SK Global Chemical to produce 'eco-friendly' packaging materials in China

SK Global Chemical CEO Na Kyung-soo, left, and Zhejiang Satellite Petrochemical Chairman and President Yang Wei Dong are seen in this photo provided by the former, Sunday. They announced the establishment of joint venture to produce ethylene acrylic acid in China. Courtesy of SK Global Chemical

By Baek Byung-yeul

SK Global Chemical has decided to build a production base for eco-friendly packaging materials in China as part of its move to integrate environment, social and governance (ESG) values into management strategies, the subsidiary of SK Innovation said Sunday.

The company said it signed a memorandum of understanding with a Chinese chemical firm Zhejiang Satellite on March 11 to establish a joint-venture company that will produce and sell ethylene acrylic acid (EAA), which is a type of adhesive copolymer.

The joint venture will be established this year with the overall investment of around 200 billion won ($176 million), with six to four contributions of SK Global Chemical and Zhejiang Satellite, respectively. The plant will be set up in the west-coast city of Lianyungang.

With the joint venture, SK Global Chemical aims to expand its presence in the global market for high value-added packaging materials. The China plant will be SK's third EAA factory, following existing production bases in the U.S. state of Texas and another one in Tarragona, Spain.

“Ever since the acquisition of the EAA business from Dow Chemical Company in 2017, it had been SK Global Chemical's goal to expand the high value-added packaging material business, mainly in emerging countries in Asia including China,” the company said.

SK Global Chemical said the strategic investment is to meet growing demand for EAA materials in Asia. EAA is widely used as an adhesive for packaging materials, such as aluminum foil, and the packaging materials are increasingly used in China where demand for delivery foods is surging.

The city of Lianyungang recently started building a massive industrial complex for eco-friendly chemical products. The complex is expected to grow into the largest chemical and industrial complex there, SK Global Chemical said.

“The site was selected for its advantageous location near export and import infrastructure and utilities such as a power grid and waste-water disposal facilities, as well as a stable source of ethylene, one of the key ingredients,” the company said.

SK Global Chemical also expects the joint venture in China to become a bridgehead for its foray into the eco-friendly, high value-added packaging materials markets in Asia.

“As part of our 'More Green, Less Carbon' goal, we are accelerating the expansion of our eco-friendly, high value-added packaging business, and the recycling of plastics,” the company's CEO Na Kyung-soo said. “We'll also take the lead in building an ecosystem for eco-friendly chemical materials from production to recycling.”