LG Chem Ltd. (Seoul, South Korea) will partner with biodiesel company Dansuk Industrial to establish a joint plant, in order to secure bio-materials required for the production of eco-friendly products.
LG Chem announced that it had signed a Heads of Agreement (HOA) for the establishment of a hydro-treated vegetable oil (HVO) joint venture at the Dansuk Industrial headquarters in Siheung, Gyeonggi-do, in the presence of executives from both companies, including Kug Lae Noh, President of the Petrochemicals Company, and Seung-Wook Han, CEO of Dansuk Industrial.
The two companies will sign the definitive agreement in the first quarter of next year and aim to complete the construction of the production plant by 2024. This is the first time that an HVO plant will be built in Korea, and this plant is one of 10 new plants at the Daesan Complex recently announced by LG Chem.
HVO is a next-generation bio-oil produced through hydro-treatment of vegetable raw materials such as waste cooking oil and palm by-products. It has superior non-freezing properties even at low temperatures, so it can be used not only for vehicles but also for aviation fuel and petrochemical raw materials. If biodiesel is the first-generation bio-fuel for vehicles, HVO is a technologically advanced second-generation bio-fuel.
In particular, due to global renewable energy policies and mandatory use of eco-friendly jet fuel and diesel, the global market demand for HVO is expected to grow from 6 million tons in 2020 to 30 million
tons in 2025, at an average annual growth rate of more than 40%.
This cooperation was formed due to alignment of interest between LG Chem, which is focusing on expanding bio-balanced products that contribute to carbon emission reduction and securing eco-friendly raw materials, and Dansuk Industrial, which is trying to expand its business to the next-generation bio-fuel market.
When a joint venture is established, LG Chem will prepare a base for supplying raw materials used to produce bio-SAP (high absorbent resin), ABS (high value synthetic resin), and PVC (polyvinyl chloride) through internalization of HVO. LG Chem is planning to expand its ISCC Plus international certified products, which are a representative means of proving sustainability of eco-friendly bio products, to more than 30 products by the end of this year.
Dansuk Industrial will enter the HVO business using its first-generation biodiesel export capability and will be able to expand its bio-energy product portfolio to high value-added products centered on next-generation bio-fuels such as jet fuel.
Dansuk Industrial currently operates a first-generation biodiesel business based on a stable domestic supply and demand system for raw materials such as waste cooking oil.
Dansuk Industrial is the only company in Korea that can simultaneously export biodiesel to both the US and Europe as it has preemptively acquired various eco-friendly international certifications.
Kug Lae Noh, President of the Petrochemicals Company, stated, “Through this cooperation, we are able to strengthen the foundation for a stable supply of raw materials for the expansion of eco-friendly products. We will continue to shift our business portfolio to eco-friendly products and actively target related markets.”