Supply chains under threat from Qenos closure
Qenos is under fire from its customers, one of which says the company is treating it and others with ‘contempt’ and leaving buyers unsure of the security of their own supply chains.
The closure of Qenos could blow a fresh hole in plans to increase plastics recycling in the country, industry experts say, as small manufacturers that buy from Qenos say they have been treated “with contempt” by the company, which is yet to give any clear indication of its future plans to local customers.
The Australian revealed last week that Qenos’s Chinese owners had reached a deal to sell the company to property developer Logos, heightening concerns the Australian plastics major is quietly planning to close down by the end of the year.
Impact International managing director Aleks Lajovic told The Australian his company was a long-term customer of Qenos for its business supplying packaging to the cosmetic and pharmaceutical industry in Australia, including locally produced toothpaste and sunscreen brands.
He said the company had bought up significant Qenos stock when its Sydney facility was hit by the partial collapse of a cooling tower a year ago, and had been waiting for news of the plant’s return to production – due by March.
But, after being advised in February in writing of a temporary commission delay, he said the only recent communication from Qenos was verbal advice from a sales representative that a restart at Qenos’s Botany facilities had been “paused”.
Mr Lajovic said the company had refused to give any advice in writing about its future plans, leaving smaller buyers unsure of the security of their own supply chains.
“With our products, we have two approved grades (of plastic) that we can use – one is manufactured here in Australia, by Qenos, but the other one is imported. But now we have to switch to the imported grade – and we’ve done that and we have that supply chain set up,” he said. “But it weakens us as a business. And also we want to be supporting Australia, and buying plastics from an Australian company with stricter environmental regulations. And their quality has been really, really good.”
Mr Lajovic said overseas suppliers were likely to demand far larger minimum orders than Qenos, which has a dedicated trading arm to service smaller Australian customers, and this would affect the cash flow of small manufacturers.
“We’re really disappointed with the way Qenos has played this out. They’ve basically treated their customers with complete contempt. And we’re also disappointed that there seems to be no real interest from the government in trying to solve this situation,” he said.
The flow-on effects from a Qenos closure could also scupper state and federal government plans to lift the rate of plastic recycling in Australia, still reeling from the REDcycle scheme scandal, where consumers were promised soft plastics would be recycled, but instead 12,000 tonnes of plastic was stockpiled in warehouses across the country.
Qenos and Viva Energy are the only two companies in Australia capable of producing the resins that underpin the production of more complex plastic products.
In 2022 Qenos launched a feasibility study with Cleanaway to break down up to 100,000 tonnes a year of packaging into its chemical components, and then back to a resin for future use. It is unclear what progress has been made on that project, but Qenos initially said it expected to commission a recycling plant in 2024.
Only about 16 per cent of plastics are recycled in Australia.
Recycling industry expert Helen Millicer was one of the co-authors on the last major study on Australia’s recycling sector, “Enabling design for environmental good”, delivered to the federal government in 2022. Ms Millicer, who also consults to The Australian Food and Grocery Council’s plastics recycling scheme, told The Australian the closure of Qenos could have a catastrophic impact on the broader Australian chemicals industry – but particularly on plans to improve recycling rates.
She said the loss of the Qenos production plants in Sydney and Melbourne would make it almost impossible to establish an end-to-end recycling industry for plastics, as the closure of the company would remove one of the fundamental building blocks for turning waste packaging back into usable products.
The 2022 report, led by RMIT University, Arcadis and Ms Millicer’s One Planet Consulting, said that while Australia’s industry was relatively small, it was one of the few globally to host the full plastics supply chain.
“Unlike countries with no resin manufacturing facilities, Australia has the potential to build and integrate chemical reprocessing into its refineries and resin production facilities for significantly greater quantities of high-quality plastics processed onshore,” the report said.
The federal government’s National Plastics plan is targeting 70 per cent recycling rates by 2025, along with 20 per cent average recycled content within plastic packaging.
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