Published : 2014-08-12 21:25
Updated : 2014-08-12 21:25
LG Chem said Tuesday it would expand its existing materials business and seek to develop a new business in desalination to overcome a slowdown facing the petrochemical industry due to a shale gas production boom.
LG Group’s flagship will boost its production capacity of engineering plastics, superabsorbent polymers and synthetic rubbers as part of efforts to more than double the sales of those materials to 4.5 trillion won ($4.4 billion) by 2018.
It seeks to become one of the world’s top three producers of engineering plastics for automotive and IT parts by targeting China.
The company has invested 320 billion won to expand its production capacity of SAP materials, which are commonly used for diapers, at its plant in Yeosu, South Jeolla Province.
It also aims to increase its focus on synthetic rubber for tires to account for 40 percent of its business portfolio from 10 percent over three years.
LG Chem said its acquisition of U.S.-based firm NanoH20, which develops reverse-osmosis membranes using nano and polymer technologies, will help the Korean company build a new business in water purification and wastewater treatment.
An increase in the exploration and production of shale gas especially in the U.S. enabled the global chemical industry to cut costs by using hydrocarbon raw materials such as ethane, industry sources said.
However, Korea, which still uses high-cost naphtha materials derived from crude oil, has been facing challenges amid the U.S. shale gas boom and China’s increase in self-sufficiency in chemicals production, sources said.
LG Chem vice chairman and CEO Park Jin-soo said it would be impossible to increase profit with its conventional petrochemical products.
“The company must develop a (new) business structure that can allow it to achieve sound results with materials through research and development,” Park said in a press release.