Industry minister urges Yeosu petrochemical complex to 'swiftly' draw up restructuring plans

Industry Minister Kim Jung-kwan, left, visits the petrochemical industrial complex in the southeastern city of Ulsan, Sept. 19. Courtesy of Ministry of Trade, Industry and Resources

Industry Minister Kim Jung-kwan on Wednesday called on petrochemical companies in the southwestern city of Yeosu, South Jeolla Province, to "swiftly" come up with voluntary restructuring plans, citing the yearend deadline for such plans that would make them entitled to government support aimed at tackling an industrywide crisis stemming from a global oversupply.

The call came as Kim met with senior officials from petrochemical companies based in Yeosu, according to the Ministry of Trade, Industry and Resources.

In August, the government unveiled its three principles for helping the ailing petrochemical industry, giving local companies until the end of the year to devise "voluntary" business restructuring plans.

The principles are "simultaneous" restructuring of three major petrochemical industrial complexes in Seosan, Ulsan and Yeosu, "sufficient" self-rescue efforts and preparation of a feasible business restructuring plan by companies, and the establishment of a "comprehensive" government support package.

Since then, the petrochemical industry has vowed to work toward reducing the capacity of naphtha cracking centers (NCCs) by up to 3.7 million tons and shifting to the production of high-value and eco-friendly products.

On Wednesday, Lotte Chemical and HD Hyundai Chemical, both located at the Daesan petrochemical complex in Seosan, South Chungcheong Province, said they have finalized a restructuring plan to reduce their NCC capacity. Firms located in the two other complexes in Yeosu and Ulsan have yet to come up with any detailed plans.

"If Daesan has opened the gate for business restructuring (of the petrochemical industry), Yeosu will determine the industry's fate," Kim said.

"The deadline for submitting business restructuring plans is the end of December as previously announced by the Ministry of Trade, Industry and Resources, and there are no plans to extend this deadline," he stressed.

"Companies that fail to meet this deadline will be excluded from government support and will have to navigate future domestic and international crises on their own."

During his visit to LG Chem's plant in the Yeosu complex, Kim urged the company to invest in high-value specialty products as a firm with "top-tier" research and development (R&D) capabilities, according to the ministry.

The petrochemical firms, meanwhile, told Kim that they faced a heavy burden from the latest electricity rate hike for industrial use while calling for legislation of a special bill to help the industry and government provide support for companies' efforts to get appropriate visas for investment in the United States.

The industry ministry said it will soon unveil a support package for petrochemical companies undergoing restructuring, such as tax incentives, R&D support and streamlined regulations.