When building your own technology doesn't pay

GCE is a "waste-to-energy conversion solutions company," founded in 2006 by president and chief executive Earl Azimov. It had been developing technology to convert tires and plastics to diesel and gasoline and build and run pyrolysis plants, with minority partners.

Entrepreneur/Financial Post

When building your own technology doesn't pay

David Sherman, Special to Financial Post | September 9, 2014 8:00 AM ET
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Christinne Muschi for National PostGlobal Clean Energy CEO Earl Azimov, left, and Brian Levine, COO, will recycle catalytic converters and turn old tires and industrial plastic into fuel using existing technology..



Die-hard entrepreneurs have to be prepared to turn on a dime, hedge their bets and prepare for all contingencies. These are lessons brought to the business model at Global Clean Energy Inc., a U.S. company with its headquarters in Montreal and offices in Houston, Texas, and Las Vegas, Nevada.

GCE is a "waste-to-energy conversion solutions company," founded in 2006 by president and chief executive Earl Azimov. It had been developing technology to convert tires and plastics to diesel and gasoline and build and run pyrolysis plants, with minority partners.

But when Brian Levine came on board as chief operating officer two years ago, he realized the business had to make an abrupt shift. Despite initial success in developing its technology, to continue down that path would require at least an additional US$10-million to US$20-million and many months, if not years, to perfect.

As well, the company had been in a development stage for nearly six years and needed revenue to make it more attractive.

"The investment community is looking for no technology risk," Mr. Levine wrote in an email. "Too many companies have tried to create … their own proprietary technologies. … Rather than waste tremendous time and money … we opted to develop and lockup top North American sites, the precious real estate and feedstock, focusing on those … with proven package' technology rather than tolerating technology risks as so many have done and failed."

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GCE abandoned its three tonne "super big barbecue on steroids" as Mr. Asimov called it, and scoured the world for existing technologies, finally acquiring systems from Britain and China. North America is 20 years behind Europe in renewable energy," Mr. Levine said.

"We were way ahead of the curve," said Mr. Azimov. "We were on the bleeding edge."

To staunch the flow of cash the company was investing US$50,000 to US$100,000 a month on the technology GCE decided this year that wagering the company on the future price of oil was a bet that had to be hedged.

The PGM or platinum group metals recovery plant GCE is acquiring in Georgia "cracks the cat," Mr. Azimov said, referring to the process of opening used catalytic converters to recycle their precious metals – platinum, palladium and rhodium.

GCE expects to become majority partner in this operation in a deal expected to close in October, but Mr. Levine would not name the firm or the total amount of the investment, though he did say GCE will invest US$15-million immediately and that that company has annual revenue of $20-million.

"The acquisition will eclipse our expectations and our attention," Mr. Levine said.

Mr. Levine is confident prices for the metals will keep rising, due in part to booming markets in China and new consumer interest in platinum jewellery.

GCE is projecting revenue from this operation to be US$15.6-million for the last quarter of 2014, and annual revenue of US$80-million in 2015 and US$162-million in 2016.

However, this acquisition won't distract GCE from the potential profit in the 144 million used tires and tons of industrial plastics discarded in the U.S. every year.

Plans are going ahead to open two pyrolysis plants in 2015-2016, each of which is expected to bring in US$20-million a year, easily eclipsed by their new venture in recovering and recycling precious metals. Pyrolysis uses chemicals and heat to decompose organic material and convert it to fuel.

A 40,000-sq.-ft. facility in Halifax is a joint-venture with Nova ReNew Inc., a four-man company that includes former Nova Scotia environment minister Wayne Adams, chief executive of Adams Management Group and Scott Travers, former president of Minas Basin Pulp and Power Co.

"[Mr. Levine is aggressive and gets things done," Mr. Adams said. "Most Canadians have not acquired his appetite for aggressive entrepreneurial spirit."

The second is in North Carolina in a majority partnership with packaging giant Sonoco Products Co.

Mr. Levine said feedstock from "the biggest tire recycler in North America," has been locked up for the 60,000 sq. ft. pyrolysis plant set to open in Q3 next year, although he would not name the recycler.

The plant will run two lines, converting tires on one and polypropylene, polyethylene and polystyrene on the other. "A hybrid system has never been done before," Mr. Levine said.

Feedstock for the plastic line is industrial plastics plastic packaging, film, sheet plastic, but not the ubiquitous soft drink and water bottles.

GCE recently filed a Form 10 with the U.S. Securities & Exchange Commission and the penny stock is now trading over the counter in that country. Similar regulatory documents were filed in Canada, Mr. Levine said, where the penny stock will be available shortly


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