Feasibility study of a rigid plastic waste recycling plant to produce recycled pellets in Jordan

Executive Summary

The project for a Hard Plastic Waste Recycling Plant (e.g., High-Density Polyethylene and Polypropylene) to Produce High-Quality Recycled Pellets (Recycled Pel in the industrial and manufacturing sector in Jordan targets a promising market opportunity. With an investment of 850,000 JOD, it achieves a Net Present Value (NPV) of ؜-99,005 JOD, an Internal Rate of Return (IRR) of 7%, and a payback period of 4.2 years.

Assumptions and Basis

The figures in this study are based on project data, the nature of the industrial and manufacturing sector in Jordan, and local market indicators, according to the following assumptions:

Basis of Assumptions: These figures are based on the average operating costs and expected revenues for medium-sized plastic recycling plants in Jordan, considering raw material and energy prices and current selling prices for recycled pellets.

Project Description and Opportunity

The project for a hard plastic waste recycling plant in Jordan aims to process high-density polyethylene (HDPE) and polypropylene (PP) to produce high-quality recycled plastic pellets. The opportunity lies in the increasing demand for recycled raw materials from local and international manufacturers, in addition to growing government support for circular economy projects. The business model relies on purchasing hard plastic waste from various sources (e.g., factories, commercial companies, municipalities), processing it through sorting, washing, drying, and pelletizing operations, and then selling the resulting pellets to plastic manufacturers for producing new products. Target customers are manufacturers of plastic products in various sectors such as packaging, pipes, and construction supplies.

Market and Demand Study

The Jordanian market is witnessing increasing environmental awareness and trends towards sustainability, which drives demand for recycled products. The continuous increase in plastic consumption and waste accumulation creates a fertile environment for such projects. Key demand drivers include rising prices for virgin plastic raw materials, government initiatives to encourage recycling, and companies' growing commitment to social and environmental responsibility. There are also opportunities for export to regional markets seeking sustainable alternatives to raw materials.

Market Sizing (TAM / SAM / SOM)

The market sizing methodology relies on analyzing the annual volume of hard plastic waste generated in Jordan and the recyclable proportion thereof. Local demand for recycled plastic pellets is estimated by studying the production volume of Jordan's plastic industries sector and its need for raw materials. The volume of virgin plastic raw material imports, a portion of which can be replaced by recycled products, is also considered. This data is collected from reports by the Ministry of Environment, Ministry of Industry and Trade, and specialized plastic industry associations.

Sizing Basis: The total market size is estimated based on the volume of virgin plastic consumption and available plastic waste in Jordan, considering the local absorption capacity for recycled products.

Unit Economics

Measures the profitability of each unit sale/customer — the most accurate feasibility indicator:

Competitive Analysis

There are a limited number of small and medium-sized plastic recycling plants in Jordan. The proposed project is distinguished by the high quality of the final product (recycled pellets), adherence to environmental and industrial standards, and the use of modern and efficient technology. The sustainable advantage lies in the ability to secure stable sources of raw materials at a competitive cost and build strong relationships with customers by providing a reliable product and after-sales service. The project can also obtain environmental certifications that enhance its competitiveness.

Market Entry and Pricing Strategy

The market entry plan includes building direct relationships with local plastic manufacturers through field visits and participation in industrial exhibitions. Emphasis will be placed on digital marketing through B2B platforms and showcasing product quality certifications. Marketing channels include direct sales, and potentially collaboration with agents or distributors in later stages. The product will be competitively priced compared to virgin plastic raw materials, highlighting the added value of sustainability and quality. Special offers can be provided for large customers or long-term contracts to ensure sales stability.

Capacity and Operations

Production capacity begins at 200 tons per month in the first year and gradually increases to 400 tons per month by the fifth year, with an occupancy rate ranging from 60% to 90%.

Daily operations involve receiving plastic waste, manual and mechanical sorting to remove impurities, washing and cleaning, and then drying. Afterwards, the plastic is shredded into small pieces and converted into pellets using pelletizing machines. A strict quality control system will be applied at every stage to ensure the product meets the required specifications. The resulting pellets are packaged and stored in suitable warehouses before being shipped to customers. Emphasis will be placed on energy and water efficiency to reduce operating costs.

The technical aspect includes selecting a strategic location for the plant near plastic waste sources and major transportation networks, preferably in an industrial zone. Integrated production lines for plastic processing will be imported, including sorting, washing, drying, shredding, and pelletizing equipment. Key equipment suppliers will be specialized international companies in this field, with a focus on operational efficiency and durability. Technical staff will be trained on the operation and maintenance of this equipment to ensure the highest levels of quality and productivity.

Projected Income Statement (5 Years)

Investment Cost Structure

Cash Flow and Break-even Point

Estimated break-even point at annual revenue ≈ ١٬١٧١٬٤٢٩ د.أ (~٩٨٪ of first-year revenue), with a contribution margin of 35%. Cumulative cash break-even in Year 5.

Funding Structure

Sensitivity Analysis (Revenue × Operating Costs)

Impact of changes in revenue and costs together on Net Present Value:

Scenario Analysis

Expected Present Value (Weighted): ؜-٩٣٬٣٠٨ د.أ.

Risk Analysis and Management

Organizational Structure and Team

The organizational structure consists of a General Manager, a Production Manager, a Sales and Marketing Manager, and a Financial and Administrative Manager. The staff comprises specialized mechanical and chemical engineers, operation and maintenance technicians, and production workers. Emphasis will be placed on attracting Jordanian competencies and training them in the latest recycling technologies. Experience in the plastic industries and project management will be highly valued.

Legal and Regulatory Aspects

The project requires obtaining numerous licenses and approvals from Jordanian government authorities, including a professional practice license from the Ministry of Industry and Trade, environmental approvals from the Ministry of Environment, a license from the relevant Municipality or Greater Amman Municipality, in addition to civil defense licenses. The project must comply with applicable health and occupational safety standards and regulations in Jordan. A specialized legal consultant can be engaged to ensure compliance with all requirements.

Expansion and Sustainability Plan

Future expansion plans include increasing the plant's production capacity by adding new production lines, diversifying the types of plastic recycled to include other types (such as PET), and expanding into regional export markets. Vertical integration can also be considered by manufacturing some final products from recycled pellets. Sustainability relies on the ability to innovate in recycling processes, seek new markets for products, and continuously improve operational efficiency.

Environmental, Social, and Governance (ESG) Impact

The project is exceptionally environmentally friendly, contributing to reducing the volume of plastic waste in landfills, thereby reducing environmental pollution and the consumption of natural resources. It also contributes to reducing carbon emissions associated with virgin plastic production. Socially, the project provides job opportunities and contributes to local economic development. Best governance practices will be applied to ensure transparency and accountability in all aspects of operations.

Conclusions and Recommendations

The hard plastic waste recycling plant project in Jordan represents a promising investment opportunity, given the increasing demand for recycled materials and government support for the circular economy sector. The project is economically, environmentally, and socially feasible, and has good growth potential. Based on preliminary analyses, the recommendation is to proceed with the project, with additional detailed market, technical, and financial studies.

Frequently Asked Questions

How much does it cost to set up a plastic recycling plant in Jordan?

The estimated cost for setting up a medium-sized plastic recycling plant in Jordan is approximately 850,000 Jordanian Dinars.

Is a plastic recycling project profitable in Jordan?

Yes, the project has expected economic feasibility, with anticipated annual revenues of approximately 1,200,000 Jordanian Dinars in the first year, with a contribution margin of 35%.

What licenses are required for a plastic recycling plant in Jordan?

The project requires licenses from the Ministry of Industry and Trade, the Ministry of Environment, the relevant Municipality/Greater Amman Municipality, in addition to civil defense licenses.

What types of plastic can be recycled in Jordan?

This project focuses on High-Density Polyethylene (HDPE) and Polypropylene (PP), which are among the most common types of hard plastic.

What is the size of the plastic recycling market in Jordan?

The realistic target market is estimated at approximately 12,000,000 Jordanian Dinars annually, with growth potential.

Sources and Disclaimer

• Jordanian Ministry of Environment reports (plastic waste volume estimates)
• Jordan Department of Statistics data (plastic industries data)
• Market studies for the plastic recycling sector in the Middle East
• Interviews with experts in plastic industries and recycling in Jordan
• Current market prices for plastic raw materials and recycled pellets

Disclaimer: This is a guiding study that provides financial analysis according to approved industry standards; verify figures locally according to your project's reality before making any investment decision.