The Louisiana State Bond Commission has approved issuing up to $1.5 billion in tax-exempt bonds to finance construction of a large manufacturing plant for West Sacramento-based Origin Materials Inc. in Geismar, Louisiana.
The approval of funding for Origin 2 comes as Origin Materials (Nasdaq: ORGN) is set to complete Origin 1, its first zero-carbon plastic manufacturing plant, in Canada this month.
"We are grateful to the state of Louisiana, the Bond Commission and the Louisiana Public Finance Authority for their continued support of the development of Origin 2, our first world-scale manufacturing facility," said John Bissell, co-founder and co-CEO of Origin Materials, in a news release.
The Louisiana Public Finance Authority can issue bonds to finance economic development, industrial and manufacturing projects in the state. It doesn’t back the bonds or guarantee them, but it does authorize them to be tax exempt, which makes them attractive investments.
Origin has picked Bank of America Corp. (NYSE: BAC) to underwrite the bonds and market them to investors, Origin said.
The Louisiana plant would be on 150 acres, and is expected to produce 500 construction jobs and then 200 local full-time positions, and between 500 and 1,000 indirect local jobs.
Origin’s first manufacturing plant in Sarnia, Ontario, is a $130 million investment, and is set to open this month.
The Geismar manufacturing operation will be a $1.1 billion manufacturing plant investment to turn wood waste materials into zero-carbon plastic that doesn’t use petroleum products.
Origin's product is a drop-in replacement for petroleum in the manufacture of PET plastic, which is the most recycled plastic on the planet. Origin has long been backed by users of plastic materials, including Mitsubishi Group, Nestle SA, Danone SA and PepsiCo Inc. (Nasdaq: PEP), all of which are potential customers for Origin’s zero-carbon PET for industrial goods and packaging.
As of the third quarter, Origin already had more than $8 billion in manufacturing capacity reservations for its product over the next decade.
Front-end design of Origin 2 is underway and detailed engineering is set to begin this year, the company said. Origin previously disclosed that its Geismar plant is expected to be operational mid-2025.
The authority from Louisiana could allow for tax-exempt bond financing for the entire Origin 2 project, but Origin said it also is working on other forms of traditional private financing and federal loan programs, including through the U.S. Department of Agriculture and Department of Energy. The company is also pursuing other economic incentives, including programs under the 2021 Infrastructure Investment and Jobs Act and 2022 Inflation Reduction Act.
The plant would convert an estimated 1 million dry metric tons of wood residues each year into products for a wide range of end markets.
