Petrochemical venture established

Lotte Chemical and GS Energy are forming a joint venture to establish a petrochemical plant. Investment will total 800 billion won ($678 million).

An agreement between the two was signed Monday, with the actual venture to be formed later this year. Lotte Chemical will have 51 percent ownership while GS Energy will take the other 49 percent.

The venture is temporarily called Lotte GS Chemical Corporation, and the official name has not yet been decided, the companies said

The joint venture will establish a factory on 100,000 square meters (1 million square feet) of land inside Lotte Chemical’s production complex in Yeosu city. For the project, Lotte and GS will invest 800 billion won in total by 2023.

The factory will produce 200,000 tons of bisphenol A annually and 210,000 tons of C-4.

Bisphenol A is the base material for polycarbonate, a plastic that is used in electronics, medical furniture and car headlamp cases. Mixed C-4 is a mixture of hydrocarbons that can be cracked to produce butadiene, the base material for synthetic rubber, and tertiary-Butyl alcohol, used for making artificial marble.

For Lotte, the new factory will provide a supply of bisphenol A for the production of polycarbonate. This will enable Lotte to reduce its polycarbonate costs, and expanding its existing business for C-4-derived products.

GS Energy will supply the factory’s base material through its 50-percent-owned GS Caltex. The materials sold will be propylene, benzene and crude C-4. GS expects the deal will contribute to the stability of its business portfolio by ensuring constant demand for the three products.

GS Caltex is among Korea’s top four oil refiners. Domestic refiners have been making efforts to diversify their business portfolio by reducing dependence on oil refining, a volatile industry, and expanding into new petrochemical lines.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]