Aduro Clean Technologies - the future superstar of plastic recycling?

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It’s been a long time since a new thread for a new company.

The company is called Aduro Clean Technologies https://adurocleantech.com/

I’ve mentioned this a couple of times, if I recall correctly, in the Neste thread, but since it is apparently listing on the Nasdaq this coming Tuesday (Nov 5, 2024), it has earned its own thread. Until now, it has only traded on the CSE and OTC, meaning it was only accessible from Finland via IB. On Tuesday, this changes and it will be available to all brokers. The listing date is, by the way, very well chosen because supposedly nothing else is happening in the world then, so the whole world will be watching Aduro’s Nasdaq debut.

And to start, here are the warnings.

This is practically a pre-revenue company (ok, there is some minor revenue stream, but it’s very minimal) from Canada; the risk profile is extremely high, so this should be approached with extreme caution.

If you’re still reading, I assume you’ve realized the risk level of this stock.

Briefly, this is a company that has patented (I recall 7-8 global patents) technology (HydroChemolysis) that can convert various hydrocarbons (plastic waste, bitumen, car tires, waste oils, etc.) into hydrocarbon-based raw materials that can be used in further processing (for example, in plastic production).

The technology in question is revolutionary because, unlike any other current technology, it accepts, for example, regarding plastics, all 7 different plastic types (The 7 Different Types of Plastic | Plastics For Change) into the process without the input needing to be precisely screened, cleaned, and sorted. All current technologies (including pyrolysis, which is the most common) require the input to be carefully sorted and cleaned (e.g., labels and food residues), and furthermore, current technologies generally only take one type of plastic at a time in the feed and only work with 1-3 of the aforementioned plastic types.

Aduro’s technology thus accepts all plastic types into the process (some are not suitable for the reaction but are expelled with the side streams), and the process is not hindered by, for example, labels and food scraps, which allegedly even improve the process’s functionality. Additionally, Aduro’s technology operates at significantly lower temperatures (pyrolysis requires temperatures in the range of 700-900°C, while 300-500°C is sufficient for Aduro), which further lowers the process’s OPEX. Similarly, CAPEX is lower because separate processing plants are not needed; plastic waste can, to put it simply, be fed directly into the reactor via a conveyor belt. The best part, however, is that Aduro can utilize plastic waste that others cannot, so it gets the raw material significantly cheaper, even for free, while “popular” plastic wastes (including cleaned and sorted polypropylene or polyethylene) are becoming increasingly expensive as demand for them grows.

Sounds too good to be true? I wouldn’t be surprised if many think so; I had the exact same reaction when I first looked into this around 2021 or so. But the technology has been tested and found to work by external evaluations (a Canadian university and Brightlands Chemelot in the Netherlands (the world’s largest recycling/green tech hub Brightlands | Chemelot Campus)), and Aduro currently has, among others, 6 billion-dollar companies in its partnership programs. Two of these have been disclosed: Shell (as part of their GameChanger program) and TotalEnergies (which expanded its cooperation to a new level with Aduro this summer).

And to make the story even more incredible, the same technology can be used not only to recycle plastic waste but also, for example, to upgrade bitumen and other heavy crude grades into lighter oil, which is easier to transport and more valuable in terms of sale price. Likewise, the technology has been successfully tested in recycling car tires (a massive problem for which there haven’t been proper solutions so far), and it also converts so-called renewable oils (palm oils, waste fats, etc.) into different fuels. This last-mentioned vertical is, however, “on the back burner” at the moment, but there is potential there too.

Well, all this and the company’s value must be several billion? No, it’s not. Market cap is around €150M at the moment, and the company doesn’t have a penny of debt. For comparison, the “biggest and most beautiful” in the field, PureCycle, trades at a market cap of about 3 billion and they don’t have revenue yet either (though it’s coming soon). This PureCycle is a former SPAC that doesn’t even own its technology but has licensed it from Procter & Gamble, which developed a technology that can process ONE type of plastic (polypropylene) and results in “cottage cheese” that can only be used in plastic manufacturing.

The company currently has only about 30M shares, of which insiders, i.e., the founders (CEO, Chairman, etc.), own 40%, so the free float is very thin. This means that if institutional investors (hello all ESG funds!) get excited following the Nasdaq listing, the shares will run out quickly. The company’s board has been expanded this year as well, and it has gained, among others, a certain Swedish lady who sits on the board of SSAB, for instance, and has a very solid CV in the recycling sector Aduro Clean Technologies - Governance - Board of Directors . This is, at least for me, a very significant matter; Canada is known for having traps elsewhere besides the hockey rink, and (perhaps naively) I believe this lady has enough judgment not to destroy her reputation with just any outfit.

So what about the business itself? Well, currently, the planning of a pilot plant is underway, and its construction is expected to start in early 2025. Aduro has the option to either start building actual plants themselves, but it’s much more likely that the technology will be licensed to the “big boys.” Major revenue is not expected before 2027, but personally, I don’t believe this company will remain independent that long if the technology works in the pilot plant as it does in laboratory reactors. The company’s management is very confident that scaling is not an issue because the reactor doesn’t require any special equipment; the secret is in the reaction/chemistry itself, and the plant can be built using “off-the-shelf” components.

This was a very small bite, but fortunately, user @AlmostMongolian wrote a very comprehensive piece on the company about 3 months ago Aduro Clean Technologies: Huge potential which everyone should read. it’s missing the latest developments, such as the collaboration deal with Total, but it gives a very good understanding of the company.

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Aduro happens to also be one of Markku from Poland’s favorite investments, and the guy has covered it quite extensively in his videos :cowboy_hat_face:

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Yeah, good addition, I meant to say that this came onto my radar before Markku did; he has good interviews with the company management, but I don’t give a cent’s worth of value to his hype.

So, you could say I’m in this despite Markku, not because of him.

If I remember correctly, the first position was taken in late 2021, and I participated in the offerings in 2023 and 2024. I hold shares and warrants through those; the average share price (excluding warrants) is around 3-4 CAD.

This is a long-term hold for me and I’m not selling in the foreseeable future—let’s just say I won’t be letting go for anything under 15 CAD at least.

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Had a quick look at the financial figures, and it looks like the current burn rate is $10M per year, with $10M in cash.

Where will the money for building the (pilot) plants come from? Is the hope that the Nasdaq listing will drive the market cap to $1 billion, after which they’ll print shares? What if that doesn’t happen? A share issue with worse terms and greater dilution?

There is no revenue. The same can be achieved with an iron nanoparticle-based reaction, and catalyst recovery is laughably easy.

I don’t understand why Neste isn’t doing this. A certain director-level person told me that it’s not compatible with the pyrolysis feedstock process :face_with_crossed_out_eyes: quite a ridiculous comment for a chemist, but they have their supply chain, so let them do what they do.

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This comment from Seeras shows a certain so-called expert bias related to patents… i.e., by being in the field: “a completely absurd comment for a chemist.” One imagines knowing all the secrets of the industry and all the patents and technologies of various companies, and understanding much more than the average Joe, which is certainly true, but I wouldn’t dare claim to know any field inside out or be an expert, no matter what education I’ve had. Anyway, human thinking and its biases are truly interesting..

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Let’s put it this way: I have personally developed an iron-NP-based reaction that breaks hydrocarbons into shorter chains. And I know how to easily recover those catalysts.

Of course, impure raw material is an issue, but there is a solution for that too through process design. I won’t go into more detail here on how, as that is information worth over €10M.

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This is turning into a playground-level debate, but I’m not going to get bogged down in these arguments with online handles again, as no one even wants to listen to the other side… My point: Sure, you might have the information you’re presenting, I’m not denying that… but the claim that you haven’t sold that information for over ten million is just another one of those online assertions, sigh… who has the energy for this?

Summary: Why can’t people outside the industry admit that they don’t know all of a company’s plans, technologies, and patents, and instead invest with the mindset that someone might know them—and by holding a small position in their portfolio, they’re betting on being involved? The fact that Aduro’s technology and patents have been researched and proven functional at a university provides peace of mind. How that knowledge is translated into revenue and net profit for shareholders is a much greater risk than questioning technology that has been proven to work time and again. Keisari summarized the company’s operations excellently, so anyone even slightly interested should just keep digging into the sector. There is plenty of material available. That’s it for me, I won’t spam this great thread any further…

Enjoy the rest of your Sunday, everyone!

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There is certainly a grain of truth in this. The fact that a reaction has been proven to work in a laboratory is light-years away from it working in a reactor with a feed of thousands or hundreds of thousands of kilograms. And additionally, that the reaction can be run cost-effectively at that scale as well.

My point was mainly that Aduro’s technology is not as unique as they market it. Of course, the talk is of that nature when the cash is running out in a year and they are forced to get additional funding from somewhere.

Furthermore, patents can always be bypassed unless it is an absolutely unique process AND the patent is valid in every single country in the world. Usually, many patented things can be turned into non-patented ones with a small modification :slight_smile:

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Now that you, Seeras, are in the industry, you probably understand the case much better than us laypeople. It would be great if you could challenge your own views and perhaps look into those materials and do some due diligence on it, just out of pure interest, and share your thoughts here on the forum. (I’ve personally spent about 50 hours on this and I realize that even that amount isn’t enough, but it’s clear from your response that you haven’t spent even an hour reading up on the case.) I mean, for example, if you could evaluate Aduro and its competitors purely from a technical standpoint (let’s leave the business development for others to worry about). If you can back up those claims of yours about why Aduro’s technology supposedly isn’t unique, we would all definitely benefit from that, wouldn’t we? :wink:

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Yes, indeed, but because of the “rush years” (ruuhkavuodet), I don’t have the time, and monitoring the business operations of my own investment targets takes up all the time I have available for investing.

I can comment on this quickly, as it seems trivial to me. For example, academic literature from over 10 years ago contains many publications on technology that achieves the same thing as Aduro. Of course, you have to do a bit of detective work to piece it all together into a coherent whole. But the pieces are there, and I’m certainly not the only one in the world who connects these dots.

In terms of technical execution and the cash position, Aduro is a clear no-no for me. Of course, it could be that this is a 10-bagger, but you never know (after all, even Neste isn’t using that technology yet). Too many risks for me.

Edit: From a purely trading perspective, there might be a unique window here to make money. IF major interest picks up on the Nasdaq. I could probably throw a few hundred bucks into this lottery myself, but in the long run, I can’t stay involved.
Do your own Due Diligence, not investment advice, management may sell their shares directly into the Nasdaq (I don’t know the details of that arrangement), etc. etc.

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I would very much like to hear more about this technology and specifically why it is not yet in use.

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My understanding is that Aduro’s reaction is not that, but I could check the matter.

Is anyone else doing it?

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I don’t know if anyone else is doing it. Not necessarily yet. It’s unlikely anyone would disclose their own process at a chemistry level anyway :slight_smile:

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But if no one is doing this yet, there’s probably a reason for it, isn’t there?

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It usually takes 10–20 years to go from academia to business. For example, the Canatu case.

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PureCycle uses solvent-based chemistry and focuses on material purification rather than so-called breaking it down.

I could take a few pieces from their process and combine them with a process like Aduro’s :slight_smile:

Taken from Aduro’s website:
”HCT is different. Simple, inexpensive metal compounds combined with the feedstock work like scissors applied selectively to cut bonds between carbon atoms”

This is the Fenton process, in all likelihood. Or some variation of it.

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I inquired with Aduro about this; let’s see what they say.

I have a firm impression that the reaction isn’t a standard Fenton, but that something essentially different is involved, though hopefully this will be clarified soon(?).

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So Aduro’s process involves heat (300-500c) but clearly has a lower requirement for temperatures than pyrolysis; as I understand it, temperatures in Fenton are even lower than this, i.e., below 200c?

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Temperature affects reactivity and reaction rate etc… many reasons to run higher than room temperature.

That 200-300C is also naturally quite good for several different reasons. I don’t really understand why Aduro is revealing the core pillars of its technology like this.

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Borealis is also developing a chemical recycling process. Revenue of €8 billion and profit of €800M. So, there is quite a lot of muscle behind it.

Other competitors, as examples, include Quantafuel (Viridor) and Lamor (https://www.lamor.com/how-we-help-the-planet/material-recycling/plastics-recycling)

From Quantafuel’s website:
”We developed a solution in which plastic waste is heated, broken down and reassembled into valuable products. A major advantage of our technology is that it allows for impurities and a mix of different colours and different types of plastics. The usual process of separating plastic and cleaning it is costly and prone to waste. Many have attempted to go down Quantafuel’s route before, but only we have succeeded.”

Sound familiar?