As Conflicts Over Medium-Sized Suitable Industries Ease... Investment in Waste Plastic Pyrolysis Oil Gains Momentum

LG Chem and SK Geocentric Plan Pyrolysis Oil Plant Construction
Market Size to Reach 3.3 Million Tons by 2030... Annual Growth Over 17%

[Asia Economy Reporter Oh Hyung-gil] "As conflicts over suitable industries were resolved, investment opportunities have opened up."

After large and small-to-medium enterprises (SMEs) that had been in a tense standoff over the waste plastic recycling business joined hands for mutual growth, related investments have continued.

According to the industry on the 17th, LG Chem will begin construction of a waste plastic pyrolysis oil plant in Dangjin, Chungnam, in the first quarter of next year. The goal is to complete the plant and start commercial production by 2024.

Pyrolysis oil is crude oil made by heating waste plastics and discarded vinyl at high temperatures. It can be used instead of crude oil in petrochemical processes to produce new chemical products. It is a core technology for building a circular economy and is called "urban oil field" technology because it extracts crude oil again from discarded waste.

Earlier this year, LG Chem announced the construction of Korea's first supercritical pyrolysis oil plant and completed the approval for occupancy in the Seokmun National Industrial Complex in June. Supercritical refers to a special heat source generated in a steam state that exceeds the critical temperature and pressure of water. It is evaluated as useful for extracting specific substances because it has both the solubility of liquids and the diffusivity of gases.

In April, LG Chem also signed a Memorandum of Understanding (MOU) with Siheung City to establish a resource circulation system through waste resource recycling. The agreement involves conducting research and development to advance the waste sorting process by 2023 using the municipal waste sorting facility operated by Siheung Urban Corporation.

LG Chem plans to foster its eco-friendly materials business based on three pillars: mechanical and chemical recycling, biodegradable and bio-based materials, and renewable energy materials.

SK Geo Centric is also partnering with the UK-based plastic pyrolysis specialist company, Plastic Energy, to establish the largest pyrolysis plant in Asia. The two companies signed a Heads of Agreement (HOA) for the establishment of the pyrolysis plant and agreed to cooperate in building the Ulsan pyrolysis plant by introducing Plastic Energy's technology.

SK Geo Centric plans to build the largest pyrolysis plant in Asia with an annual capacity of 66,000 tons on about 13,000㎡ within the Ulsan Recycle Cluster site by the second half of 2025. They also plan to establish a post-processing plant for pyrolysis oil with an annual capacity of 100,000 tons.

Lotte Chemical began commercial production of petrochemical products using naphtha derived from pyrolysis oil in September. They receive waste plastic pyrolysis naphtha from Hyundai Oilbank and input it into the naphtha cracking center (NCC) at the Yeosu plant to produce products.

GS Caltex started a pilot project in December last year to input waste plastic pyrolysis oil into the petroleum refining process and is reviewing investment to establish a new production facility with an annual capacity of 50,000 tons, aiming for operation in 2024.

The global chemical recycling market is expected to grow at an average annual rate of over 17%, from 700,000 tons in 2020 to 3.3 million tons in 2030 based on pyrolysis oil extracted from waste plastics.

A meeting scene of the Commission for Shared Growth, which is responsible for designating and reviewing medium-sized suitable industries.

However, large corporations have not been proactive in entering the waste plastic recycling sector until now. This was due to opposition from SMEs that have long physically recycled waste plastics. They argued that the entry of large corporations could take away work from the small recycling industry.

Conflicts between large and small-to-medium enterprises peaked when the Korea Resource Circulation Federation and others applied in October last year to designate the plastic recycling business as a suitable industry for SMEs.

If designated as a suitable industry for plastic recycling, large corporations would be prohibited from entering or expanding their business in the sector for three years. One extension is possible, making it a maximum of six years during which entry would be barred. Large corporations opposed this, saying they could miss the investment opportunity in the chemical recycling market.

Eventually, last month, the Win-Win Growth Committee decided to sign a mutual growth agreement instead of designating a suitable industry, bringing the waste plastic recycling controversy to a temporary close.

However, there are still challenges to overcome. Broadly, SMEs are responsible for physical recycling and large corporations for chemical recycling, but the division in raw material procurement such as waste plastic collection and sorting remains ambiguous.

Kim Pyeong-jung, head of the Korea Petrochemical Industry Association, said, "Most of the investment plans of large corporations focus on chemical recycling. Since stable raw material supply is necessary for chemical recycling, solutions need to be developed through future win-win councils."

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