Abstract: A waste stream such as from an animal or poultry processing plant is mixed with bentonite or Grafted Bentonite and then with liquid Chitosan as natural flocculents to form a rigid floc which removes fats, oils, greases, and/or proteins from the waste stream. The flocculated solids (sludge) is removed and dried, and either formed into granules or pellets. The recovered material may be used as animal feed, when appropriate. However, it is particularly useful when mixed with coal fines and pelletized to form fuel pellets or used in granule form as a fuel source.