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SK Petrochemical Shake-Up: 2 Trillion Won Aid Package
25 Feb
Summary
- South Korea approved its first petrochemical industry restructuring plan.
- A support package exceeding 2 trillion won ($1.39 billion) was allocated.
- Major companies Lotte Chemical and HD Hyundai Oilbank are merging operations.
South Korea's industry ministry has greenlit the nation's first petrochemical industry restructuring project. This significant move is backed by a support package valued at over 2 trillion won ($1.39 billion) to help companies overcome a persistent sector slump.
The approval, granted to HD Hyundai Oilbank and Lotte Chemical for their joint venture HD Hyundai Chemical, marks a pivotal moment under the petrochemical restructuring roadmap introduced last August. The approved plan involves merging operations at the Daesan industrial complex, integrating Lotte Chemical's Daesan unit with HD Hyundai Chemical.
HD Hyundai Oilbank and Lotte Chemical will each contribute 600 billion won, increasing the joint venture's capital by 1.2 trillion won. This investment will adjust their equity split in HD Hyundai Chemical to an equal 50-50 partnership. As part of this consolidation, Lotte Chemical's Daesan naphtha cracking centre, with an annual capacity of 1.1 million metric tons, will cease operations for three years to address industry-wide oversupply.
The government's comprehensive aid package includes up to 2 trillion won in financial assistance from creditor banks, alongside tax benefits and streamlined regulatory processes. Additional support encompasses reduced utility costs, estimated at up to 115 billion won, and 26 billion won for research and development. The ministry plans to advance further restructuring projects across other petrochemical complexes, signaling a commitment to revitalizing the sector.
