On 1st May 2024, Loop Industries, Inc. (referred to as "the Company" or "Loop"), a clean technology enterprise dedicated to propelling a circular plastics/fiber economy through the production of 100% recycled polyethylene terephthalate ("PET") plastic and polyester fiber, finalized an agreement with Ester Industries Ltd. ("Ester"), a prominent manufacturer of Polyester Films and Specialty Polymers in India, to establish a 50/50 joint venture ("India JV"). The primary objective of this venture is to establish and operate an Infinite Loop™ India manufacturing facility, which will specialize in producing a distinctive range of recycled dimethyl terephthalate ("rDMT"), recycled mono-ethylene glycol ("rMEG"), and specialty polymers in India, with a lower carbon footprint. This production will utilize the Infinite Loop™ technology, offering significant advantages over conventional mechanical PET recycling methods.

Loop and Ester have cultivated a robust working partnership, marked by Ester's production of Loop™ PET for Loop's worldwide brand clients over the past four years. The India JV capitalizes on the synergistic skill sets of both parties, merging Loop's cutting-edge technology and extensive global customer network with Ester's nearly four decades of specialized polymer manufacturing, operational excellence, and indigenous knowledge, including procurement of PET plastic and Polyester fiber waste feedstocks.

The global market size for DMT and MEG specialty chemicals is estimated at US$28 billion, with a projected Compound Annual Growth Rate (CAGR) of 3.7% until 2033. Recent plant closures in Europe have resulted in a global shortage of DMT, while the demand for low-carbon DMT and MEG is soaring. However, available market options are limited and costly. The Infinite Loop™ India facility is anticipated to annually produce 70,000 tonnes of rDMT and 23,000 tonnes of rMEG. Ester will then toll convert the rDMT and rMEG into various grades of specialty polymers. Compared to virgin DMT and MEG derived from fossil fuels, the planned facility in India could potentially reduce carbon emissions by up to 70%, providing chemical companies with a straightforward drop-in supplement and circular alternative to help them meet their sustainability objectives.

The product offerings of rDMT and rMEG produced at the Infinite Loop™ India facility signify a strategic diversification in a cost-effective manufacturing setting. This expansion complements Loop's current operations in PET plastic and polyester fiber manufacturing and is poised to drive growth by meeting the substantial and expanding market demand. Moreover, it allows the Infinite Loop™ technology to penetrate new markets and serve a wider array of customers spanning various industries such as electronics, automotive, textile, cosmetics, and packaging.

The India facility will harness the power of the Infinite Loop™ technology and utilize the current engineering package, expediting the lead-time for its groundbreaking, slated to take place by the end of this year. Progress in feedstock sourcing for the facility, drawing from ample textile waste sources in India, is well underway. Additionally, the partners have enlisted an external firm to procure and secure the land for the facility. Construction is projected to conclude by the end of 2026, with commercial operations set to commence in early 2027.

The India JV presents appealing economic returns without requiring significant premium pricing linked to sustainability. The total estimated capital investment stands at around US$165 million.