As SK Innovation celebrated its 60^th anniversary in 2022, 2023 marks the beginning of a new 60 years of its history, and it is also the second year SK Innovation and all of its subsidiaries execute their Financial Story.

To learn more about the company’s strategies and plans for this year, we’ve met the executives of SK Innovation and its subsidiaries and asked them in detail. The fourth guest of this series is Na Kyung-soo, CEO of SK Geo Centric, who is dreaming of a business “Beyond Plastic” that has not existed in the world yet.

Q1. It’s been one and a half years since SK Global Chemical changed its name to “SK Geo Centric,” which combines the words “geo” (meaning “earth”) and “centric” (meaning “center”). What do you primarily take as major outcomes from the retitled corporation during last year?

After changing our corporate name, many people said it is a unique name and were curious about what business we are doing. When I told them that SK Global Chemical is our previous name, people got it but they wondered why we gave up the old well-known name to retitle ourselves. So I explained that “this new name conveys our determination to transform our business model into a more ‘Earth-caring” one, and people nodded after hearing this.

In 2021, SK Geo Centric established specific strategies and objectives under the goal of “Plastic & Carbon Zero.” And last year, in order to realize this goal, we prepared the foundation for recycling business and expanded the scale and external scope of eco-friendly material business. We secured three major advanced technologies of chemical recycling through cooperation with three global companies, which are Loop Industries, PureCycle Technolgies, and Plastic Energy. Based on this, we started operating a post-treated pyrolysis scale-up plant in Daejeon, South Korea, and completed preliminary work such as site leveling to create a waste plastic recycling complex called Advanced Recycle Cluster (ARC) in Ulsan.

In addition, we also expanded our recycling business to the global market thanks to cooperation with SUEZ. We also have laid the foundation for expanding ours eco-friendly, high value-added materials business with various global brands. I believe that we have taken a big step forward to establish ourselves as a front runner who “cares about the Earth” in a world that strongly demands fundamental changes for issues such as global climate crisis and waste plastics.

▲ SK Geo Centric and SUEZ announced their partnership in June 2022 at SUEZ Headquarter in France. (From left) Loop Industries Founder & CEO Daniel Solomita, Vice president of Suez Max Pellegrini, and SK Geo Centric CEO Na Kyung-Soo

Q2. In your New Year’s greetings, you said that “SK Geo Centric is no longer a chemical company.” So how do you define the concept of “Beyond Plastic”?

Like I just said, the world is asking us for fundamental changes. Since we announced our next identity would be the “Global No. 1 Recycle Material Company” that puts the Earth at the center of our attention, our actions need to be faster and more proactive, or in short, we need to take preemptive actions.

Chemical technologies are our “Business Abilities” that lasted about 50 years during the whole corporation history. I think it’s time for us to move to the “unique” and unprecedented realm of business. From the traditional business model that mass-produces and sells chemical products like olefin, aromatic, and polymer, we’re about to reinvent our identity as a Solution Provider which suggests customized solutions with “Recycled Materials,” not “Petroleum.” The scope of our customers will be expanded from the B2B model, which supplies chemical materials as base materials of other products, to the B2C model, which provides a variety of solutions that end customers want. In addition, after setting off with our “Recycling Business” from plastic, a material we know best and can deal with best, we will expand our technologies and business models to other materials that can be recycled in the future. That’s the “Beyond Plastic” initiative I define.

Q3. Visiting CES 2023 was your first move this year and there you reportedly sealed a license agreement for the pyrolysis business with Plastic Energy. The trip to CES seemed special to you, how do you feel about it?

To me, it’s the first visit to CES in last 20 years. Many exhibitions from CES 2023 made me confirm the strong demands for a “sustainable life.” In particular, it was meaningful in that we were able to show the stakeholders that SK Geo Centric is taking the lead in carbon reduction and Net Zero through “Action”, a message that SK Group wanted to convey. As mentioned before, we’re preparing the Advanced Recycling Cluster (ARC) in Ulsan, the world’s first complex for recycling waste plastics, including the largest pyrolysis plant in Asia. Members of SK Innovation affiliates as well as SKinnonews readers must have heard about urban oil fields. To put it simply, it refers to a concept of oil extraction from waste plastics. Pyrolysis oil is a type of crude oil made by heating waste plastics, discarded vinyl, etc. to a high temperature and is also one of the essential elements in building the circular economy system that replaces crude oil in petrochemical processes to manufacture brand-new chemical products. Since Plastic Energy is the holder of advanced technologies in this area, sealing a license agreement for pyrolysis oil with the company has the meaning of matching the “last puzzle piece” to complete the ARC. It felt good that CES let me verify SK Geo Centric was heading to the right direction, and also it eased me on the way home as we finally completed the puzzle of developing the ARC.

▲ Representatives from SK Geo Centric and Plastic Energy take commemorative photos inside SK booth at CES 2023. From left: Head of Corporate Development Ying Staton, Plastic Energy Chief Commercial Officer Bruno Guillon, CEO of SK Geocentric Na Kyung-soo, Leader of SK Geo Centric Green Business Group Lee Jong-hyuk.

Q4. Besides starting construction for the ARC, 2023 is going to be a significant year for promoting visible business model transition. And you must have a different determination for that.

2023 is the year when we need to maximize corporate values and strengthen our power in executing the Financial Story centered on the new business ‘Beyond Plastic’ through the business capabilities we’ve accumulated over the past 50 years.

First of all, to specifically mention the ARC project we’ve concentrated on, the development of the ARC is in progress according to plan, aiming to begin construction this year and be commercially operated in 2025. 2025 is also the year when environmental regulations led by the EU and the US will take full-scale effects. The time is coming when new plastic products have to contain recycled plastic over certain ratios. But the issue is that the supplies of high-quality recycled plastic are not significantly keeping up with the demands. SK Geo Centric will solve that.

The ARC in Ulsan will be the world’s first all-around recycling complex that gathers chemical recycling technologies for waste plastics as well as the largest pyrolysis plant in Asia. Our goal for this year is that we should embark on the construction of the ARC as scheduled, and also increase partnerships in order to secure waste plastics with outstanding quality.

In addition, partner companies of SK Geo Centric are going to begin manufacturing high-quality recycled plastic at commercialized factories from this year. SK Geo Centric plans to preemptively secure prospective customers through contracts by introducing them to our recycled plastic materials with the same quality as ones manufactured in the ARC, which will be operated by SK Geo Centric in 2025. While existing chemical products have been circulating within the B2B business model, we also aim to expand the scope of our customers to embrace the B2C business model as well.

In addition to plastic recycling, SK Geo Centric’s business for high-value products is expected to get on the track as well this year. From constructing factories for No. 3 EAA plant, No. 5 EAA Plant, No. 2 Ionomer to expanding UD tape business which has been recognized for its quality through CES Innovation Award, we will regularly promote diverse eco-friendly projects.

(*)EAA: A type of functional Adhesive Copolymer, a high-value chemical material. Mainly used as adhesive for packaging materials including aluminum foil and polyethylene.

Q5. When considering economic situations and other variables, those projects, including the ARC (Advanced Recycling Cluster) construction, seem to require investment on an enormous scale. In this context, please tell us relevant financial plans and performance prospects.

Last November, we successfully raised a total of 475 billion won on “Sustainability-Linked Loan (SLL)” for the first time in Korea after verification by global certification bodies. This funding also demonstrates that the global financial market recognized SK Geo Centric’s Financial Story, which aims for an “eco-friendly innovation that centers the earth,” as well as its sincerity for ESG management. Despite the financial environment, where it had been difficult for companies to raise funds caused by the surge of interest rates and global economic crisis since last year, we could raise capital on competitive terms, which means a lot. SK Geo Centric established two goals tied to SLL: increasing the plastic recycling scale and reducing greenhouse gas emissions. Syndicated lenders will verify our accomplishment level of those goals and adjust the interest rate accordingly. This year, we received orders equivalent to more than KRW 1 trillion when forecasting demands to issue corporate bonds to a scale of KRW 200 billion. That’s the reason why we decided to raise the scale of bond issue up to KRW 300 billion. I presume that the market started recognizing the enterprise value of SK Geo Centric that is faithful in promoting the eco-friendly business as well as fulfilling its social responsibilities.

Last year, the chemical industry was at unfavorable circumstances caused by oil prices, exchange rates, China issues, and other factors. But this year, I expect our growth to be higher than the previous year thanks to stimulus policies, relaxed anti-COVID-19 measures, and other reasons. For SK Geo Centric’s business transition, I also hope our performance improves, initiated by high-value chemical materials such as EAAs, Ionomers, lightweight materials apart from existing chemical products.

▲ (From left) BNP Paribas Seoul Managing Director Seo Jong-gab, BNP Paribas Korea Head of Territory Phillipe Noirot, CEO of SK Geo Centric Na Kyung-soo, SK Geo Centric Head of Strategy Division Choi Ahn-seop take commemorative pictures after the Sustainability-Linked Loan (SLL) signing ceremony.

Q6. Please tell us a few words of wishes and promises for SK Geo Centric members in 2023.

We’re ahead on the road anyone didn’t explore yet. And it’s understandable that we’re not sure whether the path is right and we can make it according to the plan. As being proven in the history of all pioneers, that fear of uncertainty becomes confidence only when we make our best choice at every single turn and steadily advance step by step. I believe in the capabilities and potential SK Geo Centric members have. Keep your current pace, and we may see the growth in the corporation at the end of this year, so people admire you working for SK Geo Centric. I believe in the members of SK Geo Centric, and will continue to take on bold challenges together with them.