● SK Chemical Launches New Business, Expects Revenue of KRW 350 BillionEstablishment of Initz, a Joint Venture with Teijin (Japan)

- Factory in Ulsan••• JV to produce PPS materials
- Development of the world’s first “PPS material without halogen” ••• Revenue of KRW 350 billion expected by 2020

SK Chemical took the first step to commercialize the fruit of its 8-year endeavor.

SK Chemical (CEO: Moon-suk Lee) announced on September 1, 2013 that it established a joint venture (JV) for the PPS business with Teijin of Japan (CEO: Shigeo Ohyagi) and held a groundbreaking ceremony for the construction of the production line.

Since it announced the establishment of JV for PPS, a type of super engineering plastic, with Teijin in February, SK Chemical has been working on registering the business combination in Korea, Japan, Germany, and other major countries for the past 6 months before officially launching the JV.

This is the first time a domestic chemical company formed a JV for the PPS business with a Japanese company.

The name of the JV is Initz (CEO: Hyo-Kyeong Kim), a combination of Initium, meaning beginning in Latin, and Zenith, meaning the highest point in Latin. According to the company, the name represents “the commitment to take a leap forward to become the world’s top company in PPS by introducing state-of-the-art technology, which has not been tried by other companies until now.”

Initz will be responsible for the production and marketing of PPS, which was successfully developed by SK Chemical after 8 years of R&D investment.

Unlike other PPS materials, Ecotran, the brand for the PPS developed by SK Chemical, contains zero chlorine. The existing PPS materials in the market contain a specific amount of chlorine because the production processes use a raw material containing chlorine.

With more than 100 patents, SK Chemical succeeded in developing the world’s first process of producing the product without using solvent.

The company explained that the solvent-free production process can suppress the generation of harmful substances and eliminate byproducts such as sodium chloride; thus streamlining processes such as wastewater treatment.

It added that the chlorine-free product has clear differentiating factor in terms of competitiveness. According to the company, PPS is used in automobiles and electronic products. Since chlorine can cause the malfunction of sensitive electrical parts, and sodium chloride can induce the corrosion of metal, SK Chemical expects its PPS to gain wide acceptance as electrical and electronic material.



▶ Production factory being constructed in Ulsan City, to be completed in 2015
The factory for Initz will be constructed in the chemical complex of SK Chemical in Ulsan City. Attending the groundbreaking ceremony were Moon-suk Lee, CEO of SK Chemical, and Shigeo Ohyagi, CEO of Teijin, as well as government personalities such as Maeng-woo Park, Mayor of Ulsan, and Dong-wook Seo, Chairman of the Ulsan City Council.

Once construction is completed, the factory whose lot area is approx. 21,000m2 will produce 12,000t PPS each year. Initz plans to expand the factory facilities to produce 20,000tons annually in the future.

The company forecasts annual revenue of more than KRW 200 billion annually from the PPS business. Including the products based on PPS, it estimates an import substitution effect of around KRW 110 billion by 2020.

The business is also expected to create more than 100 new jobs considering the SK Chemical employees to be transferred to Initz.



Largest market size, highest growth potential among super engineering plastics
As a leading super engineering plastic material, PPS is rapidly growing as substitute for metals. The global super engineering plastic market is estimated to be approx. 280,000t, with PPS amounting to 94,000t annually on a compound basis.

Because of its resistance to heat and retained property under different chemical environments, the application of PPS is expanding, replacing the metals used in the automobile, electronic, and electrical areas. Moreover, it is known to have outstanding properties and rational price compared to other super engineering plastics such as LCP (Liquid Crystal Polymer) or PEEK (polyetheretherketone).

Because of such benefits, the PPS market is growing 7~8% annually, whereas the overall super engineering plastic market plateaued at around 4%.

According to the company, the materials for the electric pump and HEV (Hybrid Electric Vehicle) parts are rapidly changing from aluminum to PPS as automobiles are becoming lighter, serving as the main factor driving growth.

“Whereas around 1kg PPS is currently used in conventional automobiles, 2~5 times PPS is used in hybrid and electric vehicles. Thus, the market is expected to continue growing in the future,” said Moon-suk Lee, CEO of SK Chemical. He added that they plan to carry out aggressive marketing after 2015, when the dedicated plant is completed, to raise the share of the PPS market to 20% so that “Ecotran will become a hit item with annual revenue of KRW 350 billion by 2020.”