Lotte Chemical to Invest about $215 Million to Add Ethylene Capacity by 2018

Reuters, December 12, 2016

South Korea's Lotte Chemical Corp. said on Monday it will invest a little over $215 million (USD) to increase the ethylene production capacity at its southwestern Yeosu plant by 2018. The expansion plan comes as the South Korean government has called on Korean petrochemical companies to sharpen their competitiveness amid growing competition from China.

"The move is to establish a sustainable growth foundation by ensuring stable procurement of feeds tock and by expanding production capacity," the company said in a filing to the stock exchange.

Lotte Chemical also said the expansion plan will increase the ethylene production at its Yeosu plant by 200,000 tonnes per year (tpy) to 1.2 million tpy by 2018 and propylene production by 100,000 tonnes to 620,000 tpy.

The petrochemical maker plans to start construction in the first half of 2017 and expects to boost its annual sales to about 500 billion won ($426.48 million) in 2019 when it aims to begin commercial operation of the expanded plant, it said in a separate statement. Currently, Lotte Chemical operates a 1 million tpy ethylene plant in Yeosu and another 1.1 million tpy ethylene plant in the southwestern city of Daesan. Lotte Chemical said it expects the expansion to raise its total ethylene production capacity to 4.5 million tpy by the end of 2018, together with its overseas plants including in Malaysia and Uzbekistan, helping the company become the world's seventh-largest petrochemical maker.

The company said the expanded plant will use propane gas to produce petrochemical products, shifting away from traditional petrochemical feedstock such as naphtha in order to diversify raw materials and stay cost competitive by using ethane from Uzbekistan natural gas and U.S. shale gas. LG Chem Ltd, South Korea's largest chemical company, said in October it would spend about $260 million to raise the production capacity of its Daesan plant by 230,000 tonnes to 1.27 million tpy of ethylene by 2019.

(Reporting By Jane Chung; Editing by Amrutha Gayathri)

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