By Francesca Landini

MANTUA, Italy (Reuters) -Versalis, the chemical company of Italian energy group Eni,  unveiled on Thursday a demonstration plant based on its new technology for the chemical recycling of mixed plastic waste.    

The technology, dubbed "Hoop," makes it possible to convert mixed plastic waste into a feedstock that can be used to produce new plastic materials suitable for all applications, including food contact packaging and pharmaceutical packaging.

The move is part of Eni's strategy to overhaul its loss-making chemical business as the European petrochemical sector struggles with overcapacity.

Eni plans to set up a new plant based on Hoop technology in Priolo, Sicily, where it will shut a steam cracker by the end of this year. 

"A final investment decision on the new recycling plant in Priolo could come next year," Versalis CEO Adriano Alfani said at an event to inaugurate the demo plant in Mantua, adding the new factory could be ready at the beginning of 2029. 

Alfani said Eni would spend around 200 million euros by 2029 on the plant in Priolo and other facilities dedicated to mechanical recycling of plastic.

The sum is included in a 2-billion-euro ($2.3-billion) investment plan announced by the state-controlled group last year, which is aimed at turning around Versalis. The company has accumulated 3 billion euros in losses in the last five years.

The revamp hinges on starting new activities including plastic recycling, bio-refining, and energy storage, and shutting down several primary petrochemical plants, including steam crackers.

Alfani said Versalis could in the future consider spinning off some businesses, including its biochemistry company Novamont, and take on minority partners.

Novamont's financial results improved last year compared with 2023 and were close to break-even at the core profit level, he said.

Sources told Reuters last year that Eni was waiting for improvements in Novamont's financial results to reconsider the sale of a minority stake in the bio-plastic maker.

($1 = 0.8721 euros)

(Reporting by Francesca LandiniEditing by Mark Potter and Rod Nickel)