■ SK Trading International makes an equity investment in Daekyung O&T as a consortium with domestic investors
■ Daekyung O&T, a company specializing in producing key base materials for “bio-aviation fuel”
■ After the investment in a Chinese Used Cooking Oil (UCO) company in March, this investment established a foundation for SK Trading International to secure the supply of base materials domestically and internationally for bio-aviation fuel
SK Trading International makes an investment in Daekyung O&T, a company specializing in waste and residue (W&R*) based raw materials. This investment is the company’s move to secure raw materials for sustainable aviation fuel (bio-aviation fuel) derived from biomaterials.
*Waste & Residue (W&R): It refers to waste resources, such as Used Cooking Oil (UCO), animal fats, and POME (Palm Oil Mill Effluent). In the energy sector, it refers to the waste resources used as base materials for renewable fuels
On October 16, SK Trading International signed a share purchase agreement for equity investment in Daekyung O&T. For this contract, SK Trading International formed a consortium with Korea Development Bank’s Private Equity Division and Eugene Private Equity. The three companies plan to establish a Special Purpose Company (SPC) to acquire a 100% stake in Daekyung O&T. Within the SPC, SK Trading International will hold a 40% stake, while Korea Development Bank and Eugene PE will collectively hold the remaining 60%. The detailed terms of the shareholding structure will not be disclosed due to contractual obligations.
Established in 1995, Daekyung O&T specializes in the production of waste-based raw materials at its 13 business sites nationwide. It is the country’s largest company supplying raw materials, such as animal fats from slaughterhouse waste and Used Cooking Oil (UCO) from restaurants and food factories, for biodiesel and bio-aviation fuel.
Animal fats and UCO are gaining attention as key raw materials for bio-aviation fuel among sustainable aviation fuels (SAF) as the SAF market expands. These materials are not subjected to global regulations due to their waste-recycling nature, and they offer greater carbon reduction benefits compared to plant-based raw materials like Soybean oil.
SK Trading International views this investment as leverage for securing raw materials for bio-aviation fuel. Unlike ground transportation, which is transitioning to batteries and fuel cells as fossil fuel alternatives, aviation transportation is constrained by battery density limitations and safety, making the use of liquid fuel unavoidable for the future. As a result, nations worldwide are exploring alternatives, such as biofuels and synthetic crude oil, to reduce carbon emissions throughout the aviation fuel consumption process.
**SK Innovation subsidiaries had previously invested in synthetic crude-based SAF companies (Fulcrum, Infinium) in 2022.
In March earlier this year, SK Trading International invested in Sichuan Jinshang Environmental Technology, a Chinese UCO company. Established in 2017, Jinshang is the largest UCO supplier in the southwestern regions of China, including Sichuan, Yunnan, and Guizhou provinces. The company has been proactively expanding its production scale as it recognizes the prospect of the bio-aviation fuel market. With the subsequent investment in Daekyung O&T, SK Trading International has secured the foundation for securing a supply of bio-aviation fuel raw materials in both South Korea and China.
SK Trading International CEO Suh Sok-won said, “Proactive preparation for the SAF (Sustainable Aviation Fuel) market in line with the ‘Carbon to Green’ strategy of SK Innovation and its subsidiaries is absolutely essential for the sustainability of the aviation fuel market. SK Trading International’s efforts will not stop at investing in Daekyung O&T. We will continuously make efforts domestically and internationally to evolve into a specialized trading company that provides a stable supply of SAF to the domestic and global aviation industry.”