What this document is
A single-page action instrument: the one thing to authorise, and the gap in the County’s own transition plan that it addresses.
- The County’s goal is 90%+ diversion from landfills and incinerators. Closing HERC without a manufacturing destination converts an incineration tonnage into a landfill tonnage.
- Carbotura pays the County a Circular Royalty™ beginning at $120/ton and escalating one percentage point a year, uncapped, against a modelled $100/ton Beneficiation Fee — roughly $12/ton above HERC’s contracted 2027 rate.
- One action: authorise an LOI/MOU and open a Joint Working Group, so the option is specified while the transition decision is still open.
The half of the goal that closing HERC does not reach
Hennepin County generated about 1.3 million tons of material in 2024 and recycled 43% of it, against a Minnesota statutory requirement of 75% by 2030 for metro counties. 51% was land disposed, 12% of it outside the state. HERC processes 365,000 tons a year, and its ash goes to landfill at Rosemount. The County Board has directed a closure plan; the Mayor of Minneapolis and the Board Chair have both pressed for closure by the end of 2027.
The County’s published goal is to divert more than 90% of its material from landfills and incinerators. That is a two-part goal, and the two parts pull against each other during a HERC retirement: the tonnage has to go somewhere, and in the absence of a third route it goes into the ground.
Advanced Circular Manufacturing is that third route. It is a manufacturing operation — not incineration, not waste-to-energy, not pyrolysis, not gasification. There is no oxygen in the process, so nothing burns; there is no stack, no air pollution control train and no ash. Material is resolved to its elements and reformed into specification-grade products: synthetic graphite, graphene compounds, recovered metals and minerals, industrial gases and net-positive ultrapure water.
The commercial structure is plain and the direction of money is stated in full. Under a Circular Supply Agreement the County pays a Beneficiation Fee, modelled here at $100/ton — about $12/ton above HERC’s contracted 2027 gate rate of $88. Separately, and beginning 13 months after Carbotura’s receipt of the first Beneficiation Fee payment, Carbotura pays the County a Circular Royalty™ starting at $120/ton and rising one percentage point every year, uncapped, for a 30-year minimum term. The two are independent transactions, reported separately and in full, and never netted.
Why Hennepin, and why now
Diverting from incinerators is in progress. Diverting from landfills goes backwards during a HERC retirement unless something that is neither opens in the same window.
75% recycling by 2030 is a statutory requirement for metro counties. Hennepin is at 43%. Material that becomes a manufactured product is not landfilled and not burned.
Closure has been placed anywhere between December 2027 and 2040. A manufacturing destination takes 12 to 24 months from permit issuance; a landfill contract takes weeks. The slower option has to start earlier.
HERC’s non-hazardous combustion ash is landfilled at Rosemount today. Waste-to-energy ash is a material class Carbotura accepts as input. That is a smaller and nearer-term conversation than the full stream.
Carbotura finances, owns and operates the plant, and carries all permitting and classification work at its own cost and risk. Nothing commercial is contingent on that outcome.
The structure, stated once
The Beneficiation Fee and the Circular Royalty™ are independent gross transactions with different payers. They are reported separately and never netted against one another.
The same physical mass is counted once in each of three dimensions — asset, revenue, attributes — and never summed as three independent masses.
Build-Own-Operate. Carbotura funds 100% of capital at every phase. The counterparty commits feedstock, not money.
One Circular Supply Agreement
+ Circular Royalty™
- Beneficiation Fee: $100–150/ton · set at Term Sheet against the verified FWDC · 2.5%/yr escalator
- Circular Royalty™: 120% of the current-year Beneficiation Fee in Year 1 ($120–180/ton), +1pp/yr, uncapped
- Royalty commencement: 13 months after the first Beneficiation Fee payment, rolling monthly on delivered tonnage
- Perpetual CSA, 30-year minimum term · Build-Own-Operate · zero counterparty capital
- Feedstock transfers under the CSA — ownership and liability pass at collection or delivery
- Accounting basis: US GAAP / GASB
Carbotura is a development-stage company. No Carbotura facility is at or past Commercial Operation Date anywhere in the world. The first-of-a-kind plant is in York County, Pennsylvania, under a Circular Supply Agreement executed in July 2026; it is in permitting and civil engineering now, with commercial operation targeted for late 2027 to early 2028.
We have not asked any counterparty to take that on trust. The CSA carries a condition precedent: an operating facility meeting our stated claims and standards. Until that condition is satisfied, the counterparty is not held to performance. York executed on that basis. The clause is available for County counsel to read, and it is the part of this we would most like them to read.
Key figures at a glance
Circular Royalty™ projections by phase
Beneficiation Fee and Circular Royalty™ shown independently per the Separate Transaction Principle. No figure on this page nets one against the other.
| Capacity | Annual TPY | Beneficiation Fee · Year 1 | Circular Royalty™ · Year 1 basis | 30-Year Gross Royalty | Direct FTE |
|---|---|---|---|---|---|
| 400 TPD ← entry point Phase Phase Initial | 146,000 | $14.60M | $17.52M | ~$874M ESTIMATED | ~100 |
| 1,000 TPD Phase Phase Medium | 365,000 | $36.50M | $43.80M | ~$2,185M ESTIMATED | ~250 |
| 2,000 TPD Phase Phase Expanded | 730,000 | $73.00M | $87.60M | ~$4,369M ESTIMATED | ~500 |
Beneficiation Fee modelled at $100/ton, the floor of the $100–150/ton range; Circular Royalty™ at 120% of the current-year fee in Year 1, +1 percentage point per year uncapped. The two are independent gross transactions and are never netted. Comparator is HERC’s contracted 2027 gate rate of $88/ton; a post-closure landfill-plus-haul figure has not been published and is not asserted. Figures ILLUSTRATIVE until Term Sheet execution.