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#20) "Refacture" - your new verb for 2023
Molecular Recycling & Sustainable Manufacturing
I kick off 2023 with a fantastic new mandate!
This is a team that had me at hello. But first, let’s paint the picture1.
Waste treatment hasn't changed since 1650 BC. The earliest evidence of landfills was discovered outside the Cretan capital of Knossos where waste was deposited before being covered with soil. The 19th and 20th centuries introduced open-pit burning and incineration to decrease waste volume by converting it to fly ash and gaseous emissions. Trading of waste peaked in 2018 when buyers issued a ban on any recyclables exhibiting contamination greater than 5%. As a result, over 90% of recyclables were landfilled. Fast forward to today —> Landfilling operations are growing larger and more expensive to permit, build, and operate. Many of the world’s 60,000 landfills are reaching capacity.
And thus over 94% of the world’s waste ends up in the environment. Despite the improvements through recycling and composting, only a small fraction of waste actually closes the sustainability loop.
Refacture’s mission is to demonstrate the most effective, circular and financially viable treatment of industrial waste in the world. Refacture is a revolution in industrial waste recycling and mineral manufacturing.
Refacture Norway will raise funding in 2023 to launch a pilot facility in 2024 with the initial capacity to refacture 3,000 tons of industrial waste annually.
The world produces 18 times more industrial waste than municipal solid waste, according to The World Bank2.
Such wastes contain Critical Raw Materials (CRMs) which are in high demand and used to produce semiconductors, computers, batteries, automobiles, medical devices, defense-related equipment, etc.
Put another way, according to the CRM Alliance:
CRMs are essential for nearly all our electronic, life-saving and green technologies.
But there exists a very high supply risk - today, nearly 80% of CRMs are imported from China.
The EU and the US have declared this growing issue of CRM demand vs high supply risk a matter of national security importance.
The race to net zero 2050 only amplifies our dependence on CRMs.
"The World Bank projects that demand for metals and minerals increases rapidly with climate ambition. The most significant example of this is electric storage batteries, where the rise in demand for relevant metals, aluminium, cobalt, iron, lead, lithium, manganese and nickel would grow by more than 1000 per cent by 2050 under a 2°C scenario compared to a business as usual scenario."3
In other words, we must address the natural resource implications of shifting to low carbon technologies. If we do not, according to the EU, “the burden of curbing emissions to other parts of the economic chain may simply cause new environmental and social problems, such as heavy metal pollution, habitat destruction, or resource depletion.”
The Refacture management team believes its high-temperature plasma technology (originally developed with significant Westinghouse funding) is the most effective method for releasing CRMs trapped inside industrial wastes. And industrial wastes contain more CRMs, and in higher quality, than raw ore from underground mines.
“Our industrial waste can be one of our greatest resources - again, “ says Founder and CEO, Nick Narsavidze. “Not only can the CRMs be of higher quality but they can be refactured on an order of magnitude more cheaply and environmentally friendly than mining today.”
I am no expert on this topic matter, to be clear. Just beginning to wrap my head around it, inspired by Nick and the Refacture team.
But from what I can glean, Refacture’s systems are not “just” industrial heating torches but their IP also lies in processes that:
break down molecular bonds,
destroy hazardous compounds and
melt metals whose melting temperatures exceed the temperature limit of combustion fuels at 1,600°C.
“We can fully utilise the valuable elements found in industrial, electronic, and military waste that, if refactured properly, would illustrate a true closed loop process with extraordinary cost and environmental benefit, but also provide the EU a consistent and reliable source of CRMs that would remove dependence on foreign supply.”
The team’s new HQ is Bergen, Norway, anchored by Per Kristian Knutsen, formerly a long serving senior executive of Wilhelmsen Group, holding a CFO position as well as a GM position abroad in the Middle East. In addition, Ådne Tveit (an old business partner of mine who kindly invited me in to meet with the team this past December) is a seasoned commercial executive (former MD, former head of sales) with extensive international experience (ever meet somebody who just stays on top of things until they get done? That’s Ådne). In addition Nick has assembled a team of world-leading experts in plasma technology, thermal conversion technologies, systems engineering, and industrial manufacturing - with a shared passion and mission to recover valuable materials from unrecyclable sources.
Big Markets To Address
Refacture intends to recover materials and sell products (rather than sell equipment or license technology). “Doing so will allow us to generate revenue faster with higher returns,” according to Nick. “Our systems will permit countries to reach resource independence in the most secure and environmentally sustainable way.”
Some sample market sizings (taken from Refacture presentation materials):
With an estimated TAM of $19B, the battery recycling market is expected to grow to over $60B by 2030 following global electrification targets.
Waste Oil / Sludge >$60B/yr
The annual output of sludge is estimated at around 1 billion tons per year. Oily sludge is polluted solid waste produced from petroleum industry mainly during its crude oil exploration, refining process, transportation and storage. It can serve as the perfect resource for green hydrogen production.
Aluminum Scrap >$25B/yr
The intention is to start with Aluminum scrap, estimated at $5.6B USD today, growing to $25B by 2030, according to a report by Spherical Insights published November 2022.
And overall, the waste treatment market globally is just enormous.
image above from Refacture.com
Refacture in Numbers and Impact: A US Case Study
The US disposes 280 million tonnes of Managed Solid Waste (MSW) per year across 3,000 landfills over 560,000 acres of land.
To date, the US has spent a total of $427 Billion constructing landfills (roughly $1 Million/acre).
On the other hand, if only 0.71% of this land was used for 200 Refacture facilities the US could become a zero-waste economy.
In contrast, it would cost less than $40 Billion (< 9%) to build 200 Refacture facilities to process all of America’s waste while increasing its GDP.
Landfills release toxins to the air, soil, and ground and surface water.
Conversely, if the US could suddenly switch to a Refacture model for the next 30 years it could prevent 4.7B tonnes of greenhouse gas emissions (worth ~$61B in carbon credits).
Nick does the math for us: 10x more revenue, 10x less capex, 1000x lower environmental footprint.
We must swing for the fences to hit a home run. And software, dear investors, will not save the planet.
Refacture is that potential home run in terms of economic benefit and environmental impact.
Refacture makes the case to decrease Greenhouse Gases by 105B tons per year while freeing up over 11m acres of land (larger than Switzerland).
Ping me if you are interested to learn more.
Happy New Year.
For this post I lift heavily (often verbatim) from Refacture presentation materials and website.
What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050, World Bank 2018
European Commission: Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability. 2020.