From rubbish to riches: waste-to-resources start-up Arc Ento seeks investors

This Sydney start-up has swung to a profit and is seeking investors to expand its operations, which includes converting rubbish into an alternative for coking coal.

Arc Ento Tech CEO Adam McArdle says the company’s weekly processing has ‘scaled from kilograms to tonnes’.

A Sydney-based tech start-up that’s turning rubbish into resources, including an alternative for coking coal, says it’s profitable as it searches for investors to expand its operations after a capital raising fell through.

Arc Ento Tech, founded in 2020, is building three landfill sites in Sydney and has reported a $1m annual profit versus a $1m loss the previous year. But it failed to complete a $5m capital raising with the Philippines industrial supplies company MCCI Corporation, announced late last year.

Chief executive Adam McArdle said in a note to investors, which this masthead has seen, that weekly processing has “scaled from kilograms to tonnes” with a “production pipeline capable of delivering $1.5m in monthly revenue”.

But it is facing competition from Acciona Australia and French firm Veolia, who are fighting over $1.5bn worth of uncompleted waste-to-energy plants.

Mr McArdle said Arc’s directors had set aside $1m for existing shareholders to increase their investment, alongside $4m capital raise, which it “has not been able to complete”

“However, we are actively in discussions with alternative investors as part of the Series 2A round and expect to firm up this before the end of July. This will ensure we maintain commercial momentum and fund our growth road map,” Mr McArdle said.

He was confident that funds could be raised from Australian-based investors.

“Our three-year forecast demonstrates scalable profitability. Arc expects to generate $39m in revenue in FY26, with this figure growing to $101m by FY28. These projections are based on secured and forecasted channel growth, operational efficiencies, and product margin expansion.

“Critical to this transformation has been the establishment of a strategic lending facility with the Commonwealth Bank Growth Industries Team. This facility can provide arc with debtor finance, working capital, trade finance and equipment finance, along with a full suite of foreign exchange solutions.”

Arc Ento Tech's sales forecasts.

Arc aims to transform the global waste industry, as the World Economic Forum estimates the cost of climate change is set to soar to $US3.1 trillion ($4.75 trillion) a year by 2050.

It uses two processes to convert household garbage into energy: biological and mechanical. The biological solution uses black soldier flies to consume all edible organic waste. The larvae are then recovered and converted into commercial products, such as insect meal – which can be used at salmon farms – or as fertiliser.

The mechanical process converts plastics and non-digestible organics into refuse derived reductant, a type of fuel that can be used for a range of industrial purposes. The process targets the carbon and hydrogen content of non-digestible organics to create a “low-cost alternative to the use of high-grade coal or metallurgical coke”. The softened composite material is extruded into an RDR briquette.

Mr McArdle said Arc’s sales momentum “continues to accelerate” with “recent and expected customers” including Qantas and Sanitarium. Hawkesbury City Council has also contracted Arc to develop a 25-tonnes-a-day plant.

“The Hawkesbury City Council partnership has reached a key milestone. All plant components and final design specifications are scheduled for delivery by August,” Mr McArdle said.

“The facility is being built and will be commissioned by September. This will enable ARC to begin dry waste trials and product testing while awaiting final EPA certification, positioning the site as a proof point for future commercial rollouts.

One of Arc Ento Tech's waste-to-resources plants.

The competition regulator is assessing whether Spanish titan Acciona and its Australian arm, run by Bede Noonan, can proceed with a planned purchase of the East Rockingham waste-to-energy plant after snapping up the only other plant, Kwinana, last year and firing Veolia from running it.

The two waste-to-energy plants have cost taxpayers, equity holders and lenders more than $1.5bn to build, and neither plant has met its commercial brief. Both are located in Perth, and were to be built by Acciona and operated by Veolia.

Acciona was forced to buy out the equity owners in Kwinana, such as Macquarie, last year to keep it afloat; it then purchased all the senior debt in East Rockingham from its receivers for $460m, which it now wants to convert to equity. The uncompleted plant still has about $150m worth of building and commissioning costs before it is operational.

Originally published as From rubbish to riches: waste-to-resources start-up Arc Ento seeks investors