo courtesy of Anaergia Inc.

Earlier in 2021, Anaergia announced a planned investment on the West Coast, signing an agreement with Universal Waste Systems Inc. (UWS) based in Carlsbad, California, to build an organic waste treatment plant in Los Angeles.

Located at a UWS Materials Recovery Facility (MRF) in California’s largest city, the project “will support recycLA’s organic waste diversion efforts and help meet the organic waste recycling requirements imposed by the Bill. 1383 of the California Senate, ”according to the two companies.

An Anaergia Organics (OREX) extrusion press will be installed as part of the facility’s solid waste treatment line to “recover organics from contaminated solid waste by high pressure extrusion”. The two companies predict that OREX will divert up to 300 tonnes per day of organic waste from the Los Angeles MSW stream and generate power from organic waste previously destined for landfill. The project should be operational by the end of this year.

“Our long-term partnership with UWS will reduce greenhouse gas emissions by converting landfilled organic waste into carbon-negative fuel, thereby contributing to a circular economy,” Yaniv said at the time. Scherson, General Manager of Anaergia West Region.

“Partnering with Anaergia to extract value from daily waste streams aligns with UWS’s commitment to supporting a sustainable future,” said Mark Blackburn, President of UWS.

The two companies predict that the project can reduce greenhouse gas (GHG) emissions by more than 70,000 metric tons per year while “generating enough power to replace more than 2.5 million gallons of diesel fuel. per year “.

Under a separate agreement, the collected organic waste will be treated by Anaergia’s subsidiary, Rialto Bioenergy Facility LLC (RBF), in Rialto, California. At this DA facility, the diverted organic material will be converted into what Anaergia calls “pipeline grade renewable natural gas” and fertilizer.

Construction of the Rialto plant started at the end of 2018, and the project was marked by collaboration with several major players in the American solid waste and recycling sector.

As designed, the RBF plant can convert 700 tonnes per day of food waste and 300 tonnes per day of biosolids into natural gas, electricity and fertilizer. At the start of the project, Anaergia said it would hold the title of “North America’s largest food waste diversion and energy recovery facility.”

This large scale includes the capacity to manage some 300,000 tonnes per year of organic waste while producing the equivalent of 13 megawatts of energy per year. “The net reduction in carbon dioxide emissions will be around 220,000 metric tonnes per year, which is equivalent to taking 47,500 cars off the road,” Anaergia said.

Anaergia says the plant was built in conjunction with Houston-based Waste Management Inc.; Republic Services based in Phoenix; the City of Los Angeles Sanitation Office; and the Los Angeles County and Orange County health districts; CalRecycle; and several regional public services and other government stakeholders.

“We are proud to work with industry leaders in solid waste, wastewater and renewable energy to build one of the largest organics recycling facilities in the world serving the Southern California region,” Benedek said at the time of the announcement. “Our new plant will demonstrate a truly sustainable and reproducible way to meet the state’s organics diversion and recycling needs.

The road ahead

The scale of the building and a profitable second quarter come under the “good news” column for Anaergia. CEO Benedek, however, said COVID-19 and other factors remain capable of disrupting the energy conversion market.

“The financial results we report today reflect Anaergia’s strong year-over-year growth,” Benedek said in mid-August when announcing second quarter results. “In addition, our growing order backlog bodes well for continued revenue growth and improved profitability in the periods to come. “

Benedek continued, “While this increase in revenue is gratifying, we are currently monitoring the continued impact of the COVID-19 pandemic on levels of business activity in California. In particular, due to the COVID-19 pandemic, we are seeing a slower than expected escalation in organic waste volumes shipped to our Rialto facility near Los Angeles. This temporarily delays the expected financial contribution from this facility. “

Prospects in Europe, where circular economy proposals and targets stimulate ongoing investment, could be better in the short term, he says.

“We are seeing higher than expected demand for our integrated solution in Europe,” says Benedek. “We now expect that increased sales in Europe will offset the financial impact of the slower than expected ramp-up of the Rialto. Therefore, we currently do not anticipate any discernible change to Anaergia’s previously disclosed financial outlook for 2022 or 2023. “

After closing its initial public offering (IPO) this summer, Anaergia is promoting itself as having a “first-come advantage” for those who wish to invest in “the only player in the global market with end-to-end solutions for waste problems. organic products, including the treatment of solid waste streams (DSM, source-sorted organic and commercial waste), sewage sludge and agri-food waste.

The company says it not only sees more projects on the horizon around the world, but that Anaergia has more than 230 “active and pending patent filings around the world.” Anaergia claims that the patent for its OREX organics extrusion technology was recently upheld by a European court, “consolidating the strength of our competitive position”.

In addition to touting its own technology to investors, Anaergia highlights a circumstance well known to those who make a living in the waste industry: “The increased global awareness of the constraints of landfills and the environmental impact of waste leads to regulations on the diversion of organic materials. These regulations dictate minimum organics diversion targets in many jurisdictions, providing a line of sight to a growing global need ”for AD facilities and similar investments.

This article originally appeared in the October issue of Waste Today. The author is editor of the Recycling Today Media Group and can be contacted at [email protected]

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