Intending to recycle polyester, while manufacturing and selling the resulting fibers, Teijin Limited will establish a joint venture in September, Zhejiang Jiaren New Materials Co., Ltd., with Jinggong Holding Group, in Shaoxing, Zhejiang Province, China, one of China’s largest production bases for fiber products.

Through the joint venture, Teijin will chemically recycle polyester, as well as manufacture and sell the resulting fibers, with the aim of establishing a closed-loop recycling system in China leveraging its advanced proprietary chemical recycling technology and the business expertise it has cultivated in the global expansion of ECO CIRCLE, its existing closed-loop recycling system for polyester.

The joint venture, to which Teijin will contribute 49% and Jinggong Holding Group, a Shaoxing-based multinational enterprise involved with environmental management, will contribute 51%, will invest around 6 billion JPY in the construction of facilities for DMT (dimethyl terephthalate) production, polymerization and fiber spinning. The construction will begin this November, with operations scheduled to begin by the end of March 2014. The joint venture is targeting annual sales of 10 billion JPY in the first year of business. It will be the first time for Teijin to operate polyester chemical recycling outside Japan.

The new plant will chemically recycle polyester fiber scraps and used polyester products into DMT with quality comparable to that derived directly from petroleum. The DMT will be used for the production of polyester resin, as well as value-added polyester fiber, leveraging the Teijin Group’s polymer and fiber-spinning technologies. The facility will have a DMT production capacity of 20,000 tons per year in the initial phase. As demand grows, capacity will be expanded an additional 50,000 tons per year in the second phase, for a total annual DMT production capacity of 70,000 tons. Annual production capacity of recycled polyester fiber will be 19,000 tons in the initial phase.

This venture is the first step in the cooperative project agreed upon in March between Teijin and the China Chemical Fibers Association (CCFA) to pursue business opportunities in the field of chemical fibers and related industries in China.

Teijin will work with the CCFA, its recycled fiber committee, and the city of Shaoxing to establish a locally centered supply chain and design efficient institutional arrangements for chemical recycling to build a unique closed-loop recycling system for China and to make a contribution to energy conservation and environmental preservation. Teijin hopes to expand this closed-loop recycling business throughout China while working through the CCFA to encourage the government to enact legislation and design systems that will enable the nationwide spread of closed-loop systems.

The Chinese government has made energy conservation and environmental preservation a priority in its 12th five-year plan (2010-2015). In view of this trend, the CCFA is promoting sustainable development of the chemical fibers industry, with focus on energy savings, waste reduction and the construction of a recycling-oriented economy.

Interest in recycling has been increasing in China, and a method called material recycling, in which used products like plastic bottles are crushed and melted to recover polyester, is taking root. However, given the impracticality of removing dyes, pigments and processing agents in this process, the resulting products are lower in quality and eventually end up being incinerated as waste, curtailing material recycling’s effectiveness in limiting the use of oil and reducing waste.

China is a high-priority market in the Teijin Group’s medium- to long-term growth plan. The Group aims to expand business in China through strategic alliances with local partners, expansion of production and R&D bases, and development of environment-related businesses.