The Deeside plant, in Flintshire, will recycle 50,000 tonnes of water, milk and other soft drink bottles that might otherwise have gone to landfill or been exported, turning them back into plastic suitable to make new bottles.

Run by Closed Loop Recycling, the plant which is due to open in October next year is expected to create 50 new jobs.

It will make use of technology developed at the company's Dagenham recycling plant, which claims to be the first in the world to be able to handle both milk bottles and plastic drinks bottles and process them into plastic suitable for packaging food.

The plant will be supplied by waste recovery firm Veolia Environmental Services, which will source plastic bottles from dozens of local councils in Wales and the north west of England.

The project is funded with cash from the private equity firm Foresight Group, a bank loan from Allied Irish Bank and about £1m in public sector funding from the Welsh Assembly.

Closed Loop Recycling is reportedly already working on plans for a third plant, which could be up and running by the end of 2010 and wants up to five facilities in the next five years.