Closing door, they're dung

Adieu, fertilizer!

Samsung Fine Chemicals Co., formerly known as Korea Fertilizer Co., the first fertilizer producer in Korea, has withdrawn from the fertilizer manufacturing business after 37 years.

The company shut down the fertilizer production lines at its Ulsan plant last month, and in its place has begun producing other general and complex chemicals, including melamine.

"Samsung could no longer compete in price with fertilizer manufacturers in the Middle East, who make urea fertilizers, mainly by using cheap natural gas," an official at Samsung said.

Samsung had produced urea fertilizers using naphtha extracted from crude oil. Its products accounted for 30 percent of the domestic fertilizer market, with the remaining 70 percent taken by Namhae Chemical Corp.

Samsung Fine Chemicals posted 293.6 billion won ($246.1 million) in sales, earning 32.1 billion won in ordinary profits in the first half of the year, and targets 730 billion won in sales and 70 billion won in ordinary profits for this year.

Samsung Fine Chemicals, which started out as a fertilizer firm, had already transformed into a chemical company, with the fertilizer division accounting for only 10 percent of its revenue. General and complex chemicals represent 88 percent of its sales.

Korea Fertilizer entered the local market as a private firm led by Samsung Group founder Lee Byung-chull, and built what was then the biggest fertilizer plant in Korea, on 3.3 million square meters of land in Ulsan.

When the plant was near completion in 1967, Samsung Fine Chemical was taken over by the government due to the so-called, "Saccharine Incident," in which Samsung was accused of illegally importing saccharine. Korea Fertilizer was a major contributor to Samsung Group's earnings at the time, accounting for 30 percent of the group's revenue.

In 1970, the government had pushed the fertilizer industry as a way to increase exports, and many new companies entered the field. However, due to problems related to excessive investments and faltering fertilizer exports, the government restructured the industry in the early 1980s. Some firms were closed down.

Korea Fertilizer survived because it had diversified its operation, although 90 percent of the firm's sales came from the fertilizer business at that time.

Samsung Group never stopped trying to reclaim the fertilizer firm. When the government privatized Korea Fertilizer in 1994, Samsung acquired the firm for 230 billion won at 330,000 won per share, though the expected bid for Korea Fertilizer was 130 billion won and its stock price had been less than 100,000 won per share. The overpriced acquisition surprised the business community.

The firm was then renamed Samsung Fine Chemicals. In addition to fertilizers, the company began to diversify its products.

by Kim Tae-jin