NIAGARA FALLS – Sitting among chemical industry giants, once the backbone of the Niagara Falls economy, JBI Inc. is turning plastic waste into energy.
The company’s processors take shredded plastic pieces and make fuel more cheaply than at typical refineries. They’re also powered by the fuel they produce.
The emissions that are released into the air are similar to a natural gas furnace, according to the company and state regulators.
Through the end of March, JBI has turned about 2.8 million pounds of plastic into nearly half-a-million gallons of various types of fuel.
“It’s nice to turn this area into something positive,” company founder John Bordyniuk said last week, when asked why he decided to locate his company here.
But the company, which started in 2009 and has 55 full-time employees, also faces an uncertain future – it’s got an accumulated deficit of $50 million and its auditors aren’t sure when it will be profitable or if it can even survive its financial challenges.
The company got an approval last month from state environmental regulators that company officials say will allow it to create more fuel at a faster rate.
The permit change approved by the state Department of Environmental Conservation allows JBI to add heat transfer fluids, including waste oil, to the plastics in its fuel-making process.
It means the company can take two tons of plastic and waste oil per hour and turn it into about 400 gallons of fuel.
Bordyniuk, a Niagara Falls, Ont., native and the company’s chief technology officer, calls it “a huge move forward in the evolution of our technology.”
The company is not alone in what it does, but it believes it has lower capital costs and its technology is evolving more rapidly than competitors.
Bordyniuk has applied for an international patent for the company’s process.
Like many startups, it faces serious financial struggles.
At the end of the first quarter of this year, the company reported $14.1 million in assets, but only $197,000 in sales and a $2.7 million operating loss, according to its most recent quarterly report.
The company went through $2.9 million in cash in the first quarter, with $3.9 million in cash leftover at the end of the quarter.
If those trends continue, the company will run out of cash in the coming months without some other cash infusion.
As of the end of March, the company had a $50.5 million deficit.
In the company’s financial reports, auditors also raise doubts about the company’s ability to continue as “a going concern."
The company is encouraged by the growth it saw over the last eight quarters, CFO Matthew J. Ingham told investors on an April conference call.
“As we continue to move to a commercial production entity, we have worked to increase our revenues since the beginning of 2011,” Ingham said. “We believe the chart you see here is a relatively normal picture for a company that is just emerging from [research and development] and beginning to ramp up production and starting to gain traction in terms of revenue.”
The company has also been sued three times – twice by stockholders and once by the U.S. Securities and Exchange Commission.
In its suit, the SEC alleged that JBI officials misrepresented and overstated the actual value of assets to bolster its balance sheets for the third and fourth quarters of 2009, which it then used to raise more than $8.4 million from investors.
Bordynuik, the company’s founder, was the CEO at the time.
When the SEC filed the suit in January 2012, the company in a written statement said civil action contained “erroneous allegations of fraud” and said “the allegations in the complaint concern legacy accounting issues that have since been corrected.” A new CFO had also been hired.
JBI settled the SEC lawsuit in January, with the company agreeing to pay a $150,000 fine. Bordynuik was fined $110,000 and barred from acting as an officer or director of a public company for five years.
The case against the company’s former CFO Ronald Baldwin Jr. is pending.
“This is a very positive development in the life of our company, and we are pleased that this matter has been resolved,” then-CEO Kevin Rauber said in a written statement at the time.
A federal court in Massachusetts formally approved the settlement on June 26, according to the SEC.
A stockholder derivative suit filed in March 2012, which accused the board of directors of breaching their fiduciary duties, was dismissed June 27.
A class-action suit brought by stockholders in July 2011, which accused the company of making false or misleading statements and failing to disclose adverse information, is pending.
JBI has three plastic-to-oil processors at its Falls facility, with the third ready to go online.
The company believes the new processor will be able to run for about a month without having to be shut down for maintenance, as opposed to the first two which could only run for four or five days at a time.
The company is already building two more processors just like the third one. They’ll be put online after Bordynuik reviews operating data from the third processor over the next month or so.
The three types of fuels made by JBI include regular diesel fuel, as well as a heavier fuel used in industrial and ship boilers, as well as in steel manufacturing.
Customers have included CoCo Paving of Mississauga, Ont., and Oxy Vinyl Canada, a wholly owned subsidiary of Occidental Petroleum, as well as other large corporations.
Company officials thanked State Sens. George D. Maziarz and Timothy M. Kennedy for their help with permitting by the state DEC.
Maziarz, R-Newfane, said he was able to help get the DEC “off their back” several years ago, when the agency wanted to designate the company as a scrap yard. That would have made for a more onerous permitting process, Maziarz said.
“I think these guys are going to go places,” Maziarz said.
Kennedy, D-Buffalo, said he was able to help with an expedited permit from the DEC.
Kennedy said Bordynuik’s company is something the area should be proud to have, describing it as one that protects the environment and creates jobs.
“It’s something we all strive for and he’s doing it,” Kennedy said.
News Business Reporter David Robinson contributed to this report.