VALENCIA, CALIF. (July 20, 1:25 p.m. ET) — Canyon Plastics will use a $1.2 million loan from CalRecycle to help it relocate to a larger plant in Valencia, Calif., and finance equipment purchases, according to Kirit Gijera, Canyon’s president and CEO.

Under the loan’s terms, the custom injection and blow molder has agreed to divert 582 tons of plastics annually from California landfills, in addition to the 506 tons it already diverts, according to the CalRecycle application. It also has committed to creating 36-42 more jobs, most of them within the first year. Currently, Canyon employs 86.

CalRecycle — the state of California’s Resources, Recycling and Recovery Department — announced that it had approved the 15-year recycling-market development-zone loan at a July 19 meeting in Sacramento.

Commercial real estate brokerage NAI Capital of Santa Clarita, Calif., said Canyon purchased a 110,950-square-foot industrial building on 5.3 acres in December 2010, in a transaction valued at $7.75 million. The new site is just over a mile from Canyon’s longtime operation in Valencia, comprising a 30,000-square-feet building, which the firm owns, and leased warehouse space totaling 75,000 square feet. All of the facilities are in an unincorporated portion of Valencia in Los Angeles County.

CalRecycle expects to fund the loan by the end of July.

Canyon has relocated its warehousing and has begun moving equipment to the new plant, with plans to start production in September. The company said it may retain ownership of its former plant.

Canyon operates eight injection molding machines of 55-400 tons and 14 blow molding machines with the largest shot size capacity being 5 pounds. No decisions have been made yet regarding equipment purchases.

Gijera declined to disclose sales figures.

Canyon provides concept-to-completion services ranging from design, prototyping, mold making and production through distribution for the nutritional, nutraceutical, aerospace, medical and agricultural industries. Its auxiliary services include hot stamping, sonic welding, screen printing, pad printing, assembly and customized packaging.

Among its operations, the company can capture a job’s remaining hot-runner resin and use it for the same customer to meet a specific demand for post-consumer recycled content in a product, Gijera said. “We use our own material for our own customers,” he said.

The company uses virgin resin to mold critical-care parts.

A 1989 state law established the recycle-market development-zone program through which CalRecycle loans funds to eligible businesses and non-profits in designated zones. CalRecycle, received Canyon’s application last August. In the request, Canyon said it would use the loan to finance equipment purchases and capital improvements, facilitate its relocation and provide working capital.

Gijera’s Unistar Enterprises Inc. acquired Canyon Plastics in November 1998.