LG Chem to spend $2.2 billion to build 10 new eco-friendly factories

LG Chem Ltd., South Korea’s top chemical maker, said on Thursday it is spending 2.6 trillion won ($2.2 billion) to strengthen its green business portfolio as it steps up efforts to transform into an eco-friendly company.

With the investment committed through 2028, LG said it will build 10 new chemical factories in Seosan, South Chungcheong Province, to mainly produce biodegradable materials and other sustainability-focused chemical products.

“This investment is part of our sustainable growth strategy and a precursor to a full-fledged scale-up of the eco-friendly material business,” LG Chem Vice Chairman and Chief Executive Shin Hak-cheol said in a statement.

LG Chem, a unit of Korea’s LG Group, said it aims to turn its Daesan Industrial Complex in Seosan into a mecca for environmental, social and governance (ESG)-focused businesses such as bio-based raw material production, eco-friendly materials, waste plastic recycling and greenhouse gas reduction.

LG Chem said it will break ground for a PBAT (polybutylene adipate-co-terephthalate) factory and a POE (polyolefin elastomer) plant this year with a goal to begin commercial operations by 2024.

PBAT is a biodegradable raw material used to make agricultural and disposable film. POE is widely used to make photovoltaic films, automotive exteriors and interiors, wire coatings and footwear.

The company said it will spend 480 billion won each to build the PBAT and POE plants with an annual production capacity of 50,000 tons and 100,000 tons, respectively.

Upon completion, LG’s total POE production capacity will rise to 380,000 tons a year, which makes the company the world’s second-largest POE supplier.

According to the petrochemical industry, PBAT and POE are expected to grow at an average annual rate of 30% until 2025 on increasing demand for disposable plastics.

Eight other factories that LG Chem plans to build by 2028 will also manufacture eco-friendly raw materials, according to the company.

On Thursday, LG Chem and top officials of Seosan City and South Chungcheong Province signed an investment agreement, which also allows the chemical company to lease 790,000 square meters of land for the construction of the new plants.

GREENER PRACTICES

LG Chem’s announcement comes as the country’s private sector is accelerating its push to persuade companies to transition into eco-friendly companies in a shift toward greener practices.

The company said last month it will invest a total of 10 trillion won ($8.7 billion) in the battery material, renewable and bio sectors through 2025.

LG Chem also said it will aggressively seek mergers and acquisitions and launch joint ventures to achieve sustainable growth in these three key growth areas.

In July, SK Innovation Co., a petroleum and battery company, said it will invest 30 trillion won ($26.5 billion) in green projects by 2025.

Lotte Chemical Corp. said in mid-July that it is spending 4.4 trillion won in hydrogen projects by 2030 to foster the business as a new growth driver, moving away from its mainstay of petrochemicals.

“LG Chem is no longer a traditional chemical company. We are a science company with its focus on sustainable and eco-friendly businesses,” said LG Chem CEO Shin.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
In-Soo Nam edited this article.