Expanding Recycling in Upper Midwest

CNG, General Mills, and Others Invest in Mechanical Recycling Plant

Expanding Recycling in Upper Midwest

A coalition of Minnesota-based CEOs in the agriculture and consumer packaged goods (CPGs) industries wanted to do more to ensure a circular economy, especially when it came to flexible packaging. Business leaders—including top players at General Mills, Schwan’s Company, Target, and Ecolab—set out to create a regional ecosystem serving the Upper Midwest by catalyzing new state-of-the-art film recycling capacity and demand for post-consumer recycled (PCR) resins that could be manufactured into a wide array of new film products.

“We identified packaging and plastics as a priority and pulled together all the packaging experts from our membership and very quickly identified the development of a circular economy for flexible films as a priority,” says JoAnne Berkenkamp, managing director of MBOLD®, the name of the coalition. MBOLD® is an initiative of Greater MSP, the economic development agency for the greater Minneapolis-St. Paul region.

MBOLD® stakeholders knew they needed packaging made from recycled resins and were keen to make progress on various company goals to reduce waste, expand recycling, and reduce the use of virgin plastics. But they needed to identify a film recycler interested in locating in the Upper Midwest and a film manufacturer to provide demand for the recycled resin. They found those partners in Myplas USA Inc. and Charter Next Generation (CNG).

“When you aim for a circular economy model, you need the film waste supply, the collection and recycling capability, and the capacity to make that PCR into new products,” Berkenkamp says. “We recognized the gap in the film recycling capability in the middle of the United States and recognized that having stable demand for that PCR is critical to the overall success of the circular economy model.”

In May, MBOLD® member companies General Mills, Schwan’s Company, Myplas, and CNG revealed plans for Myplas to create a state-of-the-art mechanical recycling operation in Rogers, Minnesota, with equity investments from various entities. When it goes online next year, the plant will produce food-grade and non-food-grade recycled polyethylene (PE) resins. Equity investments in Myplas USA of more than $9 million were made by lead investors CNG, Schwan’s, General Mills, Target, and Ecolab, Berkenkamp says.

The remaining funding for the $24.2 million project will come from a variety of sources, including the State of Minnesota, The Alliance to End Plastic Waste, and Closed Loop Partners, a New York-based private equity firm, says Andrew Pieterse, Myplas USA CEO.

“We will take film waste and create pellets that can be converted back into recycled plastic film,” Pieterse says. “It is easy to buy equipment and lease a building and recycle plastic if you have the technical knowledge. What we have done is something pretty special and unique. Through the MBOLD® coalition, we managed to bring some really big Minnesota-headquartered companies together, all showing some sort of commitment—via direct investment or through participation across the supply chain—before we even started operations.”

Making Connections

The 170,000-square-foot mechanical recycling plant northwest of Minneapolis will employ about 300 people and recycle nearly 90 million pounds of low- and high-density PE packaging. Myplas has been buying equipment for a building that it is leasing, with a goal of opening in spring 2023.

MBOLD®’s initial connections with Myplas and CNG led to a deeper dialogue about the potential to form a circular economy collaboration. That led to extensive due diligence with Myplas, whose flagship plant in South Africa produces resin used by Toyota, Unilever, and BMW, among others, Berkenkamp says. MBOLD® was impressed by Myplas’ reputation for producing recycled resin tailored to unique product specifications that often enabled customers to include PCR in new products and/or expand the percentage of PCR that could be used while maintaining product performance, she adds.

MBOLD® also looked at other recyclers before deciding to work with Myplas. Founded in 2012 in South Africa, Myplas’ opening of Myplas USA is the first venture in the U.S.

“We wanted a partner who would actively work across the value chain to create a circular economy model,” Berkenkamp says. “And we wanted to work with someone ready to locate a plant in Minnesota. Myplas has been a perfect fit for us.”

CNG CEO Kathy Bolhous, Pieterse, and Berkenkamp point out that the initiative is unique because of the partnerships that were formed. “You have food and ag businesses working across the value chain with a film recycler and a film manufacturer to chart out a new solution in a collaborative fashion,” Berkenkamp says.

That cooperation led to firm agreements, Bolhous says. “It really required all of the parties that are coming together to make commitments to each other,” Bolhous says. “For Myplas to feel confident about securing the capital and making the investment, they needed to know that there would be a buyer for the materials. We view our role as trying to help more recyclers get into the business by guaranteeing a certain amount of material. And we are confident that our customers will want it. The market is heading in that direction. One of the biggest challenges we face today is a lack of supply of PCR.”

CNG, which is based in Wisconsin, is not a member of MBOLD®, which serves food and agricultural companies headquartered in Minnesota, Berkenkamp points out. But MBOLD® knew that it needed the expertise of a flexible packaging manufacturer that would buy the materials produced at the Myplas plant. “Charter Next has been a critical, integral part of this initiative,” she adds.

Before investing in the project, CNG tried Myplas products and found that they were some of the best performing PCR materials that it has used, Bolhous says. “We feel very good about their capability and their process,” Bolhous says. “We work with other recyclers and will continue to work with many different ones. We value those relationships. This deal with Myplas is not going to satisfy the entire need for CNG. We are at a billion pounds of capacity, so we are going to need multiple partners across the entire U.S. to meet our very aggressive goals around sustainability.”

Bolhous says her company’s equity investment is more about finding solutions to a circular economy than taking a bet on a new enterprise. “We didn’t make our investment to make money,” she says. “We view it as supporting the industry and creating more recycling streams. What is unique about this is that we are bring-ing together the value chain—the CPGs, the recycler, the filmmaker—bringing all the parties to the table, and we are all putting something in. By having skin in the game and supporting this, we are demonstrating our commitment to building a circular economy, and that is what is revolutionary about it.”

Bolhous anticipates using PCR resins from the plant soon after it is operational. “It won’t take long once it is up and running,” Bolhous says, adding that films that are FDA-approved might not be ready right away but will be eventually. “We make films for many different markets, so we will have the opportunity to use both FDA-approved and non-FDA-approved PCR.”

A Bigger Cause

Bolhous says she gets annoyed when reading about people who don’t understand the importance of flexible packaging and how it can be recycled.

“We are passionate about supporting the recycling of plastics, but you read so many articles that say you can’t recycle plastics,” she says. “At CNG, we are using recycled plastics every day in products that we are selling to customers. We want to do everything we can to promote recycling. In this case, we are pushing beyond our typical role, which is a film producer, to help create a circular economy.”

“What is unique about this is that we are bringing together the value chain—the CPGs, the recycler, the filmmaker—bringing all the parties to the table and we are all putting something in. By having skin in the game and supporting this, we are demonstrating our commitment to building a circular economy and that is what is revolutionary about it.”

—Kathy Bolhous, CEO, Charter Next Generation

The company is well on its way to satisfying the 2025 goals of CPGs, Bolhous also says, adding that opponents of plastics don’t seem to understand how far efforts have gone. “You have people who are passionately against plastics, and you have people who think that plastic recycling doesn’t work. What we are trying to do is bust that myth because we are doing that today. We are continuing to do it, and we wouldn’t be investing money to support a recycler if we didn’t think recycling works,” she says. “We have to do a better job. But when you look at paper or aluminum, they have had decades to develop their recycling infrastructure. Those substrates existed long before flexible packaging did. Flexible packaging needs to develop a recycling infrastructure. We need the time to do it, and there is no time to waste.”

Future Expansions

Myplas’ success could mean that the model created in Minnesota could be transferred elsewhere. “Myplas needs to make money,” Bolhous says. “Recycling has to make sense financially. Otherwise, you are not going to see it take off in other cities. But to prove this model—to make sure it makes financial sense for all the parties involved—it could be replicated in other cities.”

Once the Minnesota model succeeds, Pieterse says, Myplas would seek other projects in the U.S. “We are not the first recycler in the U.S. We are not the first recycler in the Midwest. But we are the first company to set up a business model in this way with investors and companies across the supply chain—big global brands,” he says. “For now, though, our focus is 100% on getting the Minnesota plant up and running.”

He also would expect that competing companies might take the idea and apply it to their regions. “And that would be great for the environment,” he quickly adds.

Berkenkamp says she also thinks that successes will be noticed. “This could be the first of a growing array of locations in the U.S. In the recycling space, geography really matters. In the United States, roughly 5% of flexible films are recycled. That remaining 95% leaves enormous room for creativity and innovation,” she says. “It is vitally important that regions work together on a multistate basis to develop geographically appropriate solutions for recycling flexible films. MBOLD® is committed to catalyzing a circular economy for flexible films in the Upper Midwest. We hope that our initiative can inform and inspire other regions, as well.”

Bolhous is confident, too. “We will make it work,” she says. “There is no doubt in my mind.” 

Thomas A. Barstow is senior editor of FlexPack VOICE®.