SK Geocentric Co., a chemical unit under South Korea's SK Group, said Wednesday it has signed a joint venture agreement with a Canadian partner to build a plastic waste recycling factory in Korea.

SK Geocentric and Loop Industries, a Quebec-based company, will establish a 51:49 joint venture in charge of building a depolymerization recycling factory by 2025, the Seoul-based company said in a release.

The depolymerization refers to a recycling of waste PET plastics and polyester fiber to the original raw material state without quality degradation. Loop Industries owns a patented depolymerization technology.

The envisioned depolymerization factory will aim to produce 70,000 tons of recycled plastics a year. It will be located inside the large cluster under construction by SK Geocentric in the southern industrial city of Ulsan.

Demand for an environmentally friendly recycling of waste PET plastics and polyester fiber is expected to grow amid the global trend for lower carbon emissions, SK Geocentric said.

Materials made with polyester, such as sportswear, sewing fabrics and banners, are mostly either incinerated or sent to landfills because they are difficult to recycle with existing technologies.

The joint venture will hold exclusive rights to the commercial use of the depolymerization technology in Asia. The two companies are discussing building at least three deploymerization factories in Asia.

SK Geocentric is pushing to transform its business from traditional chemicals to green chemistry, notably chemical decomposition. It plans to spend 5 trillion won ($3.73 billion) by 2025 to boost its plastic waste recycling capacity to an annual 900,000 tons.

SK Geocentric and Loop Industries are also building a joint plastic waste recycling plant with France's Suez SA in the European country. (Yonhap)