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| Prime Minister Lee Nak-yon, second from left, and Lotte Group Chairman Shin Dong-bin, third from left, press a button during a completion ceremony for Lotte Chemical's ethylene manufacturing plant in Lake Charles, Louisiana, Thursday (local time). From left are Louisiana Governor John Bel Edwards, Lee, Shin, U.S. Ambassador to Korea Harry Harris, Deputy White House Policy Coordinator Sylvia May Davis and Westlake Chemical CEO Albert Chao. Courtesy of Lotte Chemical |
Korean PM, Trump applaud plant as proof of Korea-US alliance
By Nam Hyun-woo
Lotte Chemical has completed a $3.1 billion ethylene manufacturing plant in Lake Charles, Louisiana, becoming the first Korean chemical firm to operate a massive petrochemical complex in the United States.
During a completion ceremony Thursday (local time), Prime Minister Lee Nak-yon celebrated the landmark investment, saying, "If the completion of the plant is a testament to the Korea-U.S. alliance, advances made here will be proof of the advancement of the alliance."
President Donald Trump also sent a congratulatory message noting the plant was the biggest inward-bound investment so far under his administration and proof of the ironclad alliance between Korea and the U.S.
According to Lotte Chemical, the complex, occupying 1.02 square kilometers of land, can produce up to 1 million tons of ethylene and 700,000 tons of ethylene glycol annually. Both are core components in petrochemical products. The output will raise Lotte Chemical's annual ethylene output to 4.5 million tons, the seventh largest in the world.
The $3.1 billion spent on the project is the second-largest investment made by a single Korean firm in the U.S.
The complex is comprised of an ethane cracker center (ECC) and an ethylene glycol facility. Lotte Chemical has an 88 percent stake in the ECC, while the remainder is held by the U.S.-based Westlake Chemical. Lotte Chemical wholly owns the ethylene glycol facility.
It projects the complex will create more than 2,500 jobs.
Lotte Chemical said the complex was of extra significance because it would produce ethylene by using shale gas from the U.S., helping the company lower its reliance on imported naphtha.
Compared to producing ethylene by cracking naphtha, using shale gas is relatively cheaper and there is a stable supply, which lowers raw material costs and reduces uncertainties stemming from volatile oil prices.
The company said it aims to generate 50 trillion won ($42.44 billion) in petrochemical sales by 2030, becoming the world's No. 7 petrochemical firm.
"We are proud to be the first Korean petrochemical firm running a world-class facility in the U.S.," said Lotte Group Chairman Shin Dong-bin. "Along with the growth of the firm, we will strive to play a key role in the future of the Korean petrochemical industry."
Industry analysts are also predicting a rosy future for the complex.
"The ECC's sales and profits will be reflected in the company's second-quarter earnings," said Hana Financial Investment analyst Yoon Jae-sung.
"The company is expecting 800 billion won to 900 billion won in sales and an operating margin higher than 20 percent.
Compared to its rivals in the U.S., the plant will improve Lotte Chemical's corporate value by 10 percent of its current market cap."
