The UK waste management arm of utility group NTR is set to earn almost €27 million in sales from an agreement to supply recycled plastic to a British packaging firm.

Greenstar UK, owned by the Irish energy and waste services group, is planning to invest €5.35 million in a recycling plant that will convert waste plastic into material suitable for use as food packaging.

The facility, at Redcar, near Middlesbrough in England, will break down waste into plastic pellets that can be used to manufacture bottles and other packaging.

The company has signed a deal with UK group Nampak, one of the country's biggest producers of plastic milk bottles, to provide it with 6,000 tonnes of recycled plastic a-year.

According to NTR, the deal will generate £20 million (€26.8 million) in revenues over four years. Greenstar WES, the group's recycling division, will handle the manufacture and supply contract.

Jim Barry, chief executive of Greenstar UK's parent, NTR, said at the publication of the group's results last year that high grade waste plastic and other packaging is now regarded as a commodity.

This is partly a result of increased oil prices, as petroleum is used in the manufacture of most plastics.

Prices on world markets for recycled waste plastic range from €40 to €450 a tonne, depending on its grade. Aluminium, the main component in drink cans, commands up to €850 a tonne.

According to Greenstar WES, there are also savings involved in using its process, as recycling packaging means that less of it has to be dumped in landfills or exported, which saves on waste charges.

It also means that firms can tot up carbon credits, as producing a tonne of plastic from recycled material cuts carbon emissions by roughly one tonne.

Commenting on the deal, James Donaldson, managing director of Greenstar WES said: "This contract is an endorsement of the standards of our plant." The facility will up and running in the middle of next month.