Hanwha Solutions shares plunge on plant explosion

Officials from the National Forensic Service inspect the scene of an explosion at a Yeochun NCC plant in the nation's southernmost city of Yeosu, Friday. Yonhap

By Lee Min-hyung

Shares of Hanwha Solutions dropped sharply Friday after an explosion at a plant run by Yeochun NCC, a joint venture established by the Hanwha affiliate and DL Chemical. The accident left four workers dead and another four injured.

Hanwha Solutions stock price closed at 32,800 won per share, down 6.82 percent from the previous session as foreign and institutional investors went on a selling spree following the explosion.

The accident has put a damper on the recovery momentum of Hanwha Solutions' shares.

After hitting a three-month low of around 31,500 won in early February, the shares were on track for a rebound. But the deadly accident is widely expected to keep putting downward pressure on its corporate value.

The explosion took place at around 9:26 a.m. in the nation's southernmost city of Yeosu, where the plant is located. According to firefighters, a total of eight workers were conducting test operations of a heat exchanger at the plant shortly before the explosion. Four of them lost their lives at the scene, while the other four who were injured were moved to a hospital.

The explosion did not start any fire or other accidents. The National Fire Agency sent 40 relief workers and 11 ambulances in case there were other injuries. The police also launched an investigation to determine the exact cause of the accident.

Yeochun NCC is a chemical company operating a naphtha cracking plant. Hanwha Solutions and DL Chemical each hold a 50-percent stake in the company. According to data from the Financial Supervisory Service, Yeochun NCC employed more than 1,000 workers as of the end of September of last year. The company's sales reached 3.94 trillion won in 2020. “NCC” refers to the naphtha cracking center it runs to produce petrochemicals.

Following the accident, shares of other chemical firms here ― such as Korea Petrochemical Ind and Lotte Chemical ― soared amid concerns that the temporary closure of the Yeochun NCC plant may weaken the supply of base materials for the nation's petrochemical industry.

The Ministry of Employment and Labor also started an investigation into the accident, ordering the suspension of the plant immediately after the explosion. Chances are that the co-leaders of Yeochun NCC may have to take legal responsibility for the accident according to the Serious Accidents Punishment Act, which makes company owners and executives, as well as the company itself, criminally liable for serious accidents.

“We express our apologies for causing the accident,” an official from Yeochun NCC said in a briefing. “We will also try our best to help the victims and their family members. After figuring out the exact cause of the accident, we are going to take appropriate measures to prevent a recurrence.”