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)