Korea's SK, LX, Daesang to invest $151 mn in eco-friendly plastics

South Korea’s conglomerates SK, LX and Daesang have joined hands on the eco-friendly plastics business, utilizing their respective strengths in the materials, trading and food sectors for massive production of biodegradable plastic.

SKC Co., LX International Corp. and Daesang Corp. on Nov. 23 announced that they agreed to jointly invest 180 billion won ($151.3 million) in a factory to produce polybutylene adipate-co-terephthalate (PBAT).

SKC, the chemical materials maker of the country’s No. 3 conglomerate SK Group, will spend 104 billion won, including its technology value of 79 billion won, to secure a 57.8% stake in the joint venture, according to its filing to a South Korean financial regulator. Daesang, globally known for its Jongga Kimchi brand, and LX International, a trading company, are set to invest 40 billion won and 36 billion won, respectively, for stakes of 22.2% and 20%.

The JV plans to set up a PBAT facility with an annual capacity of 70,000 tons. Once the plant begins commercial operations in 2023, it would be the world’s second plant to make the eco-friendly plastic that biodegrades in nature within six months through air, sunlight, heat and enzyme reactions, according to SKC.

The JV aims to produce a PBAT as strong as regular plastic using nanocellulose extracted from trees as a reinforcement. Existing PBAT material has limited use as it tears easily, although it decomposes completely in a short period of time. The high-strength PBAT will be used as an alternative material for disposable plastic used in products such as straws and plastic bags. SKC is in discussions with about 20 customers for the product’s testing and commercialization.

The three shareholders in the JV also plan to expand the biodegradable plastic market. SKC will provide technologies for the mass production of the high-strength PBAT material, as well as operational know-how and R&D capability. Daesang is slated to supply biomass material as a core PBAT ingredient, given its fermentation capability and experience. LX International will be in charge of product sales based on its overseas marketing capability and global network.

“The three companies plan to strengthen the eco-friendly biodegradable material business and establish an ecosystem that contributes to solving plastic issues," said a source at LX international.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jongwoo Cheon edited this article.