SKC [011790:KS], the chemical materials unit of South Korea’s SK Group, has announced a partnership agreement with local trading company LX International [001120:KS] and food firm Daesang [001680:KS] to launch a joint venture (JV) to produce polybutylene adipate-co-terephthalate (PBAT) with KRW180bn (USD151.3m), as reported by the Korea Economic Daily on November 23. PBAT is a kind of petrochemical-based biodegradable plastics, which is good at ductility, heat resistance, and impact properties. The new unit is expected to commence operations in 2023 and to produce 70,000 tons of high-strength PBAT annually.
Among the combined investment of KRW180bn, SKC will contribute KRW104bn to buy a 57.8% stake in the new JV, including KRW79bn worth of technologies. Daesang and LX International will spend KRW40bn and KRW36bn, respectively, for a 22.2% and 20% stake. SKC has approached around 20 customers regarding product tests and commercialization. It will also leverage SKC’s technology strength in PBAT mass production, while Daesang will supply biomass materials and LX International will engage in product sales. According to IHS Markit’s forecast in 2018, global demand for biodegradable plastics would grow to 550,000 tons in 2023, with a CAGR of 9% from 2018 to 2023.