Cereplast, whose proprietary bioplastics offer a sustainable alternative to traditional plastics by being fully or partially biobased (using inputs like algae, corn, potatoes, sugar and tapioca), as well as biodegradable/compostable, was pleased to provide markets an update today on the EU Environmental Commission’s landmark legislation aimed at implementing a ban or tax on conventional plastic carrier bags (50 microns or less) throughout all EU member states (94/62/EC PPWD) by this November 15.
The new law, set to go into place next month, gives member states of the EU just two years to meet with compliance guidelines and spells a huge win for the sustainable bioplastics industry in general, as well as CERP in particular. Estimates for potential alternative bioplastics demand are in the neighborhood of 1M tons per annum, or around $4B/year in revenue, making this an extremely ripe target of low hanging fruit for the company – a fruit which will likely ripen even more as the mounting changeover logistics crunch takes hold in these next two years.
The true scope of the underlying logistics may not immediately impress themselves upon the reader, but the upside potential for CERP shareholders should at least be readily apparent. With several EU states like Bulgaria, Denmark and Ireland already doing some form of ban or tax on conventional single-use plastic carrier bags, designed in each case to systematically delimit use of these bags and thus ultimately, the environmental impact from their creation/disposal, this new legislation reinforces a dominant and easily observable trend throughout the EU. While the immediate aim of this legislation is to try and reduce consumption of such bags by as much as 80%, the final trajectory of such legislative moves is already clear across all of Europe, and retailers from France to Germany, as well as in the Netherlands and Portugal, have already started down this road with voluntarily imposed spot fees on conventional plastic bags.
Resounding approval by the EU Environmental Commission of the single-use disposable plastic bag amendment to the Packaging and Packaging Waste Directive, is a major signal flare to CERP and the company is already positioning to capture momentum off the subsequent Italian legislation, anticipated to go live straight away after the PPWD is confirmed. As per the company’s previous analysis, annual revenue potential from Italy alone is in the ballpark of some $50M, so long as access to sufficient raw material inputs exists and the necessary growth capital is secured. The company already has the throughput muscle needed to satisfy some $125M worth of the annual demand created by this legislation if their 40k tons/year state-of-the-art facility in Seymour, Indiana is maxed out and management fully understands the bullishness of the underlying trend here, so CERP will be looking to double down on their proprietary technology and beef up operations accordingly.
Chairman and CEO of CERP, Frederic Scheer, noting the profound significance of this landmark legislation both for the broader industry and his company in particular, underscored to investors how well positioned CERP is to take advantage of the bioplastic resin demand metrics. The company is already hard at work in talks with target nation customers from France, Germany, Italy and Spain, well ahead of the directive’s confirmation. Scheer pegged 2014 for the company’s balance sheet to really show serious revenue impact as a result of all of this, and it now seems clear that with over 20 patents and patent applications (USA and worldwide) on their advanced compostable and biobased bioplastic resin technologies, CERP is a noteworthy contender for gobbling up a good share of the changeover pie as this new EU legislation drops.
For more info visit Cereplast, Inc. at www.Cereplast.com
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