Cereplast, Inc. (NASDAQ: CERP), a leading manufacturer of proprietary biobased, compostable and sustainable plastics, today announced it is establishing a bioplastics manufacturing plant in Assisi (Cannara), Italy.

“This is a significant step in Cereplast’s evolution,” said Frederic Scheer, Chairman and CEO of Cereplast. “The development of this plant in Italy reflects Cereplast's continued commitment to providing bioplastic resin to meet soaring demand for this material in the European market. After exploring possible sites in several countries in Europe, we identified a central location in Italy, where we have established several strong distribution relationships. In addition, the Italian government has expressed its strong support for the development and use of bioplastics, therefore it was the obvious location choice for our plant.”

Scheer continued, “Currently, 85% of our business is based in Europe. We believe this new plant will create efficiencies, reduce transportation costs and minimize risks in our business. The market for bioplastics in the European Union is expected to be one million tons by 2014 according to European Plastics. This new manufacturing facility will position Cereplast to effectively serve that expanding market.”

The plans for the plant include a total capacity of approximately 100,000 tons, or about 220 million pounds. This is expected to occur in several phases: the first phase of 50,000 tons is expected to start manufacturing in late-2012, and the second phase of 50,000 tons is planned to begin manufacturing in mid-2013, based on market demand. The plant will be developed on the site of a former industrial plant and is expected to be approximately 125,000 square feet in size. The site is currently permitted as a chemical site, which will enable the company to benefit from existing infrastructure.

The plant will be owned and run by Cereplast Italia SPA, a wholly owned subsidiary of Cereplast, Inc. This venture will be financed through local and regional financing with Italian institutions and is expected to receive subsidies from various state and local agencies. The initial investment is estimated to be about €10 million to €12 million.

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