AN EXCITING new use has been found for the annoying plastic waste that often washes up on beaches and clogs rubbish dumps: fuel.

It may sound too good to be true, given the soaring price of crude oil and the global hunt for alternative fuels, but mainboard-listed Enviro-Hub Holdings says it is building the world's first large-scale, commercial plastic-to-fuel plant.

The waste management and recycling firm yesterday announced the construction of Singapore's first $50 million plastic-to-fuel plant - which converts waste plastic into useable fuels and gases.

Its executive chairman, Mr Raymond Ng, told The Straits Times that Enviro-Hub had been researching a long-term environmental solution for plastics since 2005.

Success came only last month, when a pilot plant it built proved that the technology imported from India worked.

This patented technology, for which Enviro-Hub now holds an exclusive licence, heats waste plastic with a special catalyst that breaks it down into 85 per cent diesel, 10 per cent liquid petroleum gas and 5 per cent coke.

'This plant is a historic milestone for the company,' said Mr Ng, formerly the co-founder of waste recycler Citiraya Industries, now known as Centillion Environment and Recycling.

'Plastic waste has always been a big problem for the world. The commercial potential in this technology is huge,' said Mr Ng.

Enviro-Hub's new 200,000 sq ft plant in Tuas, which will cost an initial $30 million to build, will be able to convert into fuel 30,000 tonnes of waste plastic a year.

Mr Mohamed Gani Mohamed Ansari, business development director of Enviro-Hub unit Cimelia Resource Recovery, said the diesel produced - unlike in older technologies - would have low sulphur content and also lower carbon dioxide emissions. The heating process of converting the waste plastic into fuel would also be emissions-free, said Mr Ansari.

Enviro-Hub is now looking into seeking carbon credits from the United Nations Framework Convention on Climate Change.

These credits are savings in carbon dioxide emissions - largely blamed by scientists for global climate change - that can be traded on the carbon market.

Enviro-Hub's facility - equivalent to a 24MW plant - will use about 5 per cent of the fuel it generates to power itself.

The rest will either be used to power the rest of Enviro-Hub's plants nearby or sold to industries.

The plant will start operations by the second quarter of next year, with its capacity expanding to 50,000 tonnes a year at an additional cost of $20 million by end-2008, said Mr Ng.

Enviro-Hub yesterday incorporated a new unit - Enviro-Power - to operate the plant.

Funding for the plant is internal, the firm said in a statement to the Singapore Exchange.

Singapore is estimated to generate more than 300,000 tonnes of waste plastic a year - a capacity Enviro-Hub hopes its plant will eventually reach.

Enviro-Hub also announced late yesterday that it would invest US$4.2 million (S$6.1 million) in a 30 per cent stake in Enviro Energy - a company incorporated in the Cayman Islands.

Enviro Energy, through a unit in Thailand, will also be looking to set up a similar plastic-to-fuel plant in Thailand.

The setting up of Enviro-Power and the investment in Enviro Energy are not expected to have any financial impact on the company's current financial year.

Enviro-Hub's shares was 0.5 cent higher at 57.5 cents at yesterday's close.

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