Two of South Korea's biggest conglomerates are joining forces to build new C4 fractionation and bisphenol A (BPA) chain plants on the country's southern coast.
Lotte Chemical and GS Energy, which are units of the Lotte and GS conglomerates, today signed an agreement to jointly invest 800bn won ($679mn) in a new joint venture at Lotte's petrochemical complex in Yosu, 450km south of Seoul. The C4 fractionation plant is scheduled to start commercial operations in the first half of 2022, while the BPA chain units will come on stream in 2023, Lotte said in a public filing.
Lotte will own 51pc of the venture, tentatively named Lotte GS Chemical, while GS will own the remaining 49pc. The first plant will have a capacity to produce 215,000 t/yr of C4 fractionation products, including 90,000 t/yr of butadiene (BD), 70,000 t/yr of tertiary butyl alcohol (TBA), 40,000 t/yr of 1-butene and 15,000 t/yr of methyl tert-butyl ether (MTBE). The BPA units will be able to produce 200,000 t/yr of BPA, 350,000 t/yr of phenol and 220,000 t/yr of acetone.
The new venture is seen generating an annual revenue of W1 trillion and operating profit of W100bn, Lotte said. GS' refining joint venture with Chevron, GS Caltex, will supply materials such as propylene and benzene to Lotte GS, while Lotte plans to use its BPA products to drive down costs of its polycarbonates.
The deal with GS marks the latest of several joint ventures through which Lotte is undertaking a major expansion drive. Lotte earlier this year sanctioned a joint venture with South Korean refiner Hyundai Oilbank that plans to build a heavy-feed-based petrochemical complex in Daesan, south of Seoul. The heavy-feed cracker will be able to produce 750,000 t/yr of ethylene and 400,000 t/yr of propylene at full capacity. The company, which plans to triple its annual revenue to W50 trillion by 2025, is also expanding production of acetic acid and vinyl acetate monomer (VAM) through a joint venture with BP in the southeastern port city of Ulsan.
Outside of its home country, Lotte is an 88pc owner of a joint venture with Atlanta-based Westlake subsidiary Axiall, which earlier this year started up a new 1mn t/yr ethane cracker in the US state of Louisiana. The company's Malaysian unit, Lotte Chemical Titan, broke ground last December on a naphtha cracker in Indonesia with a capacity to produce 1mn t/yr of ethylene and related products.
