Loop Industries, a company based in Montréal that is focused on finding solutions for a sustainable plastics economy, has announced that it is forming a strategic partnership with SK Global Chemical Co. Ltd. (SKGC), a subsidiary of South Korea’s SK Group, which is a large conglomerate, to accelerate the commercialization of Loop’s sustainable polyethylene terephthalate (PET) plastic and polyester fiber manufacturing technology throughout Asia.
According to a news release from Loop, the company’s technology allows for PET plastic and polyester fiber to be upcycled into virgin-quality PET using low heat and no added pressure. The process allows Loop to eliminate contaminants, such as dyes, additives and other impurities, preventing unrecyclable materials like colored and contaminated plastics or textiles from ending up in landfills.
Loop and SKGC are forming a joint venture with exclusivity to build sustainable PET and polyester fiber manufacturing facilities throughout Asia. Loop reports that Asia contains about 60 percent of the world’s population, making it a key market in terms of plastic manufacturing, consumption and waste.
Under terms of the memorandum of understanding for the proposed joint venture, SKGC will own 51 percent of, while Loop will own 49 percent. Loop also will receive a recurring annual royalty fee as a percentage of revenue from each facility for the use of its technology.
According to a news release from SKGC, the partners are contemplating beginning preparations for a first facility in South Korea in the first half of 2022 and the construction of four facilities in Asia by 2030, with projected combined consumption of PET scrap and polyester fiber amounting to 400,000 metric tons. Once fully operational, the four facilities could lead to a carbon dioxide savings of 632,100 metric tons, the companies state.
In addition, Loop and SKGC have concluded a definitive agreement for SKGC to become a strategic investor in Loop. SKGC will purchase 4,714,813 new treasury common shares of Loop at a price of $12 per share for total consideration of $56.5 million, Loop reports. Loop intends to use these proceeds toward the funding of its planned Infinite Loop manufacturing facility at its recently acquired site in Bécancour, Québec.
SKGC also is being granted options to acquire an additional 461,298 common shares at $11 per share within the next 12 months, 4,714,813 common shares at a price of $15 per share within the next three years and a further 2,357,407 shares at $20 per share, conditional upon the timing of construction of the first Asian manufacturing facility. SKGC is being granted a seat on Loop’s board of directors and is expected to provide input into the continuing development of Loop’s global commercialization strategy.
“We are delighted to form a strategic partnership with SK Global Chemical,” says Daniel Solomita, founder and CEO of Loop Industries. “SK global chemical is an ideal strategic partner to accelerate the growth of our company and the global commercialization of our technology. Its scale and sophistication, its global chemicals manufacturing footprint and a shared vision to create value through sustainability and innovation make them a valued partner in our journey to bring our technology to market.
“Our team has been extremely impressed by the thoroughness and extent of SKGC’s technical due diligence on Loop, which it has conducted over the past several months, including a recent on-site verification of Loop’s technology at our demonstration facility,” he adds. “We are excited to collaborate with SKGC to commercialize our technology and play a meaningful role together to mitigate the environmental impact of global plastic waste and help consumer brands meet their stated goals for achieving high rates of recycled content in their products.”
SK Global Chemical CEO Kyung Soo Na says, “We look forward to collaborating closely with the acclaimed company, Loop, which has great technology competencies in correlation to the plastics recycling category. Furthermore, it is our sincere intention to further expand and add value in the APAC region together with Loop backed by its chemical recycling technology that will work towards realizing a plastic circular economy.”