Adam Brown, editor of Ukraine Rebuild Newswire, interviewed Bart Gruyaert, project director at Neo-Eco, a French company that produces building materials from war rubble and industrial waste. The interview focused on the activities of Neo-Eco in Ukraine.
Key points include:
Circular Economy: Bart explains how Neo Eco uses industrial waste in Ukraine to produce low-carbon cement, which is cheaper and environmentally friendly.
Reconstruction: They discuss the labor shortages in Ukraine, particularly due to the war, and the need to integrate war veterans and displaced people into the workforce.
Pilot Factory in Mykolaiv: Neo Eco is building a pilot plant to produce 100,000 tons of low-carbon cement annually, with plans to expand after the war.
Partnership with Kingspan: Bart says Neo Eco has a strong relationship with Kingspan, helping them source materials and land for their projects in Ukraine.
Legislative and Operational Hurdles: They mention challenges such as complex legislation around ownership of rubble and the need for more service-based companies (e.g., for heavy equipment) in Ukraine.
*This abridged machine-generated transcript has been edited to delete redundancies, unfinished sentences and pleasantries, as well as any off-the-record information.
Sept 5, 2024
Bart 00:52
Hello, good afternoon. Adam, Hi, can you hear me? You're perfect. Good. Okay, how are you? I'm fine. Where are you? Based on them?
Adam Brown 01:03
I'm in Romania. I'm Canadian, but I'm in Romania. My wife's Romanian. So I'm in Bucharest right now. Okay, yeah, yeah. We live in the countryside part time, but and you're, you're in Kyiv full time. You're, you're Belgian. I understand, right?
Bart 01:19
I'm in Belgium, living in France, very often in Ukraine. So now I'm in France, but there was the whole month of August in Ukraine. But because of the start of the school year, I came back for the children to have their start of the school year. And so yeah, that brings me the context of my traveling back and forth. So it's, I would say, hybrids between France and Ukraine. Yeah.
Adam Brown 01:46
Okay, get it, yeah. We just had school start here too. Our two kids are, are off to school. Yeah, I don't know if you had a chance to look at the questions. Basically, what I'm trying to do is encourage as much participation in the reconstruction of Ukraine. So I'm focused on that. And I'm, I'm writing for foreign investors, for, you know, various companies, a lot of them, oh, sorry, this is, I'm, if you don't mind, I'm taping the the conversation. This is the, this is the the notice, basically, yeah, I
Bart 02:20
know. I know how it works, okay, yeah,
Adam Brown 02:24
second Adam. But then I saw no It shocked me the first time I used it. Who's that? Okay, but
Bart 02:32
Adam is getting twice.
Adam Brown 02:35
It's very convenient. It's extremely convenient. There's a revolution for journalism, because normally I'd be busy typing away everything. But anyways, yeah,
Bart 02:43
but we use it also internally for our minutes.
Adam Brown 02:45
Oh, okay, right. Okay, yeah. So the the questions are, are designed to well inform foreign investors, either, you know, companies looking to like construction companies, mainly, we write for, for the people, the financial investors, but, but not only, we got a lot of engineering firms. And, I mean, I don't know if you've read, we did a long interview with, with Kingspan.
Bart 03:17
Yeah, I know. I know. Of course, Kingspan very well. Unfortunately, since I'm not registered, I just started during the beginning. Oh, I see to see them to register, and then factor.
Adam Brown 03:24
Oh, yeah, darn it. I should have said, anyways, what I'm looking for, for information that would help other or encourage other potential foreign investors. So Kingspan did a lot, and they talked a lot about what they would like to see. You know, what would help them, what other companies they could use there was, I mean, a lack of forklift drivers, whatever it was, they were talking about a lot of things for us, for example,
Bart 03:54
I will give you the relationship that we have with kingspan. Kingspan is a customer of us, because in their new facility. They are going to use low carbon cement, concrete and everything from us. Okay, so we are in very close relationships. Also, at the very beginning, we helped them around Lviv to see if we could find for them a brownfield instead of a greenfield, because of permits and voltage and a lot of practical things. So yeah, we have a very, I would say, excellent relationship, and they organized an annual event in Ireland. We were one of the key speakers on that event. So that shows the relationship that we established with Kingspan. But what I would suggest is, let's take this conversation a little bit natural. Of course, Kate asks this kind of preparation, so there's no unexpected questions. Yeah, in it, but, but let's take it naturally. So a little bit background. First of Neo eco. Neo eco is, in fact, a French company founded by Christophe, a brilliant guy who, 17 years ago, came out of automotive industry and said, Hey, we can do things different for materials. And of course, during I would say, 10 years, Christophe was in a very difficult position, because circular economy was not at all popular. It was more like greenwashing and for the Greenpeace guys and everything. But he was stubborn enough, if I can say like that, to get over time to a mechanism where, now in France, in the French legislation, circular economy, is really embedded in procurement legislation and everything. So it becomes more and more an obligation, because the French government saw during our different projects over the many years the economical, social and environmental benefit so often circular economy. People tend to think that it's more expensive for less food quality. I simplify little things, but we have done now about 3000 projects in France. We've done the lipping games. Means that during the construction of the Olympic Games, we developed the Eco materials and everything to it this neighbor who passes by. So we have proven also so stele Grand Paris, which is the Metro extension in Paris, we have shown that thanks to Circular Economy, they could save 200 million euros per year. So the economical impact of what we are doing is surprisingly more positive than people think when they hear for the first time on circular economy. People think circular economy, it's more expensive for less good quality, but basically, if you explain that on huge projects, you can save tremendously lot of money on transportation because you use the material locally as much as possible as a resource. Then people start to understand the model. Jumping to Ukraine, so myself, working for neveko, Ukraine, and then being myself long time, also an entrepreneur, and then joined as shareholder and also as as a partner of Christophe. I met Christopher the first time in 2013 so we are going far back when I had my ready mix concrete factory in France too. I two. I was working on low carbon cement factory in France, war started. I mean, the 22 war started. In Ukraine, Kyiv was liberated, and we saw window of opportunity to move in early to try to convince Ukrainians that the horrible is not a waste, but is a resource for the reconstruction. That was basically our mindset when we went in there. So we went there the first time, beginning of June 22 so very fast, and we had the chance that the French government followed us with the grant in order to start working there, right? So that's the economical setting. Currently we are in a different setting. So we are two years further. The activity is still evolving. So we have currently three activities, consultancy, project implementation and eco materials. So most probably, for the readers of your magazine, it would be more interesting to work on the Eco material part, because consultancy UK and the project implementation is what it is, but especially on eco materials, we are in the process of constructing, and factory will be the pilot factory will be ready, I think, in February, March. So in the south of Ukraine and Nikolai, we are constructing a demonstrator plan for producing out of industrial waste, low carbon cement.
Adam Brown 08:56
So you're building a factory to repurpose rubble into
Bart 09:01
no not Rubble, no industrial waste. That's the reason why, for me, that so Rubble, we keep doing that, but that, I would say, is more it's not an eco material as such. It's more part of our consultancy project implementation, that wherever we go and there's Rubble available, we process that rubble to integrate into our projects or to third party projects, but on other construction materials Ukraine, and then I will try to zoom out and then zoom in back Ukraine, in fact, is for circular economy company, the place on earth to be. And the reason why I say that is that Ukraine has huge quantities of historical industrial waste. I'm talking about 15 billion tons. This is the quantity, 15 billion tons, just to grasp that, that's the quantity that the whole European Union accumulated pollutes during 10 years.
Adam Brown 09:58
, so that's a decade of of general waste generation of the European Union, basically,
Bart 10:05
yeah, of all different type of race, household raised everything, okay, that is the quantity. That is the quantity. If I would only take industrial waste, I think it's about a century of industrial waste of the whole European Union that is accumulated in Ukraine, in terms of quantity.
Bart 10:22
That material,
Bart 10:24
which is typically linked to the industrial activity of Ukraine, which is mining and steel industry, that material is extremely good quality material.
Bart 10:36
So from a circular economy perspective,
Bart 10:40
it's a free of charge, excellent material that you need to repurpose, transform suddenly.
Bart 10:49
But when you do that
Bart 10:51
cheaper, the transformation cost is cheaper than new materials. Then we have a market.
Adam Brown 10:58
And in which cases is it cheaper now? And which case
Bart 11:02
it's already now cheaper. So I don't know how well you are connected to the to the prices of construction materials in Ukraine, but since the beginning of the war, I will just give basic materials, which is cement and concrete. These are the two bread and butter for construction industry. The cement price more than doubled since 22 in Ukraine, not in revenues, I'm talking in euros or indoors, right? Yeah, that price more than doubled. Same for concrete, that price more than doubled. And that makes, of course, for us as a circular economy company, the condition even more favorable to do what we are doing
Adam Brown 11:45
right,
Bart 11:46
because the higher, the higher the prices is for cement and for concrete, but the more money we can make by using industrial waste and rubble, because for the concrete, we are talking about rubble and combined means that we will be able, and that's the reason why we are doing a pilot plant already, we will be able to produce at the lower cost with
Bart 12:09
an environmental impact that is about 10 times less.
Adam Brown 12:13
So your input costs then are, are the the transport of the material and the transport and transformation and transformation and my competitor,
Bart 12:23
but my competitor also has transportation cost.
Adam Brown 12:25
Yes, yes, yes, of course.
Bart 12:27
So, so we, we started to work, in fact, on that pilot plant straight in 22 so in 22 we did the rubble. But in parallel, we started on this, what I call now eco materials. Yeah, because I know Ukraine. The first time I went to Ukraine was in 2001 my wife is Ukrainian. I lived in Ukraine multiple times, so a lot of historical background I didn't discover. In 22 the existence of Ukraine. Both of my children speak Ukrainian with their mother. With me, they speak Dutch, because I'm Dutch, speaking Belgium. So for me, I didn't discover, but I saw or I thought, and the further the time is going, the more attractive it becomes. There is a huge amount of opportunity to use that industrial waste and the rubble to transform it on economical scale. Of course, I have to say that in some locations in Ukraine, it does not make sense. Why is the pollution? Transportation cost? Transportation cost? Yes, so. So there are some areas in which, what we would call linear economy is very competitive, and there are other areas where linear economy doesn't even exist anymore, right? I will give the example of the city and the surrounding of Kharkiv. Currently, if you want to have aggregates for your concrete, that aggregates are coming from the propitos region, which is about 250 kilometers away, that transportation cost gives me, of course, a competitive advantage if I can use local water rubble to do what we call a substitute of aggregate to do, sorry, repeat that substitute of aggregates, right? Okay, so I substitute a linear, economical product by a local transport product. So geographically, our activities make sense in some regions and in some regions not. It's very important to notice,
Adam Brown 14:21
but that was with, with, with the economy, with the war or whatever, right?
Bart 14:27
Yes, but imagine, let's say this is the current setting, war stops. Yeah, one stops means that there will be a lot of pressure on getting additional construction materials. So my position doesn't really change, because there will be more demand, and even if there is new available material, that will take a time to get it available,
Adam Brown 14:49
right, right? Okay,
Bart 14:51
so, so I have an input. Let's say I get, I will simplify. I get my materials free of charge, my raw materials. I have the transportation transformation cost, but I would say transportation cost is more in my favor than in the favor of my competitor. So it's mainly my transformation cost that defines whether I'm competitive or not, and if my margin is big enough. So we are currently in Mykolaiv building a pilot plant to produce low carbon cement, which is, I would say, about 30% less expensive than the current cement on the Ukrainian market in the current pricing. That's the whole that's the price that you sell it at 30% Yeah, exactly. No, I'm not selling it at the price, but that is theoretically with the correct margin between which I could sell it. Could sell it, okay, and you're not. The factory is not up and running. So I only say so in February or March, when you would take an interview, I can, I could say yes, we are selling x 1000s of tons per day of low carbon cement in Ukraine from the pilot factory.
Adam Brown 15:54
So your plan is to finish it in February or March.
Bart 15:57
February, March? Yes. So the land plot is there, the machinery is being purchased, the engineering and the electricity correction, everything is now being prepared to gas water, so we are in the utility connection now, right? And like, can you give me an idea of the size, the output, the volume, 100,000 tons, 100,000 tons of low carbon cement per year, right? Okay, and that is the equivalent, that is the equivalent of the quantity of cement that you need to build about 10,000 houses per year. So it gives a significant idea of the size. Also 10,000 residences, like apartment buildings or houses, yeah, like 10,000 dwellings, basically, yeah, 10,000 living spaces. Living Spaces. Um, so, so that gives the size. It's not small, because when I say pilot, for a lot of people, they think it's very small, but it's not an industrial scale either, which would be about about perhaps five to 10 times bigger, right? And now it is like a stepping stone. It's a stepping stone for us. How to say there's a lot of skepticism to invest in Ukraine for multiple reasons. We will come back later there, in the second part, I think of the interview. But for us, it's a stepping stone to show that even during the war, you can do certain things on circular economy on the large scale, 100,000 tons already large scale for cement and benefits from the fact that you're the first one and the early adopter, and that you take that market space
Bart 17:27
into it. And of course, from a pilot, you will always learn
Bart 17:32
how to do a successful project implementation, by which, when you go to a second round, when you need to have perhaps private equity on board and people fund you a little bit more, because on the first one, it's on a donation based from Denmark. So the government of Denmark, yeah, great, right? Yeah. They're, they're quite strong there in that region. No, they are, I would say, I don't say they are perfect, because I'm a little bit in their internal kitchen when it's about meetings and everything. But I would say that they are a true example how they support the region of Nikolai and its reconstruction. It's, I would say, the one of the few examples where I see that one plus one is three in terms of collaboration between the regional authority and an international authority like Denmark and I see that a lot of other countries are really struggling with this way that Ukraine is functioning means that you have a national level, you have a regional level, you have a local level. And in fact, this regional level in Ukraine is often problematic because the Regional Governor is is not is nominated by the President. So it means he can leave at any time. Migraine is the exception. Kim governor is a very strong personality. I mean, if you live in Romania, you for sure don't know what happens in migraine. So he's a very strong figure. He will stay in place, and he's the reason why also, so it's not only the Danes. It's also the local authority that is functioning in a way that is very efficient. There is no conflict between the city of Mykolaiv and the oblast of Mykolaiv. So both of them are also collaborating very well. And then other regions on that, like Genevieve, if you have the local Genevieve mayor and the governor, which are in conflict on television, I would say. And of course, that is not helping for coordinating of reconstruction effort, yeah, and because France and Belgium, they are choosing the region of Chernihiv as their Funko area, it's extremely difficult for them to operate in a setting where there's no unity of command. Yeah, yeah. Because you will make an agreement with the mayor of Geneva, you will be criticized then by the oblast. You make an agreement with the oblast, you get criticized by the city, and you can never make an agreement with both together.
Adam Brown 19:43
And who do you like to access? For example, the the raw materials, the the Yes, who do you need to Who do you need to get permission from?
Bart 19:54
It's a commercial purchase. So there is no Oh,
Adam Brown 19:57
so you go to the the previous owners. Or what about state sites that have bridges,
Bart 20:02
they're not state I'm talking on the cement on the rubble. It's a little bit more complicated. Okay, let's first start with the cement. The cement is an industrial waste, so it's generated by an industrial production company, and you make a commercial agreement to take that product from them, and you buy it at the symbolic price. When I say symbolic, we are talking about five to 10 hours per ton. So it's really not even relevant. It cannot be a free of charge transaction because of legality. That would be a legal transaction, but we take that product in you can buy that. You can easily buy a couple of millions of tons of it. So it's largely available in Ukraine. There's no, nearly no limit. We transform it. We certify the material, because it's very important that we certify the material. So we will certify the material according to Ukrainian legislation and according to EU legislation. So we are obliged, not obliged legally, but in the way we work as a, I would say European company. It's a little bit arrogant to say that, but EU company, we may want to use both standards, not to create criticize, because if you only use Ukrainian standards, they say in Europe, it's not with material, because you don't use, if you use only Ukrainian EU standards, then Ukraine, they say you don't respect organization. So we do both standards. So it means that we need to test the materials twice in different laboratories. But okay, that's part of the game, and then you sell it to the market on the commercial terms. So if tomorrow Adam wants to construct a school or wants to construct his house, he can purchase that material from us without any problem, right? Okay, so that will be available, I would say, in springtime, 2025 with the purpose, of course, that then in 26 and 27 we will find the needed funding, equity funding and grant funding to build and the big plant to be ready by the time the war is over. Fact, that is the unknown timing for us, yeah, nobody knows when the world will be over, because in the current setting, especially with the energy, it does not make sense for us to build a big plant,
Bart 22:11
because we would basically have to build our own power station,
Adam Brown 22:15
right? Okay, yeah, and we cannot
Bart 22:18
go on solar panel, all these kind of things, because we need a permanent power Yeah, you will not build a factory to say, oh, there's no sunshine. Doesn't doesn't work. To start that solar on batteries and everything is in terms of environmental impact negative. So it's not good for the environment. So we need to avoid also that we do bad projects in terms of greenwashing. We could do, of course, a big solar park, and then, say, we put batteries and everything, and we would even, most probably get funding for it, but we would have a negative impact. And of course, we want to produce a low carbon cement. So it means that there is an environmental impact element that is important, and there we need to be consistent with it, so that is on. So that is, I would say, in terms of legality and everything, that's the easy one on the rubble is a very complicated topic in Ukraine, yeah, because of the ownership of the rubble. And I will try to explain that with several cases. I will start with the easy one and then go with a complex one. You have a school building in Nikolai, you have, I think, about 60 schools that are completely destroyed. Public Authority says that school building cannot be restored, so you get the permit for deconstruction, so you can deconstruct it. So typically Nikolai, we are doing the deconstruction there, we are doing the sorting and the repurposing of the material, but the material remains on what they call the balance of the hromada. Typically, these schools are owned by the hromada, so they are the balance of the hromada, and once at the end of the project, you need to have a transfer of those materials from the balance of the hromada to our balance, if I can say like that. So it means that at the end of the project, the hromada signs say we balance now from the hromada to you. So that is the paperwork, and it's quite a lot of paperwork that I can tell you in the reality. So that's the easy case. The complicated case is individual houses, right? That's one step more complicated. I will go later to the apartment box, which is even one more step complicated. Individual houses, you need to have the authorization of the individual owner to do that work and to become the owner of the material. But in Mykolaiv, nobody wants that. We deconstruct their houses because they are scared that we are destroying the evidence by which they will get a compensation for them. So in reality, and I can tell this now without brushing in 22 we asked the Danes of funding for deconstructing individual houses. We got the funding, and then during implementation, there was no owner who wanted to do it. Nobody wants to sign. He said, Oh, damn. And there is reason why we shifted them to what we call social objects. So these are schools, cultural centers and everything, yeah, by which the drama, of course, gives the authorization that is evident. But a lot of people in Ukraine are scared to get them. Then you have the multi store apartment blocks, let's say the khoff type and the panel cars and all these kind of things. There, again, is the public authority that says this building is unsuitable for living, but each Ramada has a different point of view on whether or not they will authorize you then to deconstruct or not, right? Because, theoretically, because, theoretically, imagine it's an apartment block of 20 blocks. Theoretically each owner of the apartment is owner of 1/20 of the rubble. Oh, yeah. And, and theoretically you need to have a signature of all of it. So there are some from others who says, we take the risk for us find it that means that they take the liability, and then the owner cannot go to telling, hey, I need 120 of my rubble back. Which, of course, that makes sense, but I'm just talking on the legality and things. So you have a couple of ramadas that are signing such documents, and then we can operate. But the majority of the ramadas, they don't sign such documents, which means we cannot work, right, right? So Ukraine will need to develop new legislation in order to clarify that. But of course, it's linked to ownership, communal spaces and everything so, so it's a quite complex legislation, and there are a lot of lobbying around that legislation from the real estate promoters in Kyiv, for obvious reasons, because the land on which these houses destroyed apartment blocks were standing is not the ownership of The apartment owners, but this communal property is, sorry, what communal property? Right? Property of the hromada. So you can imagine, of course, that for a real promoter in Kyiv, if you deconstruct it means that for him, land becomes available for a real estate promotion on which he can construct them whatever he wants. Yeah, yeah. So there is a fight going on. By which promoters wants that the trouble is cleaned up as soon as possible, yeah, but by which the previous owners don't have any right anymore? Yeah, to claim whatsoever, to claim the material they got the land, they are not owner of the land. So yes, their apartments, but they are owner of nothing anymore. Wow, yeah, yeah. And this is happening. I mean, this is happening since 22 and European and Bucha, and in hostomel and in this makarif and everything this kind of things, is happening. So you have apartment blocks that are completely deconstructed, cleaned up, but the land is not going back for the purpose of the previous owners, is going to real estate developers, by which they are going to develop a pardon block. But the previous owners, they are there standing and said we were owner of the parliament. The Russians destroyed it, but that we have nothing anymore, and we don't have any rights anymore,
Adam Brown 28:14
and they have no claim to claim.
Bart 28:15
They cannot claim anything Adam because they were not owner of the land. Yeah, yeah, of course, yeah. And that's part of the problem of the legislation of Ukraine that in 91 when did the previous decision of apartments, they never thought, of course, of the land ownership, because everything was Soviet owned. So the land, they never thought like, I don't know, in Romania, the executive but if in France, you are living in the multi store building, you are owner, proportionally, of the land according to the amount of apartments that are there. But in Ukraine, communal space is owned by nobody, which is often leading also the reason why the staircase and the facade and the things like that in Ukraine looks so filthy, dirty and ugly, and you come in the department, it looks like a small paradise. That is literally the reason why, because that, because that communal space is not owned by anybody, yeah, yeah. So sometimes you have an osba, which is kind of owner association which collects money, and with that money, is doing something that is the best case. But in Ukraine, the osba is perhaps active in 15% of the cases, right? So 85% there is no owner Association, which means also we are doing other projects, which is thermal insulation on bio based materials. So there we are in direct competition with Kingspan for insulation materials. There we often have the problem to get authorization to do an installation of a multi store building. It's really a nightmare to get authorization Right, right, right? Because you come to multi store building, there is no owner Association. That means that you need to negotiate with each individual owner, yeah, to get the permission to do it, which is a nightmare, you don't do that. Yeah. Is there anything? Is there any legislation being drafted now? Yes, yes, yes, there's a lot. I think between this and three months, 80% of these problems that I'm now telling will be solved within three months. You figure by the end of the year in the Rada, in the Rada, I mean, yeah, I get often copies, of course, of this kind of legislation. You're commenting on it, you're consulting on that? No, that's not the thing. But there are how to say that politely. In the radar, there are two factions right under the party of President, those who are working for the real estate developers, yeah. And they are the biggest one, and then those who wants good urban development, yeah. And of course, the group with good urban development, they are consulting external partners to get input. And so we are often in that conflict field. If I can say like that,
Adam Brown 30:54
yeah, you I did an interview a long time ago, several months, six months ago, with Julie Lawson. I don't know if you know, you know her, right? Okay, yeah, I guess she's on the external consultant, actually,
Bart 31:09
yeah, but I have to say it, you can imagine that around real estate, there's always a lot of lobbying in any country, yeah, it's not particularly in Ukraine, of course, the real estate developers, they would like to become the owner of the criminal space of all these apartments. Yeah, yeah, which is a nightmare, because that would mean, theoretically, they could make the life of the resident so miserable that they will move out naturally and then down the building. So there's a lot of lobbying around it. Wow. I would say that the current version of the legislation is not optimal. Let's go that way, I hope that there will be some amendments. There is also some pressure of the European Union on those amendments, so that legislation will take shape, and we will see by the end of the year, what is the birth of that new legislation, but it will highly define how the reconstruction of Ukraine will take place, in terms of ownership land and everything, right? Yeah, I guess to clear the rubble, clear the debris, yeah,
Bart 32:07
but it's not only about cleaning the rubble, it's also how to manage. A lot of people when we speak about reconstruction of Ukraine, have the image or the impression that we are talking mainly about new building. But in fact, the rebuilding of Ukraine will be mainly renovation of Soviet blocs. Right. Kingspan is also positioning itself on that renovation market, a lot, not only on the new build, on the renovation. So there kings and ourselves, we have the same understanding what will be the key market.
Adam Brown 32:37
So in other words, the reconstruction should be more, more accurately would be the renovation of Ukraine,
Bart 32:43
yeah, for 80% the market, 90% the market will be a renovation market, and only 10 15% will be a rebuilt, new build market, right? Okay, there's a lot of misconception, of course, because we get, on a daily basis, images of destroyed buildings and everything which is happening. I don't say that, but the majority of the country is not destroyed, yeah, but post war, that whole real estate market needs to evolve to a European US housing market.
Bart 33:12
So this is one of the major drivers, then, is meeting EU standards, right?
Bart 33:17
Energy efficiency. Because, yeah, I don't know again Romania, but, but I can imagine that you have seen this Soviet style blocks in Romania too, where people are regulating the heating with window during winter time. Yeah, yeah, yeah. So there's a lot of energy efficiency, and the return of investment of this energy efficient works with the current energy prices in Ukraine is high, so within a time frame and Kingspan, I think they will have golden decade in Ukraine with thermal insulation, you have return of investment because of the energy price, within two, three years to insulate your buildings. The 10 Soviet the owners, yeah, the owners, right? Because currently you are consuming a lot of calories for heating an apartment because it's extremely badly insulated. It was never in the Soviet time gas was free of charge. So why would you insulate? Yeah, but for a European Union, and you see that also in the facility fund different stages that will come that insulation, thermal insulation, also because of the energy very currently in Ukraine, they will lack for the decade, as well, energy because of the electricity and everything, and no gas access anymore Like before from Russia. So this insulation is a natural investment in Ukraine, in the construction industry. And so we need to move away. I think that's important. I think when you're right, we need to move away that the majority of the market will be new build market, yeah. And the majority of the market will be an innovation market.
Adam Brown 35:00
That's really important. Yeah, really.
Bart 35:02
And I think there is a really misunderstanding there, and we it's the same. There is a conference in Varsha in November. We call it the rebuilt Ukraine. Yeah, I'll be there. Yeah, me too for the tournament. We have the turf time, so we will, we can meet each other in person, and you're welcome to to visit us on the French pavilion. You have to be politely to the French. And
Bart 35:23
not French, I can joke there,
Adam Brown 35:26
but the French there is,
Bart 35:28
there is, there is there is really a completely misconception of what Ukraine is. Ukraine is, I would say, if you look on the historical border, I would say 70% of the territory is business as usual in terms of development. 10% is the water zone, and 20% is occupied territory. But there is misconception. Of course, we think that 100% of Ukraine and mark if you look to the construction industry in Lviv, we are not active there, and we will not be active there at all. But Lviv is very active. If you see the amounts of warehouses that are being built between Poland and Lviv, that is crazy. Yeah, construction industry is just madness. It's madness. Yeah, adding to it, and I think that's a shift also in this that gives an opportunity for for a foreign company to come in. On top of it, there is a labor shortage of labor.
Bart 36:22
I don't know why that's
Unknown Speaker 36:26
strange. I will try again, though, but it means that companies which are coming in with automation, less labor intensive methods, will be able now to come into Ukraine, where pre war, they were not able to come in, because labor was not an issue in Ukraine. Yeah, yeah, labor is a huge issue in Ukraine. I mean, that was one of my questions, how, how is that shaping up for you? First of all, actually,
Bart 36:53
I wanted to ask a little bit more about the factory that you're opening. Yes. When did you start construction?
Bart 37:00
We started construction. I mean, for me, we started to work on it officially on the first of March this year.
Adam Brown 37:08
Okay, yeah, that's and how much is it costing you to build the factory?
Bart 37:15
Because we cannot disclose that from them,
Adam Brown 37:16
right? Sorry. And how many employees do you think it will be 3040 people? 30 or 40 people? Okay, and you plan on, if this succeeds, many more. Will there be regional areas, regionally a big brother. We have the documentation already for the big brother, right? That will produce 10 times more of the Low Carbon cement than the pilot will employ about one of the people,
Adam Brown 37:44
right? And that's in the same area.
Bart 37:47
It's about two hours drive from that area, okay?
Adam Brown 37:50
And you've got the land ready to go. It's
Unknown Speaker 37:53
Yes, as we have an industrial park. I as you know, the legislation Industrial Park is very particular in Ukraine, so we have nine hectares of land that is designed as industrial park, and where is that? Two
Unknown Speaker 38:07
hours from Nikolai, yeah, you're not gonna say specifically where,
Bart 38:12
for the time being, of, yeah, that's because it's not smart. It will not
Adam Brown 38:15
be smart. Okay, no, that's fine,
Bart 38:18
but that means that that we will have. Then also the fiscal advantages,
Adam Brown 38:24
yeah
Unknown Speaker 38:25
to it, but again, yeah, again for me, but for me, the crucial, if you ask, what is currently preventing me to do the big plant? Yeah, it's not necessarily technology, but it's energy. Yeah, okay, so if I would currently build that plant, I would have to add to my business plan 30 million euros to build my own gas turbine based energy creation, which I will not do, because it does not make sense. Yeah. How much would that add to the price if you have to do that? In fact, it's a neutral operation. It does not make my business plan better or worse, no, but I mean, the price of the raw materials or yesterday
Bart 39:05
doesn't it doesn't change anything,
Bart 39:08
because in a normal constellation, I would buy that energy from the tech or at the market price. So the best not to do my own energy and generation is paying itself back. Yeah, because I'm on the self consumption so I don't need to pay the grid, yeah, if I would do that. But just, I don't know that operation, and it's not part of our Neo eco. And the constellation in which we are operating in Ukraine is not a constellation in which we become an energy operator, yeah, that's right, although some companies are, yeah, yeah, sure, and I respect those ones. But for us, it's, it's, it's a negative impact in terms of carbon emission. It not in terms of economical competitive, but in terms of carbon emission, because we, of course, would like to use the nuclear power of Ukraine to have the lowest possible carbon impact per ton produced, yeah. So for us, the quality, the carbon, quality of the electricity, is important to make our project more sustainable than than elsewhere in the world, yeah, of course. Okay, yeah. So we got material where there's no food carbon footprint the transformation? Well, if we can use nuclear energy, we are close to zero in terms of carbon footprint. So basically, we have a cement that is perhaps 1/20 of caker cement production. So that is extremely sustainable, extremely green. And of course, you could imagine that the European Union Market would be able to pay me the price for that kind of material. Yeah, yeah. So the idea of that big plant is not only for the domestic use, but it's also for exporters. Yeah, I was just about to ask,
Adam Brown 40:52
Okay, couple questions I wanted to run through too. So what kind of I know with Kingspan, there was a lot of they talked about a lot of missing services and missing companies that they wish they had seen. They wish they they hope comes to Ukraine to to kind of slot into their supply chain. Or, you know, what do you see?
Bart 41:15
Yeah, I'll give a specific example. Normally, when you have such operations, you need a lot of what I call small equipment, lifting equipment, forklift, all these kind of things. And typically you would contract that via a company that is doing the operational lease of that kind of equipment. That's a normal practice, a forklift. You don't buy anymore. You You operational lease by which is servicing coming in to this change and all these kind of things. But in Ukraine, it doesn't exist. Yeah. So that means that, okay, how we are going to do that? We need a forklift, we need the wind loader, we need an excavator and everything. But that would mean that we would be responsible ourselves of the maintenance of quite complicated equipment, because we are specialized in it. So it's adding a lot of competences that you don't want to put into your project,
Bart 42:08
and which makes your project significant more complicated.
Adam Brown 42:12
So if a company were to set up, set themselves up as a heavy equipment operator, maintenance, whatever, and contract. So, so when, what happens when you you need an excavator then, or, you know,
Bart 42:26
to buy it, need to buy it, and then you need to find the guy who's doing the maintenance and everything, but all this kind of additional stuff. Yeah, it's not necessarily about cost. Let's forget about the cost. But, but it's more focusing on the fact that it's not no echo is not specialized in maintaining heavy equipment, of course.
Adam Brown 42:45
So is there any, any anything in the law that's preventing this from happening?
Bart 42:50
No, it's just the market is not there.
Adam Brown 42:52
So some entrepreneur can come in now you'd be happy to speak to them about
Bart 42:58
No, but, I mean, there is a whole market to develop, but doesn't exist. And there's a reason, of course, as well. Adam is that a company in Ukraine, a Ukraine company, cannot borrow money, generally, from the bank,
Adam Brown 43:10
right? Yeah, yeah.
Bart 43:11
Interest are too high enough. So that means that a company that invests is investing in what I would call is by cash. So I need a forklift. I cannot take a loan on the bank to buy a forklift. Yeah, so by the time I accumulated enough cash, I'm going to buy the forklift,
Bart 43:33
by which I own the forklift,
Bart 43:36
and I'm going to use the live. I'm going to use the forklift beyond its lifetime. And that is the reason why this kind of leasing, operational leasing, for heavy equipment and lighter equipment, industrial equipment, is not really developed in Ukraine. So what you have, of course, you have a service company. That service company, yeah, it's not the way to work. I mean, imagine that your wheel loader is broken. You call the service company say, we come in three days. That means during three days, you don't have the wheel loader, yeah, yeah. So, so that doesn't work, in practicality, not well either. So I don't say that there are no service companies, but there are no companies that you service the normal service I can do. The example of the wheel loader would be that you have an operational lease on the wheel loader with operator, right, right, in which you in source that activity, which means that you can concentrate on your core business, yeah. But by the reason that you need to go for one reloader, two forklifts, etc, etc, means that you're adding a lot of workload. Yeah, adding workload means that you need to have more management for it, managing it so you're becoming less lean then you would for the same type of operation in standard, standard environment. The second challenge that you have on top of it is qualified people. Yeah, so qualified people means you need to find operators. You need to find technicians, etc, etc. Pre war in Ukraine, that was another big challenge
Bart 45:21
you could find, easily, excellent engineers. But
Bart 45:25
what you find, of course, is that, now I simplify, a lot of technicians went to the army. Yeah, a lot of female engineers went to Western Europe. So what is the left on the labor market are people which are under qualified, often, often no experience at all with anything else than basic activity. So to come in a complex environment is extremely This. Is extremely difficult. If you look to abstract MIT, I will give that example. They are now looking for 1100 people, 1100 people, despite the fact that they are only operating at 50% of their historical volumes, right? Yeah. And of course, what does mean? Means that is going up in Ukraine now rapidly, so the current salaries in Mykolaiv are nearly the double as at the start of the war, in euros or in US dollars. I don't speak now, there's inflation to take into account. But that means, of course, that if the salaries are doubling. There is a very strong competition in the market. Means I find somebody that somebody might live very fast because he can get 30, 40% more if the rise of wages are continuing. Yeah. Second problem is training, and I will try to explain me, currently I'm not able to train males abroad. Not able to train, sorry, male, I'm not able to train man abroad, right, right? Yes, cannot leave the country. That's right. Yeah, to bring in staff from France, other countries, into Ukraine. There are very few who are willing to do that. Yeah, so you're sitting there with the funding, with the raw materials, with the process machinery and everything, but then you need to train your people, how you're going to organize that from a practical point of view, because you cannot train the staff abroad. You cannot bring in stuff in because of insurance liability and everything. If sometimes something would happen to a French employee, that would mean that the owner of the company goes to
Bart 47:50
jail in France.
Adam Brown 47:51
Oh, wow, okay, because
Unknown Speaker 47:53
there's a personal there's a personal liability to send people in the war zone in France, the whole map of Ukraine is red. So if you send somebody to red and something happens, you are personally liable. Yeah, wow. So you are in the circle to say how I'm going to do that, yeah? So I would say that, of course, I understand the Ukrainian government needs to mobilize, but because of mobilizing, you cannot invest in the main population, yeah, so you need to focus on the female population. But of course, in that sphere of industry, not all professions can be by legislation. And Ukraine can be executed by females, right? By legislation? Yeah. So a reloader, right? A female cannot drive. I don't know if you know this joke, Adam, but the female can drive a tram, but not a metro in Ukraine, okay, I didn't know that. Yeah, so there is some legislation the same female can, of course, in a factory, a female cannot work in the night shift. Okay, well, so there's a lot of this kind of Soviet legislation,
Adam Brown 49:05
yeah, I imagine that's changing soon.
Bart 49:09
There's a lot of pressure to change it, but, but so far, we didn't see too much initiative. Wow, that's Yeah, but it sounds it's the same, I don't know, dumb truck. So in the activity, if the dump truck, I think, is above 32 tons, a female cannot drive under the 30 tons. He can drive something like that. There are some rules like that, yeah, which doesn't make sense, yeah. Well, particularly when you're going to be the main workforce left, yeah, exactly the second the topic that is adding to the workforce. Problem is that internally displaced people are not necessarily registrating themselves in a new place, which means that they're not visible in the labor market. So they are unemployed but not visible to the labor market, because the male does not want to become visible, so he cannot be mobilized. So we are getting to a situation that the workforce, shortage of labor, is worse than it should be. Yeah, because the legislation and the circumstances are created, if they would, I simplify, if we could employ an internal displaced person legally, but it does not increase the chance that he's getting mobilized. Then, of course, that I think about 200 300,000 additional men will be on the labor market,
Adam Brown 50:34
right? So, so
Bart 50:37
there is this that is during the war.
Adam Brown 50:39
So, so the moment the war ends, the labor situation will already be without, even without the refugees coming back, it'll already improve, yeah,
Bart 50:49
naturally you will get additional labor force coming available. Yeah, the next thing I would mention is the war veteran. So we have done a project with 25 war veterans of cleaning up rubble. Yes, it is the same for a war veteran. Is how to say it in my plant, I want to take a lot of war veterans because I have lot of advantages by it, and I will tell no experience a war veteran is a big employee. We have 25 of them. The majority of them continues to work for us on another project. Now, right why? We don't have any obligation anymore, but they are excellent, excellent work. The reason is that the quality of the work they delivered is better than ordinary Ukrainian. Yeah, because, again, we are talking about war related reconstruction. Often a war veteran that is demobilized has a syndrome, that he feels useless, right? We give him a purpose that he's still useful and he wants to honor, and I will use that word, he wants to honor that commitment from us, right, right? That means that the rubble that was cleaned and sorted by the war veteran is, in terms of quality, extremely, much better than what we have done with regular civilian employees. Wow. So you can measure the difference in in quite
Bart 52:26
laboratory. Laboratory, we see that one to one,
Bart 52:29
you see, so it's clear in laboratory. So, and I will give a what I'm now going to say is not for publication, but I give you the example. .........................Off the record conversation......................................................................................
Adam 52:57
........................................
Bart 53:00
..................... So in our low carbon cement factory, the majority of the people that will be employed will be war veterans and females, right, right? War veterans can travel abroad. Yeah, okay, yeah, yeah, if he's demobilized, the condition and the females can travel abroad, but that is the key focus of employees. And of course, that means that you need to invest a little bit more in terms of training and everything, but that's fine. But also the second thing of a war veteran, he's a very disciplined employee, because he served the army. So how to say that also we, we had, we were lucky that in that project that we have done with the rubble cleaning, that one of these war veterans is also somebody who's a cyclo from right? So we have a particular lock amongst them.
So it means that this si clock makes that this war veterans feel extremely well in our team. Yeah, 23 out of 25 consider themselves as being healed of their war traumas because of the work with us. But that's not I would say, Neo, eco proud. It's linked to the chance that we had, the opportunity that we had, and that we took of having one of these war veterans who himself is a psychologic war veteran, is much easier to speak about his problems. Yeah, to a fellow war veteran than to a professional shrink. I will use a negative word to a professional shrink, because in Ukraine as a man, to go to psychological help, you are a pussy. So there is this micro culture in it. But of course, to talk to a colleague is fine.
Yeah, about your trouble, the fact that you cannot sleep, the fact that you tend to have an alcohol abuse, violent abuse, or sexual abuse syndrome, because majority of the warrants are developing this kind of syndromes. Please don't speak during the war. We will not speak about it in Ukraine, but after the war, it will be the primary problem of Ukraine is that is war veterans comes with with a lot of traumas.
Traumas are not being dealt with in Ukraine. In reality, yeah, and Lutsk, I think a couple of days ago, there was again, an access which was public but, but if you ask on my daily basis, that there are much more sexual violence by the demobilized soldiers than Ukraine will become a less safe place, unfortunately, if we don't take care of the demobilized soldiers, yeah, yeah, but to come back to our project, it means that, and I also think that kings has the same attitude we have to carry a responsibility to integrate these vulnerable groups into our stuff.
But one year ago, I would have said that this was more from a social aspect that I would do it currently, I would do it from an economical aspect, because they are better workers, right? Yeah, yeah, yeah, that's so I can't mention that you're bringing them to Kyiv. That's
Bart 56:00
the part that you cannot mention hospital, but the rest
Adam Brown 56:03
you can, is it, the hot the Children's Hospital, the Can I mention that you're supplying material? But no, okay, okay,
Bart 56:12
we are, we are preparing that project. And is the Minister of Health that that is there, the one who wants to communicate that, right? But you've Okay, that's right. I won't. I will write about it when the announce it, but I would just want to give you the perspective that I saw myself. This is more from a social perspective, to integrate 25 of them, but now I'm a strong advocate to say they have, in fact, a lot of added value as a worker.
Bart 56:40
Yeah, yeah. That's great. That's great. Okay, I think you've answered. I had a list of questions. I think you've answered most of them, one of them, one of them. I was going to say why I'd asked you're such a young company, but you've attracted so much attention. How did that happen? I can see now, because you're very clear when you're explaining things. It's really It's great from a journalist perspective. I think, I think much of that is owed to you, and the way you explain things to journalists, that's great, you know, thank you.
Bart 57:07
Very hard to say it. Adam, when we came in, we come in on circular economy, so we don't step on anybody's tools. Yeah, yeah. It's very important. So we come in, into these construction materials as a circular economy, so we don't step on somebody's tools. We were the first one wants to clean up or, right?
Adam Brown 57:31
Yeah, are you, I know there's a Japanese company now, is that you consider, I can't remember the name of it, yeah, I'm sure, yeah. Is it? Is it?
Bart 57:40
It's American. It's American.
Adam Brown 57:42
That's right, it's from Los Angeles or something. Yeah, you're right, exactly.
Bart 57:46
Is not cleaning up. Probably they are advising to clean it up. Probably doing. So this is they are doing consultancy, and it's not negatively meant. They are doing great consultancy. Yeah, I disagree with their consultancy, but that's part of the difference in point of view, and that's fine, but we moved in very fast with the European method,
Bart 58:10
where there was a lot of skepticism.
Bart 58:13
But in our first project, which is, which was hostomel, we got about about 200 journalists visiting it. Wow. Okay, 200 Yeah, yeah, you guys, what happened? Because, what happens? I use the journalist, you come to Kyiv, you have to report on butcher European, butchery, whatever. But at a certain moment, you also want to give some hope, or to to give something positive light. And of course, everybody in that area, they said, Well, if you want to look for a positive story, go to hospital. That's right. So, so there was a period, there was a period that we had one full time person in our team, yeah, for sure, which was just receiving jealous, but it was an investment that for which we got paid us. So it was not a charity. It was it was part of the agreement with the French.
So we got paid, in fact, to do excellent marketing on that first project. Yeah, we keep doing that. Also. You will see that on LinkedIn. We keep focused on our marketing efforts, but it is very important in the nature of our work. Neo eco will never say that we are the only company that will clean up Ukraine, but we want to lead by example, and we hope that others are copying the good practice that we try to draw. Yeah, and for us, it's very important to communicate a lot by which we hope that people that we've that there are copycats, because this rubber cleaning for us is how to say really basic things. It's not high engineering, yeah. So for us, we do the same now in Turkey, and we do that same in Libya, and we've done it in the port of Beirut as an example. So yeah. So we are quite experienced in chaotic travel, cleaning, chaotic means in circumstances where there was an explosion, where there was an earthquake, where there was natural disaster, that's for Libya, which was
Bart 1:00:06
that socially or a hurricane, place would be perfectly for us, because it's very chaotic. But we developed, over time, a methodology that is quite stupid, simple, efficient, but for us it's not anymore, I would say the final goal. The final goal now is to be a producer of eco products with the pilot, plus our final goal in Ukraine, right? So is to be a key supplier. We want to be a key supplier of eco products in Ukraine, and to supply out of Ukraine to the European Union. There's a great opportunity for us. I think that's a window for the coming 10 years. Will you continue the consultancy? And yes, because the because the consultancy and the project implementation, you get new network, you get new knowledge.
You can demonstrate new evolutions, because how to say as an example, and you can cite that we want to establish a state of the art laboratory in one of the cities in Ukraine to support our R D activity. So, so in TV, I will use the name in we will have a 600 to 700 square meters state of the art laboratory. So that's, that's already planned. We are, we are, no, we are in progress. Also there building hope to open it in Yeah, by which we will be able because now we have to send a lot of those to France and to Belgium, because some of laboratories are in Belgium, but we are losing a lot of time and energy and cost by it. We need the laboratory in Ukraine, by which we can accelerate the development of lot of new eco materials. So the laboratory will be testing for toxins, for mechanical, mechanically, chemically toxin certification.
And because we need to certify the product, the purpose is that, in a typical cycle in France, from a raw material, waste raw material, to an echo product. You need to calculate three to four years by this, by the type of laboratory and the scale of the laboratory, we can shorten that to 18 months, right? In Ukraine, yeah, but it's very Ukraine specific, which means that laboratory that we are developing in Ukraine is better than our laboratory in France, right? So, so that's the opportunity, but that opportunity is also there we need time to time to market is key, because the longer, the less opportunity the window creates. So, because if we wait till the end of the war, and that's for the readers, if we wait till the end of the war, that's too late for us. It's too late for you.
I mean, because we need to have that materials ready certified by the end of the war, I see Yeah, yeah, yeah. Otherwise the war starts, we have 18 months of development, and only then we can start producing, yeah, yeah. That does not make sense, yeah. We need to be ready. And it's the same strategy with King spam. I think they want to be ready by the end of the war. I mean, the calendar is shifting, but they want to be ready by the end of the war. And the same with us. We need to be ready by the end of the war. We cannot wait till the end of the war then to start the process, to do the r&d and to install the plans and everything that is that would be crazy stupid for us to wait till that moment.
Bart 1:00:06
that collapsed,
Adam Brown 1:03:20
Well, so, so with this new laboratory, it'll take 18 months your whole process, from from industrial waste, Rubble, whatever,
Bart 1:03:29
to a pilot plant, sorry, from the raw material till a pilot's plant, yes,
Adam Brown 1:03:38
from around, no, I don't understand. So from the raw material, it takes 18 months until what stage?
Bart 1:03:46
That means I get waste product. I want to develop something with that waste product. It takes me 18 months before I produce the third quantities to be sold on the market.
Adam Brown 1:03:57
Yeah. Okay, that's right. And currently, what? How long does it take you,
Bart 1:04:02
if I would do it in the current constellation, three to four years. So what's happening are you're not selling material right now? Yes, but again, on this low carbon cement, we will start selling that in springtime, as I mentioned, yeah, yeah, okay. On the on the rubble. We integrate that currently in our own project. So we are purchasing, if I can say like that, our own process materials. So we are building schools and then bomb shelters with that kind of now, but you will see that we are developing, I'm not going to disclose that, but we are developing at least seven to eight other eco materials currently, right?
.......... Parting conversation ................
Bart 1:07:55
Adam and take care there in Romania. Yeah. Thanks. Talk to you soon. You
