Featured Company / Aduro Clean Technologies Inc.

Take, make, use, discard. For centuries, that has been the typical approach to production and consumption in what can be described as a linear economy that yielded tremendous growth. At the same time, it generated enormous waste, polluted our planet, and damaged the atmosphere, while being dependent upon finite natural resources. Against that backdrop, it’s not a big surprise the most leaders throughout the world are incentivizing new technologies that are more environmentally friendly in a “take less, make, use, reuse” model.

There are many challenges that scientists and engineers alike have been trying to solve, including what to do with all the plastic waste created each year. Looking back to 1950, plastic production globally was about 2 metric tonnes. By 2015, the figure had exploded by 200x. The sad fact is that only a small fraction of that plastic gets recycled, less than 9% in the U.S. Part of the problem is that today’s technology is economically inefficient and less-than-desirable because it is cheaper to make a new plastic bottle from scratch.

After more than a decade in the making, though, a little Canadian upstart thinks it has the solution, and it’s a brilliant one at that.

Aduro Clean Technologies Inc. (CSE:ACT) (OTCQB:ACTHF) understands the robust chemical and mechanical properties that make plastics so problematic post-use. The Sarnia, Ontario-headquartered company is a developer of patented water-based technologies to chemically recycle waste plastics; convert heavy crude and bitumen into lighter, more valuable oil; and transform renewable oils into higher-value fuels or renewable chemicals.

If that sounds highly scientific and technical, that’s because it is. Initial research and development on the technology began in 2009. The company was officially formed in 2011 and came public via a reverse merger transaction completed in April 2021.

At its founding, Aduro was working on innovations to upgrade bitumen, a black, viscous form of petroleum found abundantly in Canada’s Athabasca Basin stretching across upper Alberta and Saskatchewan. What they discovered in the research could change the future of plastics and oils as we know them today.

Aduro’s team identified trace metals in bitumen to be a culprit in difficulties of oil refining. While a hassle for refiners, those trace metals are integral to breaking down complex bitumen components. Aduro also identified specific materials that could be used instead of hydrogen gas in hydrocracking reactions.

Furthermore, the company discovered that certain bio-based materials could replace hydrogen gas required in a process called hydrocracking reactions, where larger hydrocarbon molecules are broken into smaller molecules via intense hydrogen pressure and raised temperatures. While making these discoveries for the purpose of the bitumen industry, it became clear that there could be other applications, ones with even larger addressable markets.

Plastics, which are comprised mostly of petroleum, were a logical choice for experimentation. Turns out, a lot of the chemistry translates into what can be a sustainable approach to recycling plastics to replace the outdated, inefficient pyrolysis methods used today.  The company discovered that a process somewhat akin to hydrofracking can be achieved at far lower temperatures and without the need for hydrogen or other expensive catalysts to break plastics down at the cellular level.

In short, it’s an environmentally-friendly industry breakthrough and a next generation chemical conversion platform, which underscores why it is the optimal time to look at the company closely.

Aduro uses cellulose, ethanol, and glycerol as chemical agents and water as the medium to facilitate an optimized chemical reaction. The operation has multiple benefits over commercialized technology. The process happens at a lower temperature, resulting in lower energy consumption and operating costs and fewer emissions, along with higher yield and a higher quality output. The kicker is that the water is not consumed in the process, so it to can be recycled and re-used.

The process is highly scalable and modular, making it appropriate for both large and small units. Perhaps counterintuitive as small always seems easier, small operations have historically been left out of the recycling ecosystem owing to economic viability. Aduro can change that.

Aduro has branded its patented (protected by 7 patents, in fact) process Hydrochemolytic™ Technology, or HCT. When used in the case of plastics, it is appropriately called Hydrochemolytic™ Plastics Upcycling, or HPU, a moniker reflective of a sustainable process that can be used in chemical recycling of polyethylene. By far, polyethylene is the most common type of consumer plastic. Other recycling applications include polypropylene and even polystyrene.

Lab tests processing polyethylene with HPU resulted in a diesel-like oil that was 99% pure at yield rates in excess of 90%. What to do with the output oil is up to the market, as it could be used as fuel or, in the mantra of a “reuse” economy, to make more polyethylene for plastics.

The technology has been validated by independent, third-party testing.

Aduro received some funding from Bioindustrial Innovation Canada and developed a pre-pilot reactor system that upgrades heavy petroleum into lighter oil. As it happens, Aduro has a long list of partners interested in their technology. The company operates in southwest Ontario out of the Western University facilities, where the R&D and technologies are located, with an
additional lab and headquarters in Sarnia. From the companies it is allowed to disclose partnerships/collaboration, Aduro has mentioned Greenfield Global, Exergy Solutions, Switch Energy Group, and Brightlands Chemelot Campus, in addition to government relationships with Ontario Centre of Excellence, Canada NRC CNRC, NSRC CRSNG, and Reseau BioFuelNet Canada.

At this moment, the company is at the pilot stage for both Hydrochemolytic bitumen (HBU) and Hydrochemolytic plastics (HPU) and working on advanced research in the area of Hydrochemolytic renewables (HRU). These represent three breakthrough solutions, each of
which undo the stubborn chemistries of man-made and natural materials.

With negotiations already underway with over a dozen organizations across 7 countries, Aduro says there is established interest to build plants around the globe. The go-forward strategy is to begin this year with polyethylene upcycling through a pre-commercial site in Ontario with capacity of 2 metric tons per day to prove the simplicity of the design and process on the path to commercialization and scaling. Other pilot plants for different inputs will then follow.

Aduro, under the driving passion of co-founder and CEO Ofer Vicus, has assembled a leadership team with a comprehensive skill set obtained through centuries of work in industrial processing, resources, chemicals, finance, and more to see this project through to commercial operations. Once commercialized, the company intends to implement a licensing model that will generate strong gross margin. According to the corporate presentation, an HPU facility processing 76,500 tons annually (with naphtha, kerosene, diesel, lubricating oil, and fuel oil outputs) is estimated to generate $69.66 million in revenue and $47.77 million in gross profit, $13.93 million of which will come back to Aduro per a licensing agreement.

Start putting those plants around the world and the upside starts to crystallize, particularly with consideration for Aduro currently having a market capitalization of just $34.3 million.

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