Northvolt’s Green-Industry Sibling Forges On in Fabric Recycling

Rafaela Lindeberg
2-min read

(Bloomberg) -- A Swedish textile-recycling startup that shares roots with struggling Northvolt AB says it’s plowing ahead with the similar challenge of taking on an entrenched Chinese industry.

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Like EV battery maker Northvolt, Syre AB plans to ramp up rapidly — the manufacturing firm targets building 12 recycling plants over the next decade.

The two also share an anchor investor: Vargas Holding, a serial founder of clean-industry entrants ranging from batteries to steel to heat pumps. Retailer Hennes & Mauritz AB is Syre’s other founding investor.

“Things are going according to plan and at full speed,” Chief Executive Officer Dennis Nobelius said in an interview. “We are aiming for 3% of world fiber production within a decade. That may not sound like much, but that kind of scale does not exist today outside of China.”

Syre raised $100 million to build a pilot polyester-recycling factory in North Carolina that’s set to start operations this year. The company also has plans to use the funds for two large recycling plants, one in Vietnam and one in Iberia. By 2032, it’s targeting worldwide capacity of more than 3 million metric tons of circular polyester fabric sourced from used textiles.

Northvolt’s ambitious expansion has been a factor in the liquidity crisis the company is now trying to resolve. As it built more plants, quality and output levels suffered at its main factory in northern Sweden. A slowdown in demand for EVs has also played a role in its troubles.

Alongside Vargas, H&M remains committed to scaling rapidly to give the clothing industry access to recycled materials, said Nanna Andersen, the retailer’s chief of new growth and ventures.

“Historically, it usually takes a long time” for capital intensive materials-technology startups to reach a significant size, Andersen said in an interview. “We see this as a great opportunity to scale much faster, together with a strong financial partner.”

Syre’s investors also include asset manager TPG Rise Climate, Volvo Car AB (which has a JV with Northvolt), IMAS Foundation, Giant Ventures and Norrsken VC.

Vargas, which has pledged to continue backing Northvolt, declined to comment. The firm, led by Harald Mix, has also invested in green steel maker Stegra AB, and heatpump venture Aira AB.

Any lesson drawn from those other projects “remains highly relevant,” Nobelius said.

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