Aug 19, 2023

Why MAS Holdings Invested in HeiQ’s Eco

The apparel industry today relies heavily on synthetic fibers such as polyester, but clothing brands and manufacturers are increasingly seeking out alternatives to these materials due to their fossil fuel feedstocks, microplastic shedding and long lifespan in landfills.

Sri Lanka-based MAS Holdings, which produces apparel and textiles for brands including Lululemon and Gap, is among the companies seeking out greener materials. In service of this goal, the manufacturing and technology firm has taken a stake in material firm HeiQ’s AeoniQ GmbH subsidiary. Through this agreement, MAS will become the first producer partner for AeoniQ, a cellulosic filament yarn that performs similarly to polyester or nylon. Instead of solely entering a supplier partnership, MAS chose to make a financial investment to help this material scale quicker.

“As a manufacturer, we have a unique view of the sustainability challenges that face the industry and the kind of initiative, effort and collaboration that’s required to make the changes that are needed in how we operate as an industry,” Nemanthie Kooragamage, director, group sustainable business at MAS Holdings, told Sourcing Journal. “We also strongly believe that sustainable innovations like HeiQ AeoniQ need to be scaled and quickly for it to be a viable, sustainable solution that is widely available. Investment is critical to this, and we felt that we could contribute actively towards a growth of a solution that we believe in.”

AeoniQ is a “climate-positive” continuous filament yarn. It uses feedstocks such as non-valorized agricultural waste, bacterial cellulose and Circulose, a material made from recycled cotton. HeiQ says that each ton of AeoniQ has the potential to reduce CO2 emissions by 5 tons. Additionally, more than 99 percent of the water used to produce the yarn is recycled. The cellulosic yarns biodegrade, and they can also be perpetually recycled, creating a closed loop.

The deal includes a five-year offtake agreement with a total value of $100 million. MAS will procure 3,000 tons of AeoniQ yarn in 2025, as well as 5,000 tons each year from 2026 through 2029.

“MAS’ investment and offtake agreement serves as resounding proof that leading textiles value chain players recognize HeiQ AeoniQ as the ultimate game-changer, placing their trust in its transformative power, and is a natural result of the confidence built over a decade that HeiQ and MAS have been doing business together,” said Carlo Centonze, CEO of HeiQ Group, in a statement.

HeiQ debuted its AeoniQ technology in the fourth quarter of 2021, and the yarn has been manufactured at a pilot plant in Austria since the third quarter of 2022. By the end of 2023, HeiQ plans to triple the factory’s current 100-ton capacity to 300 tons. By 2026, HeiQ will invest $250 million to build a gigafactory that can manufacture 30,000 tons of AeoniQ per year.

“While we were exploring this space, we considered many different alternatives for us to play in,” said Kooragamage. “What really attracted us to HeiQ AeoniQ was twofold: firstly, the material itself, and secondly, the plan that HeiQ had in place to convert a scalable part of the industry, with a roadmap to cost neutrality.”

According to Kooragamage, AeoniQ has a “higher tenacity” than other cellulosic fibers, which is beneficial for design and production. “MAS has access to different technologies of creating fabric and material, ranging from lace to one-knit to seamless and open width fabrics,” she said. “We have found that HeiQ AeoniQ is versatile across all these technologies and, due to its unique characteristics, can unlock areas that were not possible before with natural or man-made yarn.”

In addition to its own use of AeoniQ, part of MAS’ intent with this investment is to make the yarn available to more of the industry. Kooragamage noted that as a manufacturer, MAS also has “influence both up and down the value chain,” including with its suppliers and retail brands.

This stake moves MAS closer to its goal to have sustainable products represent half its revenue stream by 2025, part of its Plan for Change initiative. To reach this target, MAS is focused on innovation, sustainable material sourcing and circularity.

“We want to be able to have options to convert more and more of our product portfolio into sustainable alternatives,” said Kooragamage. “This is what makes innovative solutions like HeiQ AeoniQ so attractive to us, as it…allows us to source more sustainable raw materials, while also potentially addressing the challenges that the industry faces in terms of emissions and apparel waste.”

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