SK Global Chemical and its joint venture partner Japan’s JX Nippon Oil & Energy unveiled a new production plant for paraxylene in Korea’s southeastern city of Ulsan on Thursday.

According to SK Global Chemical, the two companies have poured 936.3 billion won ($887.4 million) into the new facility for Ulsan Aromatic Corp. based on a 50-50 joint venture. Test operations kicked off in June.

The 460 billion won in funding from JX was the largest foreign direct investment made in Korea to date, officials said. JX is the third-biggest refiner in the Asia-Pacific region.

“Ulsan Aromatic Corp. is the result of a successful joint project between SK and JX. It will play a leading role as a production base for our future global businesses,” said Koo Ja-young, vice chairman of SK Innovation, at an unveiling event on Thursday.

SK Global Chemical, wholly owned by SK Group’s energy unit SK Innovation, has operated paraxylene production facilities in both Korea and Singapore. 

With the new plant, which boasts an annual capacity of 1 million tons of paraxylene and 600,000 tons of benzene, the company said its annual paraxylene output is expected to reach 2.81 million tons ― the largest amount produced by a Korean energy company.

Paraxylene is a chemical widely used for manufacturing plastic fibers and films.

Company officials said that about 95 percent of paraxylene and benzene produced at the new plant will be exported overseas, especially to the soaring Chinese market.

Some 300 guests attended the unveiling ceremony. They included SK Innovation’s Koo, JX Nippon Oil & Energy chairman Yasushi Kimura, SK Global Chemical president and CEO Cha Hwa-youp and Ulsan City Major Kim Ki-hyun.

SK Innovation and JX Energy, led by their respective top executives SK Group chairman Choi Tae-won and JX chairman Yasushi Kimura, have been rapidly expanding their partnership since 2004, when the two companies started exchanges to hold joint seminars.

When JX’s refinery plants were hard hit by the earthquake in Japan in 2011, SK Innovation purchased crude oil from the company worth $200 million for processing and supplied it with other petroleum products.

By Lee Ji-yoon (jylee@heraldcorp.com)