SK, SABIC to invest $150 mn to boost Korean capacity

SK Geo Centric Co. and Saudi Basic Industries Corp. (SABIC) have agreed to co-invest 200 billion won ($150 million) to increase their production of high-performance petrochemical products in South Korea, SK said on Tuesday.

Their 50:50 Korean joint venture, SABIC SK Nexlene Co. (SSNC), signed a memorandum of understanding with the Ulsan metropolitan government on Aug. 23 to expand its production lines of polyolefin elastomers (POEs).

Regarded as an eco-friendly chemical product, POEs are increasingly used in automobiles and solar cells. The material reduces the weight of plastic parts in automobiles. POE film is also used for solar panels thanks to its energy efficiency relative to other types of film.

The new production lines in Ulsan, about 400 km southeast of Seoul, will be built on 1,322-square-meter land by July 2024. If completed, they will boost SSNC's production capacity by 43% to 300,00 tons a year. More than 90% of its output will be exported, SK said in a statement.

SSNC already operates a 68,100-square-meter plant in Ulsan, in which both SK and SABIC had invested a combined 605.1 billion won. The plant produces 210,000 tons of Nexlene, an ethylene-based high-performance petrochemical product developed by SK Geo Centric in 2010.

The JV produces POEs, polyolefin plastomers (POPs) and linear low-density polyethylene, cracking open the high-performance petrochemical market dominated by global giants such as Dow Chemical Co.

POPs boast greater sealability than other chemical materials, thus adopted for food and medical packaging. The market of both POEs and POPs is expected to grow at an average rate of 5% per year, SK said.

SABIC is a Saudi chemical company, majority owned by Saudi Aramco.

Write to In-Sik Ha at hais@hankyung.com
Yeonhee Kim edited this article.