Plans to build what’s been called the nation’s largest plastics recycling plant in Erie took a step forward Monday as International Recycling Group completed the purchase of 25 acres of the former Hammermill Paper site.
The property was purchased for $1.23 million from SB3 LLC, owned by Erie businessman Samuel P. “Pat” Black, III, and his daughter Sumi James-Black.
The sale closed Monday afternoon.
More:Breaking the mold: In-depth look at how Erie-based IRG wants to change plastic recycling’s future
The purchase price represents a tiny fraction of the expected cost of building a plastics recycling facility.
But it’s an important step, said Mitch Hecht, a former steel company executive who is chairman and founder of IRG.
“Actually owning the site is a really important, concrete step,” Hecht said. “Now we can move forward on negotiations for putting our financing package together. Everything, including permitting and going out for debt and equity financing, is dependent on owning the property”
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The recycling plant, which is being built on a federal Opportunity Zone — which provides special tax incentives for those investing capital gains — moved out of the starting gate in 2020 with a combined $9 million investment from Erie Insurance and the Erie-based Plastek Group.
At the time of that investment, Hecht was describing the project as a $100 million investment that would create at least 50 jobs.
More:History of International Recycling Group included challenges, setbacks en route to Erie
That’s changed.
Hecht now pegs the overall investment at $185 million with the expected creation of about 300 jobs.
“We have decided to put more investment in value-added downstream manufacturing capacity for value-added materials, Hecht said.
“We are not getting into finished product,” he said. “We are not doing anything that is involving chemicals or heat. It’s still basic.”
But instead of producing what he described as reground plastic flake, the plant will produce washed ready-to-use resin pellets.
The demand for those recycled pellets is rising, Hecht said.
“We have seen the market really moving in our favor,” he said. “There is dramatically increased demand for post-consumer resin (plastic) under demand from consumer product companies to increase the recycled content.”
More:Rules of recycling in the city of Erie for plastics, papers, metals and other items
In an interview in April 2021, Dennis Prischak, CEO of Plastek Group, said his company’s partnership with IRG, “will allow us to dramatically increase the percentage of our products that contain recycled materials.”
While plastics recycling efforts have struggled financially in the past, Hecht had said previously that IRG had a market to sell the lowest-grade plastics — which are typically sent to a landfill — to steel mills that can use the blended plastics to take the place of coke in the production of iron oxide.
Hecht said he expects that only about 10% of the plastics IRG processes would be used for that purpose.
Help from Penn State Behrend
Meanwhile, researchers at Penn State Behrend’s School of Engineering recently completed an analysis, looking at the company’s supply chain and how different polymers might be reused or recycled. The second round of research is about to begin.
Behrend Chancellor Ralph Ford serves on the board of directors for IRG.
Hecht expressed confidence Monday that his plans for the massive recycling facility, previously described as up to 300,000 square feet, will move ahead quickly.
He said he hopes to have both debt and equity financing in place by late this year and to break ground by next spring.
The goal, he said, is for the plant to be operating by the middle of 2024.
If the IRG plant is built as planned it would join a number of other environmentally focused endeavors operating on the former Hammermill site, including Prism Glass Recycling and Hero BX, a biofuels company. Both Hero and Prism are owned by Erie Management Group.
Sumi James-Black, interim CEO of Erie Management Group, which owns SB3 Industrial Park said, “The best way for us to support this project and its impact on the community was to offer the property. We look forward to seeing it come to life.”
Contact Jim Martin at 814-870-1668 or jmartin@timesnews.com. Follow him on Twitter @ETNMartin.