Vitrum Holdings wants to convert the Cardiff plant into a facility that will use high-temperature "vitrification" technology to turn contaminated soils and other hazardous wastes into a glass-like material.
Nippon Electric Glass (NEG) announced the closure of their Cardiff Bay operations in October with the loss of 400 jobs, because of a shortage of feedstock.
However, with support from the Welsh Assembly, the Vitrium project would create 120 new jobs, the company said. A deal could be completed by the end of this month with the plant up and running by early 2007.
Waste for the new plant will be taken in from the asbestos industry and contaminated soil producers, with Vitrium Holdings suggesting it could treat one million tonnes of waste each year. Discussions concerning possible contracts are already underway with local authorities, construction companies and asbestos companies.
Vitrium chief executive John Evans said: "We remain positive a deal can be reached with the Japanese owners after negotiations began very successfully.
"They want to sell and we want to buy, but both of us want a good deal. I am sure a positive outcome can be achieved for everyone involved. Hopefully, it can all be concluded by the end of the month," Mr Evans said.
Vitrification, the process to be used at the new plant, involves cooling hazardous organic and inorganic materials that have been heated in a furnace such that a glass-like substance is formed.
Some of the existing glass-handling equipment at the NEG site will be modified to be used in Vitrium's process. Mr Evans suggested that pressing machinery might be adapted to turn Vitrium's glass-like product into tiles.
The company is hoping the Cardiff plant could be the first first of six for the UK and Ireland, with a search already underway for a possible second site in South Yorkshire or North Derbyshire.