Renewi surges as thermal soil approved for use in Netherlands
Renewi shares surged on Friday after the Dutch government and regulator lifted the ban on the use of thermally treated soil (TGG) in the Dutch market.
The waste-to-product business said this means that the TGG produced by its ATM facility can now be used for industrial purposes at appropriate sites in the Netherlands and abroad.
Chief executive Otto de Bont said: "We are delighted that the Minister and IL&T (The Human Environment and Transport Inspectorate) have lifted the ban after confirming TGG is safe for use in an industrial application. We will now work hard with our customers to secure permits for its local application in the coming months.
"The ability to use TGG again as an important secondary material in the infrastructure market will complement our ongoing strategy to scale up capacity for the manufacture of secondary building materials using TGG."
IL&T imposed a ban on the use of TGG last year pending a period of testing of TGG production by market participants as it sought to understand the full chemical composition of the product. This process was completed in recent months, including an extensive testing programme by ATM and the testing showed that TGG is safe to use in an industrial environment.
Renewi reaffirmed its outlook for the year to the end of March 2020.
"ATM has maintained a strong pipeline of customers who intend to use TGG at their locations. These specific uses will require approval by local regulators, as before," it said. "We anticipate that as the market reopens it may take some months to secure the first permits for use."
At 1145 GMT, the shares were up 24% at 33.50p.
Edison said: "Renewi’s previously noted increasing confidence of improved ATM production volumes in 2020 have proved to be well founded as the ban on using thermally treated soil in the Netherlands has been lifted. This sets a positive backdrop for management’s forthcoming strategy update and an expected secondary listing on Euronext shortly.
"On unchanged estimates, it also brings into focus mid single-digit earnings multiples beyond the current year which, given the above, look low by conventional standards."