LG Chem Establishes Korea's First Bioplastic Plant in the US

Signed Heads of Agreement (HOA) with ADM, One of the World's Top 4 Grain Companies
Annual Production of 75,000 Tons of LA·PLA Starting 2025
Full-Scale Entry into the 'Bio-Plastic' Market through PLA Investment
Part of Vice Chairman Shin Hak-cheol's 10 Trillion KRW Investment Plan in 3 Major New Growth Areas

[Asia Economy Reporter Hwang Yoon-joo] LG Chem is making aggressive moves in investing in the eco-friendly materials sector. LG Chem has decided to build a bio-plastic factory in the United States in partnership with Archer Daniels Midland (ADM), one of the four major grain processing companies. This is part of the three major new growth engine investment plans announced by Shin Hak-cheol, Vice Chairman of LG Chem, last July. It comes just one month after revealing a KRW 2.6 trillion investment plan for biodegradable plastic facilities in Korea.

LG Chem announced that it signed a Heads of Agreement (HOA) for establishing a joint venture for Lactic Acid (LA) and Polylactic Acid (PLA) with ADM in Chicago, Illinois, USA.

ADM is a global grain processing company operating crop procurement facilities in over 200 countries worldwide, with strengths in producing “glucose,” a key raw material in the biochemical field, and fermentation technology using this raw material.

The two companies plan to finalize the contract in the first quarter of next year to confirm the factory site and investment scale. The investment amount is reported to be several hundred billion KRW. Once the state government and detailed conditions are agreed upon, they plan to build a PLA factory with an annual capacity of 75,000 tons and an LA factory producing raw materials locally in the US by 2025. This will be the first PLA factory in the US built by a Korean company capable of integrated production from raw materials to products.

Glucose (dextrose) extracted from corn will be processed to produce LA, which will then be used as a raw material to make biodegradable plastic PLA. PLA is produced from 100% bio-based raw materials and is mainly used for food packaging containers and tableware. It is an eco-friendly material that naturally decomposes within months under certain conditions by microorganisms.

According to market research firms, due to the global tightening of single-use product regulations, the bio-plastic market is expected to grow at an average annual rate of 23%, expanding from KRW 12 trillion in 2021 to KRW 34 trillion by 2026.

Once the joint venture is established, LG Chem will be able to integrate renewable bio-based raw materials into the development of various high value-added products based on vertical integration, securing commercial-scale production capacity of high-purity lactic acid needed for PLA production. LG Chem plans to aggressively target the bio-plastic market based on PLA production.

Vice Chairman Shin said, "The establishment of the joint venture with ADM will be the beginning of a new journey leading to a sustainable business structure for the environment and society beyond simple cooperation," adding, "We will continue to seek new ways to contribute to carbon-neutral growth as a sustainability-leading company."