The Company
Municipal Solid Waste In,
Usable Commodity Products Out
World Waste Technologies, Inc. (Nasdaq OTC: WDWT.OB) is a development
stage company that is developing technologies to profitably transform
Municipal Solid Waste (MSW) into usable commodity products such as
ethanol, electricity and paper pulp. We plan to design, build, own and
operate such facilities.
Patented Technology
Our patented technology utilizes a sealed rotating vessel to combine
steam, heat, atmospheric pressure and agitation to convert MSW into
usable materials. Paper-based garbage in MSW is converted into a
sanitized cellulose fiber containing material which we plan to turn into
usable commodity products. Other recyclable materials such as aluminum,
steel, tin and plastics are also captured and sold into commodities
markets.
Commercialization
We recently completed construction of our first facility in Anaheim, CA
located on the campus of the regional Material Recovery Facility (MRF)
of Taormina Industries, a wholly owned subsidiary of Republic Services,
Inc. This facility is in a limited startup phase and has successfully
transformed MSW to produce paper pulp, which we have sold to paper
manufacturers. We are now utilizing this facility to continue improving
our pulp technology and for research and development in additional
technologies to transform MSW into renewable energy products such as
ethanol and co-generated renewable electricity. We are analyzing
opportunities to design, build, own and operate our next facility with
intent to establish Memorandums Of Understanding (MOU's) with site
specifications and feasibility studies for additional plants.
The Anaheim Facility
At our Anaheim facility, we use a rotating pressure vessel to combine
steam, heat, pressure and agitation to change the waste's physical
composition. The process converts paper, cardboard, and paper packaging
found in RMSW into a cellulose biomass fiber-containing material. The
cellulose biomass can be screened and cleaned using conventional and
non-conventional pulp recycling equipment, and the resulting unbleached
fiber, known as "wetlap" pulp, can be used as a raw material for making
new lower grade paper stocks such as linerboard, corrugating medium, and
packaging.
We have entered into a long-term contract with Taormina to supply us
with RMSW. We began processing RMSW at our Anaheim facility on a limited
start-up basis during the second quarter of 2006, and since then have
processed over 2,500 tons of RMSW through the facility and the resulting
cellulose biomass has been refined into over 400 tons of wetlap pulp.
This wetlap product has been supplied to several cardboard and paper
manufacturers with operations in Southern California. We have also sold
a limited amount of the other inorganic, recyclable materials captured
by our process including aluminum, steel, tin and plastics, into various
commodity markets.
Although our customers have provided positive feedback on the pulp
quality and specifications and have requested continued shipments, we
recently became aware of several issues with our process, including its
creation of an unexpectedly high level of biological oxygen demand (BOD)
from organic wastes in the wastewater from the pulp screening and
cleaning process, and design issues related to the steam classification
vessels. These issues would require a significant level of reengineering
and repairs to put us in a position to potentially conduct sustained and
profitable operations on a commercial level at our current facility.
Due to, among other factors, the significant costs of additional capital
improvements required at our Anaheim plant that would be necessary in
order to address the BOD issue, we recently decided not to make these
improvements for the pulp process or to actively pursue the creation or
sale of wetlap pulp generated at this plant. Rather, we plan to expend
our resources on analyzing the data gathered through the plant's limited
operation and refining those lessons learned from the design,
construction, commissioning and operation of the plant. We will focus
our cash spending on the development of additional larger scale
facilities and on the development of our renewable energy platform which
we believe holds the potential for better returns than investing
additional capital in a small scale facility. Accordingly, we recently
reduced our workforce and began to run the plant on an intermittent
basis for process improvement trials, technology demonstration, product
development and other research and development initiatives, including as
relates to the production of ethanol and electricity. We expect to
continue to use the steam classification assets at the Anaheim facility
in a research mode in an effort to develop ethanol, electricity and pulp
opportunities until such time, if ever, as we can develop or acquire the
technology to enable us to operate the plant profitably.
Based on our research and development, including our accumulated
experience from operating the Anaheim plant, we believe the necessary
characteristics for the successful development of additional wetlap-based
MSW conversion facilities include: a relatively high volume of MSW,
larger physical plant enabling a larger scale operation, a desire by the
community to increase recycling rates to minimize the amount of this
waste disposed of in landfills, feedstock composition which includes a
higher amount of paper products, a fully scoped on-site water treatment
facility, and higher landfill tipping fees than we currently receive in
Anaheim, California. We plan to continue to conduct business development
discussions with various paper and solid waste companies and government
agencies to determine where the proper combination of operating
characteristics can be achieved to pursue a larger scale wetlap
production facility in future locations.
Ethanol and Electricity Opportunities
We recently began pursuing the development of various energy products
which can be produced from MSW. One process which we believe has
potential for successful commercialization involves using gasification
technologies to produce a synthetic gas (or "syngas") from wetlap or
intermediate products in our process. This syngas can be used to produce
energy to drive a turbine or passed through a catalyst environment to
produce fuel grade alcohols, primarily ethanol. We believe this same
basic process can also be used to produce hydrogen for industrial
applications and fuel cells. In this area we recently filed a
provisional patent covering a process and certain conditions, which we
believe may maximize the yield of these alcohols. A by-product of the
catalyst process is a residual producer gas that can be used for the
beneficial co-generation of renewable electricity. The syngas can be
used to fire either a boiler driving a steam turbine, or a gas-fired
turbine, and thereby produce energy to reduce our utility costs.
Also in the ethanol area, in addition to the above process for producing
fuel alcohols through gasification, we are investigating alternative
pathways for transforming our cellulose biomass product into ethanol
using various acid and enzymatic hydrolysis processes. We have produced
small quantities of ethanol through an intermediate acid hydrolysis
process in the early trials and are currently performing additional
testing and engineering studies to determine the economic feasibility of
a commercial size plant based on the insights from our research.
We recently established a Technical Advisory Board to assist us in
advancing our business of creating usable commodity products from MSW,
particularly as it pertains to developing our ethanol and electricity
technologies.
Strategy
Our goal is to profitably
transform residual MSW into usable commodity products, such as ethanol,
electricity, and paper pulp and to build, own and operate facilities to
accomplish this goal. Our strategies to achieve our goal include the
following:
Preliminary Commercialization and Further Research and Development
Technical feasibility and process characterization of our RMSW to pulp
process has been achieved at our facility in Anaheim. We are now
utilizing the facility to collect further detailed operating data in
anticipation of developing a potential full-scale plant. We are also
using the facility to perform research and development on alternative
energy technologies for processing RMSW, such as gasification for the
production of electricity and ethanol, and acid hydrolysis for the
production of ethanol. We are investigating the installation of a
small-scale gasification unit in Anaheim or elsewhere, with the
intention of collecting detailed operating data on ethanol and
electricity production. In addition we anticipate constructing a
small-scale hydrolysis facility to generate ethanol from MSW. We
anticipate that this phase of our strategy will continue through at
least the remainder of 2007.
Full Scale Facility and Commercialization
We are in the early stages of identifying potential sites for our next
facility, which we anticipate will be a full-scale facility. We are
identifying high priority sites and targeting locations with
advantageous MSW tip fees and volume.
Replication and Rollout
We anticipate that our technologies will be configured to meet the needs
of the local market, and we will seek to develop additional facilities,
implementing the most profitable end product platforms on a site by site
basis. We will seek to develop facilities in the most favorable
locations within the United States, and we anticipate exploring
licensing opportunities to accelerate the rollout. We plan to leverage
experienced engineering and construction partners for the most effective
utilization of our resources.
In addition, as part of the implementation of our strategy, we may
investigate potential acquisitions. In general, we may seek acquisition
candidates with characteristics that included: (a) established and
growing revenue, (b) positive cash flow, or (c) technology or strategy
that complements our focus.
Our ability to implement our strategy will be dependent upon our ability
to raise significant amounts of additional capital, of which there can
be no assurance.
Economic Viability
Each facility will have three primary revenue streams: (1) tipping fees
paid by solid waste collection companies, (2) recycling revenue from the
sale of standard recyclables such as aluminum, tin, steel and plastics
that our process recovers, (3) revenue from our end product, anticipated
to be either ethanol, electricity, or paper pulp, depending on which
technology is employed to satisfy the local market demand.
KEY POINTS
Long-Term Supply Contract
World Waste has signed a ten-year contract with a Solid Waste processor
in Anaheim who will deliver and pay tipping fees for 3500 tons per week.
This contract also has the potential for 3 five year extensions.
Additionally, the parties intend to expand into additional facilities
capable of processing up to 2,000 tons per day of municipal solid waste.
Key Customer Relationships
World Waste has signed LOIs with three major packaging grade papermakers.
The customers have provided positive feedback on the pulp quality and
specifications, based upon limited test quantities. World Waste recently
developed a commercial relationship with one of the customers whereby
that customer, although not contractually obligated to do so, is
currently purchasing all of the product World Waste is capable of
producing at market prices consistent with terms commonly used for the
sale of recycled corrugated containers, OCC, exported for the Los
Angeles region. These LOIs represent our
customers'
intentions to purchase our cellulose fiber through
multi-year agreements at market prices competitive with OCC.
The Industry
Target Markets in Waste and Paper Total Nearly $60 Billion
The $36 billion Municipal Solid Waste industry is dominated by three
firms: Waste Management, Inc. (33% share); Allied Waste (15% share); and
Republic Services (10% share). Revenue growth is driven by fee increases
at landfills (“tipping fees”) which currently average $34/ton, and
long-term collection and hauling contracts with municipalities. Key
industry cost drivers are transportation rates, landfill maintenance,
tipping fees, labor, and recycling costs.
Increased municipal recycling costs (approximately $100/ton) have led
several cities to cut back or even suspend their
curbside recycling programs, resulting in public and political backlash.
Traditional recycling facilities incur extremely high labor costs to
sort and process materials, while a flat market for commodity pricing
constrains profitability.
As a result, only 32% of the more than 409 million tons of MSW produced
in 2001 in the U.S. was recycled (up from 10% in 1975), with the
remainder taking up valuable landfill space. The average life of a U.S.
landfill is 20 years (12 years in the Northeast). Alternatives to
landfill disposal such as composting or incineration are unprofitable or
environmentally unappealing.
Public companies in the waste handling and disposal market have grown
primarily through acquisition over the past decades, not through growth
in the volume of waste processed annually. The industry seeks a
technology-based solution that will increase capacity utilization at
existing landfills, lower hauling costs, and satisfy the public and
political demand for cost-effective recycling.
The
World Waste patented process creates value and reduces costs for waste haulers by:
significantly reducing landfill inflows, thereby extending landfill
life; reducing hauling costs; and helping communities comply with laws
mandating that up to 50% of MSW be diverted from landfills and recycled.
The market for corrugated medium, liner board and packaging is over $24 billion. Independent third parties
as well as paper and box manufacturers such as Weyerhaeuser have tested wetlap from World Waste’s process and consider the World Waste product
to be an answer for long term rising pulp prices driven by consumer
growth trends in developing countries. Experts have projected a
long-term upward trend in global pulp prices primarily due to economic
growth in China and India.
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