LX International : breaks into the eco-friendly biodegradable plastic market

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LX International breaks into the eco-friendly biodegradable plastic market

• 03/24/2022
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- Set to invest in Korea's largest biodegradable plastic producer and seller with SKC and Daesang

- Plan to invest 36 billion investment to acquire a 20% stake. Ready to initiate the commercial production of 70,000 tons per annum by 2023

- Seek the continuous innovation of the business portfolio by making inroads into the new eco-friendly businesses

LX International has set out to diversify its business portfolio by investing in new businesses in the eco-friendly field.

On March 23rd, LX International (CEO Yoon Chun-sung) announced its plan to establish a joint venture with SKC (CEO Lee Wan-jae) and Daesang (CEO Lim Jung-bae) to produce and sell biodegradable plastic, PBAT (polybutylene adipate terephthalate).

LX International held an investment review committee on the 22nd and reached the decision to invest 36 billion won and acquire a 20% stake to launch a joint venture for the production and sales of high-strength PBAT. On March 23rd, SKC held a board meeting and chose to invest 104 billion won, including 79 billion won on technology, and Daesang also decided to invest 40 billion won through its board of directors held on the same day.

The joint venture plans to build the largest PBAT production facility in Korea with an annual capacity of 70,000 tons of commercial production by 2023. This is currently the second-largest in the world in terms of production capacity.

The three companies will align their strengths to achieve their joint goal of expanding their base in the global biodegradable plastic market and moving forward as major players in the eco-friendly material field. LX International will engage in the sales of manufactured products based on its overseas marketing capabilities and an extensive global network built up over the past 60 years. In the meantime, SKC will provide the mass-production technology for high-strength PBAT and R&D capabilities, while Daesang will supply bio-based raw materials for PBAT to ensure the products are eco-friendly.

PBAT is a plastic product that breaks down rapidly in nature through oxygen, heat, light, and enzymatic reactions. This eco-friendly material decomposes in just six months after being buried in the ground. The product serves a range of purposes as plastic bags, sanitary gloves, straws, and agricultural films.

In particular, the high-strength PBAT, which will be produced by the joint venture, is expected to record growth by replacing the existing plastic products such as PE (polyethylene) and PP (polypropylene), as it overcomes the shortcomings of the previous PBAT products which were easily torn apart and ensures a strength equivalent to conventional plastic products.

The biodegradable plastic market has recently been experiencing rapid growth, primarily in Europe, due to stricter regulations on the use of single-use plastics and the growing concerns over plastic waste. According to a market research agency, the global PBAT market, which recorded 250,000 tons last year, is expected to grow further to reach 500,000 tons by 2025. The markets in China and the United States are experiencing particularly rapid growth as single-use plastic products are continuing to be phased out on a yearly basis. The industry expects the potential demand to exceed 2 million tons. As the demand continues to grow for eco-friendly plastic products, global companies are shifting their focus to biodegradable bioplastics.

An official from LX International said, "this joint venture will help us expand our base in the biodegradable plastic market and dominate the rapidly growing market for eco-friendly raw materials and exploit the rising business opportunities." "This will lay the groundwork for us to review an entry into the realms of associated articles and identify additional business opportunities." he further added.

Meanwhile, LX International revised its articles of association at the regular general meeting of shareholders in March to implement the following seven fields as its new business purposes: ▲establishment and operation of waste collection, transportation, and treatment facilities for eco-friendly projects; ▲development and operation of e-commerce, digital content, platforms, etc. in line with the growing digital economy, and ▲medical examination, analysis, and diagnosis service business designed to promote the health care business. This is to enable the company to swiftly mount a challenge in promising fields and perform a new sustainable independent operation.

In particular, as the investment principle has been further augmented from the ESG perspective recently, LX International is now poised to convert its eco-friendly business portfolio.

High-strength PBAT and biodegradable products made of high-strength PBAT

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