Circulus aims to be a major LDPE film recycler

For Circulus Holdings PBLLC, the company's approach is literally in the name.

With one low density polyethylene film recycling facility recently opening in California, the Houston-based company not only wants to make a difference in the plastic recycling but also wants to impact lives along the way.

Circulus aims to divert as much LDPE film away from disposal, incineration and export to create recycled resin that can be reused over and over again in a circular approach.

As CEO and founder of Circulus, David Hudson started working on the company's vision in 2017 after spending time as head of sales and marketing for Recology in San Francisco. He saw how much film was discarded as part of his work at the solid waste management company.

"We were just looking for ways to further diversion. There was a lot of flexible packaging that was still being landfilled without a suitable home and therein lies the opportunity," he said. "It seemed like an opportunity that was being missed that we could capitalize on."

Many municipal recovery facilities, places where curbside collected recyclables are sorted and bailed for reprocessing by others, are just not equipped to handle films such as grocery store T-shirt bags, shrink film and overwrap. They can easily become tangled in rotating equipment used to separate recyclables by commodity and size. As a result, most MRFs shun film.

As a private company, Hudson was hesitant to share some of the details of his company's operations, but he did pull the curtain back a bit.

Production at the company's first location in Riverbank, Calif., began in July and the facility has the capacity to process about 40 million pounds of material annually. Two more locations are in construction in Ardmore, Okla., and Arab, Ala., and another two are under development in the Midwest and Northeast.

Each location, when fully staffed, will have about 45 employees.

"Our goal is to scale it to a broad footprint whereby we can be the customer of choice for the supply community and also be able to have resin ready to sell in various markets within that wide footprint," Hudson said.

"We've been fortunate enough to really develop some very nice supply streams. We've built a world-class operating model for mechanically converting plastic film back into a world-class resin," he said. "We've been highly engaged with buyers of this material that really seek to get it back into the circular economy."

Hudson said his company sells recycled LDPE to three major buyers: consumer packaged goods companies, packaging manufacturers and petrochemical companies. One of those customers is Nova Chemicals, which announced Nov. 17 that it has signed a long-term supply deal with Circulus.

Recycled LDPE has found a home in the production of plastic lumber, but the CEO said his firm looks to give the resin several lives beyond a single reuse. That's why Circulus is targeting its resin for reuse in packaging that can be recaptured and recycled repeatedly. "One of the goals of Circulus is to focus on true circularity," he said.

Circulus eventually could have a network of 10 locations in the United States as well as others around the world, Hudson said.

"Our vision, long term, is to have an international if not global footprint," he said. "Because if you think about it, our suppliers are national and in some cases global. Our customers are national and sometimes global.

"Why have a single location whereby you have long supply lines coming in and a long, extended supply chain going out? Why not work to localize," Hudson said.

Starting construction of the company's first processing facility during a pandemic in 2020 certainly created some challenges, the CEO said, but they were overcome.

"It was difficult. The issues with labor are very real. The global supply chain crisis is very real. It's affected everyone, including us."

"We certainly had to get creative in how we approached construction and timing and delivery of equipment and our approaches to keeping the workforce safe," Hudson said.

Circulus is a public benefit limited liability company, or PBLLC, the CEO explained. With that designation comes an expectation that the company will conduct business with more than just the bottom line in mind.

On the environmental side, Circulus uses 100 percent renewable energy and 85 percent recycled water, Hudson explained. Employees also have benefits including health care coverage and a retirement plan, for example.

"We do hold ourselves to a higher standard with regards to ESG, with regards to how we treat our employees and things of that nature. We really look to be world class in all of those elements, with how we treat the environment," he said. "I think we're doing a lot of things right as a company.

"I think ultimately if you look at who we are as a company, ultimately what we sell is the resin. But I think ultimately our product is the people that work with us day in and day out. I've always been a true believer if we treat our employees well they will be more engaged, they will work more safely and they will help us produce the best-quality produce we possibly can," Hudson said.

"I feel making investments in our employees then in turn will do right by us," he said.

Becoming a public benefit LLC provides the company with added legal protection to make decisions that go beyond just financial considerations.

Circulus is backed by Ara Partners, a private investment firm focused on companies with sustainability and environmental, social and governance principals. The firm specializes in what it calls "industrial decarbonization investments."

"The high-quality PCR [post-consumer resin] produced enables consumer-facing brands to enhance their packaging and eliminate a significant quantity of greenhouse gas emissions and environmental degradation. We look forward to continuing to partner with the Circulus team to expand its footprint," Ara Partners Managing Partner Troy Thacker said in a statement.

Ara Partners also is an investor in Aloxe, which it describes as a PET recycling platform based in Europe. Aloxe said it intends to become a significant player in the recycled PET market.

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