Lotte Chemical’s JV to boost specialty chemicals output

Lotte Chemical Corp.'s joint venture with Japan’s Tokuyama Corp. will ramp up specialty chemicals production to accelerate its shift from the basic chemicals market flooded with cheaper Chinese products.

Hantok Chemicals Co., their 50:50 joint venture, signed an agreement on Thursday to build an ammonium salt plant in Pyeongtaek with the Gyeonggi Free Economic Zone Authority and Pyeongtaek City.

Hantok will pump 130 billion won ($88 million) into the facility and break ground on it in the second half of 2025. It is scheduled for commercial production at the end of 2026.

A Lotte official said it is considering increasing its production capacity in the free economic zone, where it secured a 32,000-square-meter parcel of land in the Thursday agreement.

Ammonium salt, or tetramethylammonium hydroxide (TMAH), is vital in the photolithography process of semiconductors and displays.

The advanced chemical is produced in South Korea, Japan, Taiwan and the US. Hantok controls 35% of the global TMAH market catering to semiconductor companies as the sector’s largest player.

Lotte Group is the world's sole producer of TMAH and its basic material, tetramethyl ammonium chloride (TMAC). Lotte Fine Chemical Co. supplies TMAC to its affiliates.

The chemical-to-retail conglomerate has invested 1 trillion won in eight specialty chemical plants in Korea. In comparison, its recent spending on domestic basic chemical production lines amounted to 443.8 billion won.

The new facility construction comes as South Korea pledged to ease regulations and offer incentives for mergers and acquisitions of domestic petrochemical companies and plant shutdowns to survive the competition with Chinese peers.

Write to Woo-Sub Kim at duter@hankyung.com

Yeonhee Kim edited this article.