LG Chem and Danseok Industry Establish Korea's First 'Bio Oil' Plant

LG Chem to Establish HVO Plant at Daesan Site by 2024
2nd Generation Biodiesel 'HVO'... Demand Rises Due to Carbon Emission Reduction Regulations

[Asia Economy Reporter Hwang Yoon-joo] LG Chem is internalizing 'Hydrotreated Vegetable Oil (HVO),' which is expected to grow at an average annual rate of over 40% due to strengthened carbon emission regulations.

LG Chem announced on the 2nd that it has signed a 'Heads of Agreement (HOA) for Establishing an HVO Joint Venture' with biodiesel specialist Danseok Industry. The two companies plan to sign the main contract in the first quarter of next year and complete the production plant in 2024. This plant is one of the 10 new factories recently announced by LG Chem at the Daesan site.

The collaboration between the two companies was made possible because LG Chem, focusing on expanding bio-balanced (materials made by inputting bio raw materials extracted from renewable resources) products that contribute to reducing carbon emissions and securing eco-friendly raw materials, and Danseok Industry, aiming to expand its business area into the next-generation biofuel market, shared mutual interests.

HVO, a next-generation bio oil, is characterized by its excellent property of not freezing even at low temperatures, making it usable not only for vehicles but also as aviation fuel and petrochemical raw materials. If vehicle biodiesel is the first generation, HVO is the second generation biofuel. Especially, due to global renewable energy policies and the mandatory use of eco-friendly aviation fuel and diesel, the global market demand for HVO is expected to grow sharply at an average annual rate of over 40%, from 6 million tons in 2020 to 30 million tons in 2025. This is because refineries must sell diesel blended with biodiesel such as HVO due to strengthened carbon emission regulations.

Once the joint venture is established, LG Chem will secure a supply base of raw materials used in the production of bio SAP (superabsorbent polymer), ABS (high value-added synthetic resin), PVC (polyvinyl chloride), etc., through HVO internalization. LG Chem plans to expand its eco-friendly international certification (ISCC Plus) products to more than 30 items within this year.

Danseok Industry, the only company in Korea that can simultaneously export biodiesel to the United States and Europe, will make a full-scale entry into the HVO business with this investment. Through this, the strategy is to expand the product portfolio in the bioenergy field to high value-added products centered on next-generation biofuels such as aviation fuel.

No Guk-rae, head of LG Chem's Petrochemical Business Division, said, "This cooperation has strengthened a stable raw material supply base to expand eco-friendly products," adding, "We will continuously shift our business portfolio to focus on eco-friendly products and actively target related markets."

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