●  SK chemicals and Teijin Chemicals
     to Launch Joint Venture for Super Engineering Polymer
     Business

The leading chemical companies of Korea and Japan have decided to pursue joint venture partnership for developing, producing and marketing a super-engineering plastic.

SK chemicals, Korea’s leading chemical producer, announced on February 1st that it will launch a joint venture with Teijin Chemicals Limited of Japan for polyphenylene sulfide (PPS) business.

The announcement revealed that SK chemicals will share 66% of the equity of the new joint venture to be established. Teijin Chemicals will have 34% shares of the joint venture’s equity.

The joint venture between SK chemicals and Teijin Chemicals will officially start around the end of July, when the business combination between the two companies is approved in Korea, Japan, China, the United States, and other such countries to which the joint venture’s operations will extend. 

PPS is a super-engineering plastic with outstanding thermal and chemical stabilities, whose demand is expected to grow to replace various metallic applications. The super-engineering plastic industry worldwide produces a total of 280,000 tons of products a year, with the trade of PPS compounds accounting for 94,000 tons (as of the end of 2012).

SK chemicals expects the new joint venture to help the company accelerate the expansion of its PPS projects with the synergy created from the companies’ world-class R&D, production expertise and global marketing networks.

The joint venture will establish PPS resin manufacturing facilities to produce 12,000 tons of PPS a year, by 2015. The company also considers expanding the production capacity to 20,000 tons a year during the second phase of business expansion.

SK chemicals commented that: “Joint venture with a strong market player like Teijin Chemicals should enable successful business partnership over production, R&D, and marketing to grow global market share with great efficiency.”

SK chemicals thus anticipates generating the revenue of KRW 350 billion in 2024. The international PPS market at present is led by CPC, DIC, and Toray. The joint venture between SK chemicals and Teijin Chemicals intends to revolutionize this industrial makeup, rising to claim at least 20% of the international market share by 2019.

President Lee Moon Suk of the Green Chemicals Business at SK chemicals commented: “Once the PPS facilities of the joint venture are completed, SK chemicals will become the first and only Korean company to manufacture PPS. The successful operation of the partnership with Teijin Chemicals will, therefore, help SK chemicals emerge as a new leader of the international super-engineering plastic market.”

Company insiders explain that the agreement between SK chemicals and Teijin Chemicals to launch a joint venture was mainly based on the long-continuing relationship of firm trust between the two companies.

They also added, : “The relationship with Teijin has been established for more than four decades, when, in 1969, Teijin transferred part of its technology to SK chemicals’ predecessor, Sunkyoung Synthetic Fiber, and invested in setting up a project together, sharing 50% of its equity. The new joint venture will mark the second time in SK chemicals’ history to form a successful business partnership with Teijin.”

[Note] What is PPS?
The reason SK chemicals seeks to expand its PPS lineup is because SK chemicals’ PPS business presents a much more competitive and eco-friendly potential for success than other conventional PPS.

Unlike PPS production systems at competitor companies, the process SK chemicals envisions for the production of its PPS involves no toxic solvents, and will thus require no additional systems or facilities for treating the related byproducts.

PPS to be produced by the joint venture, for example, will contain no traces of chlorine. Chlorine is frequently used as a chemical ingredient in materials such as PVC and epoxy, and is also commonly used as a bleaching agent, a disinfectant, and a sterilizer. Its toxic properties, however, have raised worries and the demand for alternative substances in North America and Europe. The electric and electronic industries worldwide have begun to enforce strict regulations to control and inhibit the amounts of chlorine used on their products.

The commercialization of chlorine-free PPS will help SK chemicals to be considered as a leading player with environmentally friendly product.