S Korea’s Lotte Chemical exits PTA business with sale of Pakistan subsidiary
SINGAPORE (ICIS)–South Korean producer Lotte Chemical is exiting the purified terephthalic acid (PTA) business with the sale of its 75.01% stake in LCPL (LOTTE CHEMICAL Pakistan Ltd).
This divestment is part of the company’s medium-term strategy to strengthen its high value-added specialty materials business.
LCPL, which produces 500,000 tonnes/year of PTA at Port Qasim in Karachi, will be sold to Pakistani chemical company Lucky Core Industries (LCI) for Korean won (W) 192.4bn ($156m) – more than 13 times Lotte Chemical’s acquisition cost in 2009.
The buyer LCI is formerly known as ICI Pakistan, which produces polyester – a derivative product of PTA.
It produces 122,000 tonnes/year of polyester polymer and 135,000 tonnes/year of polyester fibres in Lahore; and 225,000 tonnes/year of soda ash in Khevra, according to ICIS Supply and Demand Database.
“Lotte Chemical plans to use the funds secured this time to promote high value-added products such as PE [polyethylene], PP [polypropylene], and PET [polyethylene terephthalate], which are existing petrochemical products, and to expand the specialty business and enter the eco-friendly material business,” the company said on 16 January.
In South Korea in July 2020, the company ceased producing PTA at its 600,000 tonne/year plant in Ulsan, and converted it into a facility producing purified isophthalic acid (PIA).
The Ulsan plant’s current PIA capacity is 520,000 tonnes/year.
“The sale of overseas subsidiaries is part of the business portfolio adjustment in accordance with the vision 2030 strategic direction,” said Hwang Jin-goo, CEO for basic materials business at Lotte Chemical.
By 2030, the company is targeting high value-added specialty and eco-friendly material business to account for 60% of its total projected sales of W50tr ($41bn).
Lotte Chemical plans to become carbon neutral in the same year, with plans to invest W4.4tr over 10 years on hydrogen production, in line with its target of supplying 30% of South Korea’s demand for the clean fuel.
Additional reporting by Samuel Wong
Focus article by Pearl Bantillo
($1 = W1,234)
Speak with ICIS
Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.
Want to learn about how we can work together to bring you actionable insight and support your business decisions?