Clean technology firm Loop Industries Inc. (LOOP:NASDAQ), which is focused on developing methods to create a more sustainable plastics economy by taking waste PET plastic and polyester fiber and converting them into high value repurposed materials, today announced that it plans to enter into a strategic partnership agreement with SK global chemical Co. Ltd. (SKGC). The company stated that SKGC is a subsidiary of the SK Group based in Korea, which is one of Asia's largest conglomerates. Loop Industries advised that the primary objective of joining with SKGC is "to accelerate commercialization of its sustainable polyethylene terephthalate (PET) plastic and polyester fiber manufacturing technology throughout Asia."
Loop stated that its low energy process, which uses only low heat and no added pressure, is capable of converting waste PET plastic and polyester fiber to be upcycled into virgin-quality PET. The company noted that its processes are able to eliminate contaminants and impurities, which allows what would otherwise be unrecyclable materials such as colored and contaminated plastics from being dumped into landfills.
The company said it is teaming up with SKGC in order to form a joint venture (JV) that will hold the exclusive rights to construct sustainable PET plastic and polyester fiber manufacturing facilities across Asia. The proposed JV will be owned 51% by SKGC and 49% by Loop. In addition to its equity ownership interest in the JV, Loop will receive recurring annual royalties in exchange for the use of its technology based on a percentage of revenue generated from each facility that is built.
The two companies expect that the first facility will be built in South Korea in H1/22 with four additional facilities scheduled for completion by 2030 in other unnamed Asian countries. When all five plants are completed and are fully operational, it is estimated that they will have a combined capacity to handle approximately 400,000 tons of waste PET plastic and polyester fiber.
Additionally, Loop and SKGC indicated that they have executed a definitive agreement whereby SKGC will make a strategic investment in Loop Industries. The report advised that "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 stated that plans to use the proceeds to fund its Infinite Loop™ manufacturing facility at its Bécancour, Québec, site.
Loop Industries Founder and CEO Daniel Solomita commented, "We are delighted to form a strategic partnership with SK global chemical…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."
"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," CEO Solomita added.
Kyung Soo Na, CEO of SK global chemical remarked, "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."
Loop Industries is headquartered in Montreal and describes its business as "a technology company whose mission is to accelerate the world's shift toward sustainable PET plastic and polyester fiber and away from our dependence on fossil fuels." Utilizing its patented proprietary technology, the company takes items which cannot be conventionally recycled such as waste PET plastic and polyester fiber and converts them into high value repurposed materials. Loop's process allows for the depolymerization of all kinds of low-value waste PET plastic and polyester fiber from plastic bottles, packaging, carpets, textiles and discarded ocean plastics, which are turned into monomers as base sustainable building blocks. The company stated that "the monomers are then filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin and polyester fiber suitable for use in food-grade packaging."
SK global chemical reportedly was an instrumental player in developing Korea's petrochemical industry when it commenced operations of the first naphtha-cracking facility there in 1972. The company is largely focused on automotive & packaging products and thru its R&D and global expansion efforts has grown into a global technology-based chemical enterprise. The firm is now endeavoring to change into a more plastics based circular economy by forming new commercial partnerships. The company's strategy is to expand its portfolio of eco-friendly products and strive toward continuous recycling above and beyond the quantity of plastics it manufactures.
Loop Industries has a market capitalization of around $560.0 million with approximately 42.4 million shares outstanding and a short interest of about 6.8%. LOOP shares opened close to 5% higher today at $13.80 (+$0.61, +4.62%) over yesterday's $13.99 closing price and reached a new 52-week high price this morning of $18.20. The stock has traded today between $13.75 and $18.20 per share and closed the day at $15.90 (+$2.71, +20.66%).
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