Today, the principles of the circular economy occupy a leading place on the global agenda. Europe and the world are on the threshold of rethinking their relationship with resources: the traditional “extract–produce–discard” model no longer satisfies regulators, major manufacturers, or investors. How a circular economy can be built within a single country, how this model is structured and why it works in an economy where recycling remains expensive, as well as the key industry trends – are the focus of this article.
European Expectations and Regulations
Recycling today is no longer merely a social trend or the prerogative of progressive companies. It has become a major economic driver – provided that countries are prepared for it, with the infrastructure and technologies needed to return used materials back into the economy. Each year, the European Union raises the bar on how much material must be recycled. Regulators demand less waste, more reuse, and a higher share of recycled content in production. Countries that fail to comply with these regulations face substantial fines.
One example is the new comprehensive Packaging and Packaging Waste Regulation (PPWR, Regulation (EU) 2025/40), which introduces requirements for recyclability, recycled content, and packaging design with recycling in mind. The regulation will come into force in stages, with a significant tightening of criteria expected by 2030–2035. For businesses, this is no longer simply a matter of corporate social responsibility, but a real necessity to adapt supply chains and raw material flows. The alternative is to risk fines and loss of market access.
Who Will Buy Recycled Plastic?
Demand for recycled materials in Europe is growing, but unevenly so. Some sectors – such as packaging and automotive manufacturing – are already preparing to incorporate recycled materials, while others remain hesitant due to price competition with cheap virgin polymers, logistical constraints, and concerns about material quality. Institutional players note that demand will increase in the coming years, especially in sectors where regulation mandates recycled content. However, growth in recycling capacity slowed in 2023–2024 due to high energy costs and reduced investment. This creates a window of opportunity for players that combine technological flexibility with control over their supply chains.
Latvia’s Plan
In 2020, Latvia approved the Action Plan for Transition Towards Circular Economy 2020–2027, a comprehensive roadmap designed to put the country on a circular economy trajectory. The document provides for improved resource efficiency, an increased share of secondary materials, the development of recycling infrastructure, and the creation of demand for products made from recycled materials. Special emphasis is placed on educating businesses and the public, as well as stimulating sectoral investment.
However, actual performance still lags behind ambition. A key indicator – the circular material use rate, which measures the share of materials returned to the economy – remains stable at around 5%. In other words, most materials in the country still enter the economy from primary sources rather than through recycling. This signals the need for a deep restructuring of Latvia’s collection, sorting, and recycling systems.
The transition is hindered by systemic obstacles. Separate waste collection is unevenly developed, resulting in low-quality feedstock and higher recycling costs. Secondary raw materials lose competitiveness when prices for virgin polymers fall. The market is unstable, with sharp fluctuations in recycled material prices complicating investment decisions. Technological limitations add to the challenge: many processing lines are not adapted to new types of plastics and mixed streams, including biomaterials.
Companies That Close the Loop
Against this backdrop, companies that integrate multiple stages of recycling – from collection and sorting to logistics and the production of recycled pellets – stand out. An integrated model makes it possible to standardize feedstock quality, accelerate the adoption of new technologies, and reduce transaction costs. For Latvia, this is particularly important: achieving the goals of the national plan largely depends on the resilience of such operators, capable of assuming the risks associated with sector development.
An example of a systemic approach today is the group of companies comprising SIA Zalais Cikls, Green Plastics, Loid Logistics, and Naura. The founder of the group, Aivars Sveida, has been in this business for more than 20 years. When environmentally responsible approaches to secondary raw materials were only beginning to emerge in Europe, he recognized the potential of this niche. He started as a manager at a recycling company, and after managing to effectively save it during a crisis, he became a co-owner.
The Latvian circular economy model that Aivars Sveida’s group is building today differs markedly from the familiar notion of “put plastic in a container and someone will recycle it somewhere.” This is about a closed-loop chain that the entrepreneur deliberately constructed over many years – from waste collection to pellet production and equipment servicing. Such an approach minimizes losses, improves feedstock quality, and keeps economic value within the country.
SIA Zalais Cikls is the core company responsible for purchasing waste from small businesses and large agricultural operators, sorting it, and distributing it to clients. SIA Loid Logistics handles transportation. SIA Green Plastics processes plastic, and SIA Naura repairs machinery and rents out equipment.
The Circular Economy in Action
The first link in the chain is the company that purchases secondary raw materials from local waste management operators. Each Latvian city has its own collector, and sorting standards vary widely, so quality assessment – and, if necessary, additional cleaning – takes place at a central warehouse. Volume then comes into play: the larger the batch, the higher the price that can be obtained from major processors. During periods of low prices, the company holds onto materials, relying on its infrastructure and experience. In essence, this functions like a commodity market: understanding seasonal fluctuations helps improve supply margins.
The next stage is the conversion of collected plastic into pellets at the Green Plastics plant. The company specializes in polymer recycling and pellet production, which are then used as raw materials for new manufacturing – from industrial tooling to consumer goods. This is where the greatest economic value is added: pellets are worth more than sorted waste, creating additional value within the chain. Moreover, Green Plastics was among the first in Europe to start working with PLA (bioplastic). Because the company assembled its own production line, it was able to experiment – and in the process, the team succeeded in recycling bioplastics as well.
For the entire system to function smoothly, an in-house logistics network is essential. This role is fulfilled by Loid Logistics, which transports waste from local operators to Zalais Cikls warehouses and then delivers materials and pellets to processing plants. The decision to move away from external transport was strategic: it reduces operating costs, eliminates dependencies, and keeps working capital within a single ecosystem.
The final – but crucial – link is Naura, the company responsible for renting and repairing recycling equipment. Initially, the group had to rely on third-party service providers, but high costs prompted the creation of an in-house technical unit. Over time, Naura developed specialists capable of servicing not only internal facilities but also equipment at external enterprises. This significantly reduced costs while keeping economic benefits within the group’s own structure.
A Bet on In-House Development
One of the key factors that sets Aivars Sveida’s group apart from most recyclers in the region is its focus on in-house engineering development. In a market where equipment is traditionally purchased “turnkey” from major manufacturers, his team chose a different path: assembling production lines independently, combining the best technical solutions observed at dozens of plants across Europe.
Aivars explains: “While selling raw materials, I visited many facilities and saw which equipment worked best. But for each plant, ‘best’ meant a specific component – one had the best shredder, another the washer, another the extruder.” Drawing on this experience, he and his engineers assembled their own installation, combining the most effective elements into a single line.
In effect, it is an engineering assemblage made up of top-tier components. “It’s like building a car with the best parts available: an engine from Mercedes, suspension from BMW, an interior from Lexus,” he says.
The result proved competitive not only technologically but also economically: the cost of the equipment was five times lower than comparable market alternatives.
Trends in the Recycling Market
Today’s recycling market trends are shaped at the intersection of economics, regulation, and technology. Recycling costs are rising: expensive electricity and cheap oil make virgin plastic more attractive than secondary raw materials. At the same time, EU regulatory pressure is increasing – environmental taxes on packaging are being introduced, and requirements for recycled content are being tightened. This gradually pushes the industry toward mandatory circularity and creates demand for high-quality recycled plastic. These same mechanisms also provide subsidies to recyclers, helping to keep their business models viable. Market consolidation is evident: smaller companies are unable to withstand the pressure and are exiting the sector.
