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“Money literally wallows underfoot” – this is how a private plant makes money from garbage


Photo courtesy of VZPP

The global waste recycling market is growing faster than the global economy as a whole. According to Global View Research, for the period 2020-2027. its average annual growth will be 5.2%. A large share in the volume is paper and paper waste, followed by electronics waste, metal and plastic. The CIS region remains catching up in this area as well. But there are good examples as well.

Let’s start with a few interesting facts:

  • According to an average estimate, from 4 to 7% of the territory of Ukraine is occupied by landfills with a practically inoperative system of sorting or recycling waste
  • In Russia, annually 300-400 thousand hectares are allocated for garbage waste. There, over the past 15 years, the volume of annual waste has tripled.
  • In Belarus, according to experts’ forecasts, the Trostenets landfill is about to exhaust its potential, where wastes from all over Minsk are brought. The Vitebsk landfill has long been “packed” and looks directly into the windows of new buildings. According to the latest data, Belarusians annually throw out about 280 thousand tons of plastic waste. And only a small part has been collected and recycled.

However, there is progress. Here are some examples:

  • A draft law was submitted to the Russian State Duma, potentially obliging manufacturers and importers to dispose of 100% of packaging waste. It may come into force from the beginning of 2022.

  • In Ukraine, the fight against plastic bags is in full swing. Just the other day, a law was introduced prohibiting their sale

  • A number of regulations have been adopted in Belarus, which make it possible to count on the fact that even with an increase in the volume of garbage produced by the population and companies, the threat to the environment will not grow proportionally.

In the CIS, garbage volumes continue to grow. This business segment is just starting to develop. One of these enterprises was CJSC Vitebsk Industrial Processing Plant (VZPP). How a private Belarusian waste recycling plant operates and what can be expected from a business in this area, in a partner material for “Pro Business” he said head of the company Sergey Galykin.

How was VZPP created?

VZPP was founded in 2015. The location of the plant was not chosen by chance. There is a landfill near Vitebsk, which, despite being overcrowded, still receives waste. Sergey Galykin, together with his partner, decided to create a project – both useful for Vitebsk and the Vitebsk region, and profitable: to build a modern landfill and a waste processing plant.

Photo courtesy of VZPP
Photo courtesy of VZPP

“With my partner, we started work on a waste recycling plant and the construction of a new MSW landfill 10 years ago. We have a landfill near Vitebsk, it is located near the city and should have been closed many years ago. We had the resources and the desire to do something good for the city, ” – Sergey shares.

Why can a waste recycling business be profitable? Every day there is more and more garbage, and this seriously harms the environment. The resource looks inexhaustible – according to superficial estimates, an average person leaves 300 kg of waste per year. “Due to the underdevelopment of this sphere in Belarus, income literally wallows underfoot,” – continues the entrepreneur.

Today the company’s staff consists of 50 employees, has its own fleet of specialized equipment, a sorting station, a line for the production of recycled granules, plastic films, a mobile facility for the processing of construction waste, a mobile plant for the processing of wooden waste, a line for the production of PET-flex, a paper press , cardboard and other secondary material resources.

Material provided by VZPP
Photo courtesy of VZPP

However, the process of opening such a production is rather complicated. Not every investor can expect to get started quickly. Only the collection of the necessary documentation can take 5-10 years.

The process of creating an enterprise looks like this:

  1. First, a place for the polygon is selected. For this, many studies and approvals are carried out. In the case of the site for the construction of a new MSW landfill VZPP, this stage took about 6 years.

  2. Public hearings are being held.

  3. A project is being developed.

  4. State environmental and construction expertise of the project is being carried out.

  5. A building permit is obtained.

It took VZPP investors 8 years to reach this point, and the total investment reached about $ 3 million.

How does a waste recycling business work?

The business model of the plant has a high added value and includes waste collection, sorting, partial processing and sale of finished products, disposal of residues (tailings) of municipal solid waste.

The negative cost of raw materials is obtained even before entering the marshalling yard. For the removal and disposal of MSW, the enterprise receives money from the owner of the waste. This can be both companies and individuals.

This is how the VZPP work process looks like:

1. Garbage is collected on the territory of Vitebsk and Vitebsk region. The plant receives payment for garbage collection from the users of this service.

The service is cost-effective when operating within a 50 km radius of a processing station or landfill. The increase in the radius of work can be regulated by increasing the tariff.

2. Having received raw materials at negative cost, the plant delivers them to the sorting yard. There they select separately PET bottles, film, various types of plastics, glass, cardboard, cans. This raw material is sent for processing.

3. Garbage left after sorting is disposed of in a landfill.

Photo courtesy of VZPP
Photo courtesy of VZPP

Now the enterprise sends for recycling about 20% of the incoming waste. Accordingly, the amount of waste sent to the landfill is reduced by this volume. This not only has a positive effect on the environment, but significantly reduces the company’s disposal costs, which amount to 1 ruble per cubic meter. meter.

Today, a plastic recycling plant is operating in test mode. As a result of processing, polymer granules are obtained, which are used, for example, for the production of plastic films, agricultural needs, construction, as well as for the manufacture of boxes and even chairs. The enterprise is awaiting a license to process polymer waste.

The company has been allocated land plots for the design of a site for the processing of construction and food waste. After passing the entire long path of design and all sorts of approvals, VZPP is going to build lines for handling food and construction waste (concrete, reinforced concrete, brick, etc.). At the moment, the company has received all permits and approvals for the production of mineral mixtures and building materials. There are also plans for wood processing.

Investment Opportunities

VZPP attracts external investments for the construction of the waste processing complex. A large share of investments was attracted by a Russian partner. The company used the issue of tokens on the Finstore platform as one of the tools to attract additional financial resources. A token is an investment vehicle similar to a debt bond. In contrast to classic bonds, the regulator when issuing bonds is not the National Bank, but the HTP.

Since February 2021, VZPP has issued three token issues in euros, dollars and Russian rubles. To date, the company has attracted more than 215 thousand and $ 145 thousand

A feature of VZPP tokens is a low entry threshold and high rates for tokens in foreign currency. It is worth remembering that income from tokens is not subject to income tax and income tax, and both investment and payment of income, according to Decree No. 8, take place in foreign currency, which distinguishes tokens, for example, from bonds.

Tokens in USD

Tokens in EUR

Tokens in RUB

Denomination in the currency of placement

fifty

twenty

5000

Interest rate

9.55

Start date

04/01/2021

02/15/2021

04/01/2021

End date

03/31/2025

02/14/2025

03/31/2024

End date of sale

09/30/2022

02/14/2022

09/30/2022

Early repayment option

Once every six months

The entire volume of attracted resources is used for the implementation of investment projects, which favorably distinguishes VZPP from other issuers – some of them direct investments to repay current loans and credits.

“To pay off current loans and liabilities, we have enough money supply that we receive as a result of current activities. Therefore, all additional investments go to our growth “, – sums up Sergey Galykin.

Why is the plant’s business model sustainable?

VZPP is organized as a full-cycle enterprise – from the receipt of raw materials to the release of finished products and disposal of residues at its MSW landfill. Working with raw materials with negative value, careful sorting of waste and the release of highly liquid finished products makes the enterprise model unique and marginal, including with instant turnover.

Photo courtesy of VZPP
Photo courtesy of VZPP

Already today we note the interest in purchasing products made from secondary material resources from foreign companies, including those from Russia, the EU and China. In case of problems with the Belarusian ruble, the company can quickly reorient its products for export.

What impact the plant can have

In the future, VZPP intends to recycle 30-50% of collected waste and expand to other regions. The ideal now is Japan, where 90% or more of the collected waste is recycled.

“It is also possible to achieve this indicator in Belarus. But the cost of waste management in our country is low, like the cost of land plots for landfills – even in comparison with Russia, where a new shopping center will be built on a piece of land rather than a landfill. “– Sergei Galykin is sure.

In this case, for example, PET bottles and films decompose in the ground for at least 150 years. And closed landfills become completely useless plots of land. This can and should be avoided.

Project partner:

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Fidenge Pecold

My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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