■ SK Global Chemical and Zhejiang Satellite are planning to construct an eco-friendly, high value-added packaging material plant in Lianyungang
– KRW 200 billion investment in production facilities with an annual production capacity of 40,000 tons of ethylene acrylic acid (EAA)

■ SK Global Chemical aims to build a triangular formation of USA – Europe – Asia business sites to take the lead in the global markets

■ CEO of SK Global Chemical Na Kyung-soo said, “This investment will expand our eco-friendly businesses for the implementation of the financial story.”

SK Global Chemical, a subsidiary of SK Innovation, took a step forward to expand its eco-friendly, high value-added packaging material business as the first move to engage in its financial story toward eco-friendly ESG.

On the 11th, SK Global Chemical signed an MOU with Zhejiang Satellite, a Chinese chemical company, for the establishment of a joint company that will be responsible for the production and sales of ethylene acrylic acid (hereinafter referred to as EAA), a sort of adhesive copolymers.

This joint company will be established this year with the total investment of approximately KRW 200 billion, with six to four contributions of SK Global Chemical and Zhejiang Satellite, respectively. This move is aimed at preoccupying the Chinese and Asian markets through the strategic ties of SK Global Chemical’s EAA production technology and sales channels, and Zhejiang Satellite’s stable source of raw materials.

Ever since the acquisition of the EAA business from Dow Chemical Company in 2017, it had been SK Global Chemical’s goal to expand the high value-added packaging material business, mainly in emerging countries in Asia including China. By securing the EAA plant in Lianyungang, China, SK Global Chemical will be able to complete the triangular formation of global high value-added materials production bases in USA, Europe and Asia. Two other EAA plants of SK Global include one in Texas, the U.S., and one in Tarragona, Spain.

SK Global Chemical shared that this strategic investment reflects the surging demand for EAA materials* in emerging Asian countries, including China. The packaging materials market for fresh food has been rapidly growing due to the high demand for boxed or delivered foods in China. SK Global Chemical’s EAA materials are renowned for their green packaging technologies in the growing fresh food packaging materials market.

Luanyungang, China, the new land for EAA factories, has recently started creating a massive eco-friendly chemical and industrial complex. It is expected to grow into the No. 1 chemical and industrial complex in China. The site has been selected for its advantageous location near the exporting and importing infrastructure and utilities such as the power grid and waste-water disposal, as well as a stable source of ethylene, one of the key ingredients.

SK Global Chemical plans to make its first EAA plant in China a bridgehead to preoccupying the eco-friendly, high value-added packaging markets in Asia, and develop it into a hub for eco-friendly chemical materials.

“Going toward the core of our financial story, More Green, Less Carbon, we are accelerating the expansion of eco-friendly, high value-added packaging business, and economic circulation system for plastic,” said Na Kyung-soo, the CEO of SK Global Chemical. “We’ll also take the lead in building an ecosystem for eco-friendly chemical materials that take consideration from the production to recycling.”

(*) EAA demand outlook

As an adhesive copolymer, which is a high value-added chemical product, EAA is widely used as an adhesive for packaging materials such as aluminum foil. The global market scope for EAA will be around 439,000 tons by 2030, with the demand expected to increase by approximately 10,000 tons year-over-year. The EAA demand will be mainly led by the multi-layer packaging and aseptic packaging, which take about 75% of the entire EAA market. More specifically, a continuous growth is expected, following the increased needs for eco-friendly chemical products mainly in China and emerging countries in the post-COVID-19 era.

Zhejiang Satellite

[Reference] Ethylene Acrylic Acid

[Reference] SK Global Chemical’s EAA production bases

[Photos]

(Photo 1): CEO of SK Global Chemical Na Kyung-soo (left) and Chairman/President of Zhejiang Satellite Petrochemical Yang Wei Dong (right)

(Photo 2): Cai Lian Chun – Head of SK Global Chemical’s China Investment Management Department (3^rd from left), Zhao Hou Feng – Director of the Management Committee of Xu Wei New District (4^th from left), Yang Wei Dong – Chairman/President of Zhejiang Satellite Petrochemical Co. Ltd (5^th from left) and other representatives at the signing ceremony of the MOU on March 11^th.