Kumho P&B Chemicals and OCI Establish Joint Venture for Bio-raw Material Production

Kumho P&B Chemicals and OCI Sign Joint Venture Agreement for Bio ECH Production

[Asia Economy Reporter Hwang Yoon-joo] Kumho P&B Chemicals is taking a full-scale step into ESG (Environmental, Social, and Governance) management by establishing a joint venture with OCI to produce bio epichlorohydrin (ECH).

Kumho P&B Chemicals announced on the 1st that it has signed a contract to establish a joint venture with OCIMSB, OCI’s Malaysian subsidiary, for ECH production. A total investment of 200 billion KRW will be made to build a production facility with a capacity of 100,000 tons of ECH. The joint venture will be established by 2024 in the Samalaju Industrial Park in Sarawak, Malaysia. ECH is one of the raw materials for epoxy resins, which are mainly used in paints, coatings, construction, and wind turbine blades.

The two companies plan to continue cooperating in raw material supply, product manufacturing, plant operations, and marketing. Additionally, OCIMSB has decided to invest an additional 180 billion KRW to produce 100,000 tons of chloroalkali (CA), a raw material necessary for ECH production, starting in 2024, to supply the new ECH plant.

The entry of both companies into the bio ECH business is notable from an ESG perspective. Unlike ECH produced by the conventional propylene process, the ECH produced by the new joint venture is synthesized from glycerin, a byproduct of biodiesel.

This process not only replaces raw materials with bio-based alternatives but also recycles process water generated during production, significantly reducing wastewater discharge. Furthermore, most of the electricity used in the Samalaju Industrial Park in Malaysia is generated by nearby hydropower plants, so the carbon dioxide emissions are expected to be much lower than those of other companies’ ECH production processes.

Until now, Kumho P&B Chemicals has continuously expanded its production capacity of epoxy resins, which are increasingly used not only in traditional demand sectors such as paint, coating, and construction but also in eco-friendly fields like wind turbine blades and automotive lightweight materials. Anticipating increased future demand for ECH, the raw material for epoxy resins, Kumho P&B Chemicals has secured stable procurement of ECH through this joint venture.

Kumho P&B Chemicals stated that by successfully completing this joint venture, it aims to further solidify its position as an eco-friendly epoxy resin specialist company that has internalized key raw materials from BPA to ECH.

Shin Woo-sung, President of Kumho P&B Chemicals, said, "As the importance of ESG management continues to grow, we believe that investing in the ECH business using eco-friendly bio glycerin as a raw material will further strengthen Kumho P&B Chemicals’ competitiveness in the epoxy field. We look forward to maintaining a close cooperative relationship to continuously create synergy between the two groups."

Kim Taek-jung, President of OCI, said, "The entry into the ECH business through this joint venture with Kumho P&B Chemicals is significant as it is the first joint venture with the Kumho Petrochemical Group. Through this joint venture, OCI will lead the materials market, which is expected to sustain growth in the future, focusing on electronic materials and green chemicals as core pillars."