PS Group Unit Faces Key Test of Technology : Recycling: The company has pinned its hopes on the Illinois subsidiary’s ability to retrieve valuable metals from industrial waste.
PS Group’s Illinois-based Recontek subsidiary will face a crucial technology test this summer when plant operators try to prove that Recontek can safely draw zinc from industrial wastes, PS Group President George Shortley told shareholders during the company’s annual meeting Tuesday.
If the zinc test proves successful, Recontek will then attempt to draw copper from the waste stream in an environmentally safe manner. The technology tests will help determine whether Recontek should be closed down or become the prototype for a string of metals-recycling plants around the country, Shortley said.
Recontek, viewed by many analysts as the main source of PS Group’s future profits, is developing a hazardous-waste recycling technology. Technological problems have kept the subsidiary from opening its initial plant, and Recontek and the Illinois Environmental Protection Agency are locked in disagreement over how the plant should be regulated.
Early in 1991, Recontek’s potential drove PS Group’s stock to as high as $72.25. But the stock since has fallen to as low as $16 as word of the technological problems spread.
PS Group Chairman Charles E. Rickershauser on Tuesday voiced optimism that Recontek’s problems will be overcome. But he also acknowledged that the subsidiary will be unprofitable during 1992. “It’s a frustrating time to be a PS Group shareholder,” he said.
PS Group reported a loss of $23.9 million on revenue of $297.8 million for fiscal 1991.
Shortley said that Recontek continues to meet with Illinois environmental regulators who have alleged various violations at the Recontek plant in Newman. Shortley, who moved to Newman in January to manage the facility, is optimistic that Recontek and regulators will eventually reach an accord.
Recontek, which had planned to be recycling industrial wastes at the end of 1991, suffered a major setback when plant operators learned that Recontek’s acid-based technology was destroying the recycling plant. Recontek is now reconstructing the process, using a less-destructive, alkaline-based system, Shortley said. Recontek now hopes to prove during the third quarter that its alkaline-based system can successfully draw zinc from an industrial waste stream. As early as the fourth quarter, Recontek will attempt to prove that the system is also capable of recycling copper.
The tests are important because, in order to turn a profit, Recontek must handle both zinc and copper. It also must be able to draw the metals from often-complex blends of industrial wastes. The process must also retrieve precious metals without creating hazardous byproducts, Shortley said.
While PS Group’s 40-minute annual meeting in La Jolla focused largely on problem-plagued Recontek, Shortley also delivered a dour report on PS Group’s other businesses.
PS Group has received “no solid bites” from airlines interested in leasing two 747 jetliners that now-failed Pan Am returned to the company. The jets are being reconfigured to serve as cargo planes, but the market for used jets is saturated, Shortley said. PS Group earlier said it intends to eventually abandon the aircraft leasing business.
PS Group’s US Travel Systems subsidiary, which operates a nationwide string of travel agencies, has yet to experience an uptick in business, Shortley said.
US Travel’s fate is tied to the success of the domestic airline industry, Shortley said. American Airlines’ recently revamped fare structure is expected to revitalize airline traffic, Shortley said, but he added that the economy is “so fragile” that many business travelers continue to cut back on travel.
