Taekwang Industrial-LG Chem Establish Joint Venture for Acrylonitrile Production with Annual Capacity of 260,000 Tons

Taekwang Industrial, First Ever Joint Venture Established Since Founding

[Asia Economy Reporter Hwang Yoon-joo] Taekwang Industrial, a textile and petrochemical affiliate of Taekwang Group, is partnering with LG Chem to undertake a large-scale joint investment to expand acrylonitrile (AN) production. This marks the first time in the company's history that Taekwang Industrial has established a joint venture.

On the 2nd, Taekwang Industrial held an extraordinary board meeting at its headquarters in Jangchung-dong, Seoul, and approved the establishment of a joint venture tentatively named ‘TL Chemical Co., Ltd.’ Later that afternoon, Jeong Chan-sik, head of Taekwang Industrial’s petrochemical division, and Noh Guk-rae, head of LG Chem’s petrochemical business division, officially signed the joint investment agreement related to the AN expansion.

At the initial establishment, Taekwang Industrial plans to acquire 2.22 million shares, representing 60% of the total 3.7 million shares, for 72.8 billion KRW, while LG Chem will acquire the remaining 1.48 million shares for 48.5 billion KRW. Both companies plan to make additional capital contributions through future paid-in capital increases.

Taekwang Industrial currently produces 290,000 tons of AN annually at its petrochemical Plant 3 located in Bugok-dong, Nam-gu, Ulsan Metropolitan City. The joint plant, to be located near Ulsan Plants 1 and 2, is scheduled to begin its first commercial production in 2024 after contract signing, basic and detailed design, and commissioning. The production capacity of the joint plant will be approximately 260,000 tons per year.

The shareholding ratio has been finalized at 60% for Taekwang Industrial and 40% for LG Chem. The official company name and establishment date will be finalized in the second half of the year.

The AN produced by the new company will be supplied to both Taekwang Industrial and LG Chem. The two companies stated, "Through this joint venture, we can share the risks associated with large-scale investment while enhancing the competitiveness of our core businesses and expanding market dominance." They also expect "economies of scale through expansion secured by stable demand channels and the nurturing effect on core businesses."

In fact, through the establishment of this joint venture, both companies anticipate increased sales and profits driven by economic recovery expectations following the COVID-19 pandemic and growing demand for petrochemical products using AN in home appliances, automobiles, and eco-friendly hygiene sectors.

Taekwang Industrial has secured not only the effect of AN expansion but also a stable supply source. According to the Korea Petrochemical Industry Association’s ‘2020 Petrochemical Handbook,’ Taekwang Industrial’s domestic market share in the AN sector was 33.3% as of the end of 2019.

LG Chem has also enhanced its cost competitiveness by securing domestic AN supply, a raw material essential for its core growth businesses such as high-value-added synthetic resin (ABS) and nitrile butadiene latex (NBL).

Meanwhile, Taekwang Industrial’s petrochemical division produces AN, high-purity terephthalic acid (PTA), propylene, and other products at its three Ulsan plants, accounting for 74.2% of total sales as of 2020, making it the company’s main business sector.

LG Chem holds the global market share number one position based on an annual production capacity of over 2 million tons of ABS domestically and internationally. For NBL, used in eco-friendly latex gloves, LG Chem plans to expand production capacity to over 1 million tons by 2025 across three major countries: Korea, China, and Malaysia.

This content was produced with the assistance of AI translation services.