In one of our latest interviews, we spoke with David Callejo, the CEO and the Co-founder of Resilco. Resilco is an Italian startup founded at the end of 2019 that helps in CO2 emission reduction by recovering industrial waste materials, converting them into construction materials in which CO2 is permanently stored.
Since the interview is pretty comprehensive, we've divided this write up into two parts: the first talks about Resilco in general and its (very interesting) business model, while the second goes further into their technology. Read part II here.
A. Resilco's origin, and the business side of things
Can you tell us a little bit more about yourself? What's your background and how did you come up with the idea of funding Resilco?
I'm Spanish, but I live in Italy. I have been traveling around the world for the last 20 years, working in the US, China, Korea and other countries. I'm a material scientist by training and have been working in Industry for a long time, supporting companies both in external and internal capacities, helping them transform technologies into real industrial solutions.
I started Resilco almost 4 and a half years ago, with the idea to create something that combines two of my passions -- environmental and materials. My goal was to promote circularity—sustainable practices based on scientific principles—while also ensuring profitability.
I know it's hard to be objective, but what is unique about Resilco?
That's a challenging question. Resilco's strength lies in its diverse team. We are a truly cross-functional group, with members from various backgrounds, age groups, and genders, representing different countries. This diversity allows Resilco to tackle long-standing problems by leveraging existing, well-known technologies. We don't invent new solutions; instead, we apply established technologies in innovative and effective ways to address specific issues.
What is the problem you're trying to address today?
We are trying to address 3 problems with one solution.
First, we want to remove CO2 permanently from the atmosphere. CO2 capture technologies are already available in the market, so we are concentrating on permanent storage by creating new materials.
The second issue is industrial waste. Both hazardous and non-hazardous waste pose environmental problems—they occupy space, pollute soil and water, and generate more CO2.
The third challenge is the scarcity of raw materials. In Central Europe, mining is difficult and environmentally taxing. The current situation necessitates increased recycling to reduce the need for new mining operations.
Our solution to tackle these three problems at one go is to store CO2 in waste materials and transform them into new construction materials. This is our main approach.
What are the main segments or the main industries that can benefit from your solution?
In Europe, one of our verticals focuses on the steel industry. Steel mills generate around 8.5 million tons of waste materials annually, which are currently not reused and end up in landfills. This waste, however, is rich in minerals and can be repurposed for construction.
The second vertical involves waste-to-energy plants. Despite efforts to recycle urban and industrial waste, some materials remain non-recyclable and must be managed. Incineration and thermolysis are necessary but should be minimized. We're targeting the fly ash from waste-to-energy plants, which is hazardous but also mineral-rich. Our process transforms this hazardous waste into construction materials while storing CO2.
The third area is the dust collected from industrial fumes, a pervasive issue across industries. Although the volume isn't as significant, the economic impact is substantial due to the high value of these materials. Addressing this dust is crucial for the European Union and its member states."
How are the companies currently addressing the challenges? Are they addressing these challenges at all?
The approach depends on the country and its government regulations. For example, in the steel industry, they've been trying to use white slags for construction for the past 20 years. However, they struggled because these materials are unstable and too reactive, causing issues for concrete manufacturers. In the case of waste-to-energy plants, their current solution is to store waste in salt mines, which is not ideal. Our approach offers a much-needed solution to both these issues.
Do your customers have other incentives to address this problem? What kind of negative consequences do they face if they do not act?
Well, they do. First thing is the cost of disposal. Landfill costs are a big hurdle for waste-to-energy plants, with gate fees swinging wildly between €150 and €500 per tonne. On top of that, landfills in Europe are filling up fast, and there aren't many other options for disposing of this type of waste. This lack of space is expected to send those fees skyrocketing in the coming years.
They also need to address this due to costs associated with complying with sustainability regulations. Steel producers, for instance, must cap their production by the amount of CO2 they are emitting. So, by storing up to 25% of the CO2 they produce, steel producers could potentially ramp up their production capacity. It of course also lowers their costs related to CO2 allowances.
How do you think the environmental regulations affect you?
Regulations are definitely helping us, especially downstream in our supply chain. Since we sell to the construction market, new rules requiring companies to use a certain percentage of recycled materials are a big benefit. Finding large quantities of recycled materials is tough, so this creates a market for the limited amount we produce and drives up the value because of its scarcity.
Regulations are also helping us on the CO2 front. New CO2 restrictions are pushing our customers to find solutions for capture and storage. This benefits us in two ways. First, it helps us find partners. We work with companies doing carbon capture, whether they capture air or industrial CO2, and they all need partners for permanent storage, which is what we offer. Second, it makes choosing us easier for our customers, as we're one of the few companies creating new materials with captured CO2 in a sustainable way.
So, overall, regulations are making things easier for us by creating demand for our product and pushing our customers towards solutions we can provide.
That's cool. Can you explain how your business model works?
Based on insights from our customer interactions across Italy, Europe, and the US, we’ve realized that merely selling equipment or plants was insufficient because we're essentially forging a new supply chain and our customers need support on that.
For instance, waste management plants are municipality or region-owned, and those entities are not interested in the business of materials resulting from the process of fly ashes conversion. To address these needs, we've developed a hybrid business model in close collaboration with our customers. It's a comprehensive model where we not just sell the equipment, but also take on the management and operation of the plants. Furthermore, we handle the sale of materials produced to construction companies.
Our proposition includes taking on the operation and management for a minimum period of five years, often aligning with the plant's depreciation period. This ensures a guaranteed return on investment for our clients, as we take charge of product commercialization and share the profits. Some customers are interested in assuming control after the plant depreciates, at which point we transition to earning royalties on the material sales. Others prefer that we continue managing operations.
This strategy ensures the return on investment for our clients is secure. For instance, with waste-to-energy plants, they can typically expect their investment to return in about three years, which is relatively quick. With stainless steel plants – which are larger and deal with more material – the expected return takes slightly longer, about four and a half years. These timelines present an attractive investment opportunity for them.
How do you measure the sustainability impact of your solutions?
Our company has formed a partnership with Polytechnic University of Milan, which holds the distinction of being one of Italy's most prominent universities, to help us specifically with Lifecycle Assessments (LCAs).
What we're doing with LCAs is twofold. Internally, we measure both direct and indirect reduction of carbon emissions (the reduction of landfill uses and mining activities contribute to the indirect reduction). These assessments help us to ensure that we are carbon-negative and to identify areas for improvement. Externally, we provide LCA services to our clients and their end-users, contributing to a broader understanding of the entire supply chain's sustainability.
Can you give us an example of your existing partnerships?
We are currently working on two collaborations. First, it is a partnership with a North Italian company that specializes in managing dust emissions from ceramic production fumes. They are market leaders in Italy for landfill management — a niche but lucrative market due to the high costs involved. Our partnership is looking at developing smaller scale plants, with a production capacity of around 4,000 to 5,000 tons per year. While we consider this a pilot plant, for this client, it's an operational scale. This venture is particularly exciting as it represents our initial foray into an industrial application on the ground. We're aiming to commence operations by the end of the first quarter of 2025, with installation set for before Q3 2025.
The second example is a waste-to-energy facility that handles exceptionally challenging material. They have pledged to acquire the first module of our industrial-scale plant with a similar capacity i.e., approximately 5,000 tons per year. This module marks the beginning of a more extensive plant design. Contract signings are anticipated in the coming autumn, aligning with start-up preparations for the following year.
The modular nature of our technology underpins its appeal and adaptability for our clients. For instance, with the waste-to-energy project, the initial module will serve as a part of the eventual full-scale facility. This approach allows for a practical experimental phase where data can be gathered for environmental authorization purposes, and simultaneously, the module is not wasted but becomes integral to the larger establishment. This scalable aspect of our technology offers a tailored solution that evolves with the growing needs of our clients.
Can you just tell me a little bit more about your expansion plans? Are there any other industries that you would like to break into?
Talking about our growth, we have an exciting opportunity for expansion through our participation in the Deep Tech Alliance in Europe. This network is essentially a consortium of forward-thinking organizations pioneering the next wave of technologies. It's through this alliance we're making inroads into the Spanish market—not because I'm of Spanish origin, by sheer coincidence! We're planning to start tapping into this new market by the end of 2024 and kick things off in 2025. We are also starting our first engagements in France.
Furthermore, we're branching into the oil and gas sector. There's a hazardous type of dust produced by refineries—dust we find particularly interesting and potentially valuable. We're poised to begin laboratory tests soon.
Our team is also looking into the challenges presented by various kinds of industrial slag, such as the byproducts from biogas and water treatment plants. These materials can encapsulate a large amount of CO2—an intriguing attribute that we're researching to determine how to best stabilize it for reuse in other industries. We're vigorously exploring these materials, and we're optimistic about delivering preliminary industrial findings by mid-next year.
What are your biggest challenges when it comes to scaling your business over the next 5 years?
Addressing the complexity of scaling up, especially for startups in the environmental sector, the biggest hurdles are related to the differences in local regulations. Replicating a business model in a new country with vastly different laws and regulations is not only time-consuming but also demands significant local resources.
The challenge intensifies when you consider team building on an international scale. Although we've successfully recruited the right talent in Italy thanks to our conducive work environment and the company culture we've cultivated, doing so outside our home country presents a new set of challenges. As we establish ourselves in new locations, creating subsidiaries, we need to attract and integrate local professionals who are passionate about our mission.
Transitioning from a national to an international company involves scaling not just operations but also the organizational structure. It's a complex—arguably the most complex—aspect of global expansion. However, we're confident in our ability to extend our reach. With the right approach, we believe we can effectively navigate these challenges and thrive on the global stage.
For many startups, one of their biggest issues is access to capital. Is this also a challenge for you?
Not really. We are probably in the right place, at the right moment with the right technology. Sometimes you just have to be lucky. The problems we're tackling are so big and so important, a lot of funding is flowing into this area because of the urgency of the problem itself. But more importantly, our offering stands out, as we present a model that is profitable for both our company and our clients while also doing good for the planet.
Continue to read part II here, where we discuss the technical aspect of Resilco's solution.
