SK Global Chemical and Saudi Basic Industries Corp. announced Sunday that they had agreed to establish a 710 billion won ($631.9 million) joint venture to produce and market high-performance polyethylene products based on SK’s technology. 

By Seo Jee-yeon

(jyseo@heraldcorp.com)SK">jyseo@heraldcorp.com)SK Global Chemical and Saudi Basic Industries Corp. announced Sunday that they had agreed to establish a 710 billion won ($631.9 million) joint venture to produce and market high-performance polyethylene products based on SK’s technology.

The new 50-50 joint venture, SABIC SK Nexlene Co., will be located in Singapore and operate SK’s polyethylene plant in Ulsan, which was completed in 2014 with an estimated annual capacity of 230,000 tons.

They will also consider building a second plant in Saudi Arabia in a few years and expand production bases worldwide, they said.

The agreement capped four-year negotiations between Korea’s top chemicals producer and the world’s secon- largest petrochemicals group to enter the market for highly specialized polyethylene, which is currently dominated by Dow Chemical, ExxonMobil and Mitsui Chemicals.

The two partners will use Nexlene, a high performance polyethylene technology developed by SK Innovation.

Covering the whole process, including catalyst, reaction, and production, Nexlene is used for high value films, interior materials for automobiles and shoes, and cable sheathing, SK Global Chemical said.

This product is more shock-resistant, transparent, machine-able, and hygienic than existing polyethylene product, it said.

SK Innovation and SK Global Chemical are contributing their technology and production facility to the joint venture SSNC, securing 540 billion won in cash.

“SK with an original technology and SABIC with raw material competitiveness and marketing capability are joining hands to charge into the global market,” SK Global Chemical chief executive Cha Hwa-youp said after he signed the final agreement with Abdulrahman Al-Fageeh, executive vice president of polymers at SABIC, in Seoul Friday.

“We will continue to upgrade our business portfolio with a series of high-value added chemical products to follow up with our Nexlene success.”

SABIC said through the partnership it will be able to expand its product line and strengthen its presence in Asia. It is SABIC’s second joint partnership in the region, following its deal with the state-run China Petrochemical Corp. in 2009.

The SK solution will enable the two companies to manufacture a wide range of materials and will benefit both converters and end customers through better performance, processing and product properties, SABIC said in a statement.

“Excellent impact strength, enhanced toughness, superior transparency, low heat seal temperatures, incremental output and improved organoleptic properties are just a few of the competitive advantages that this technology can deliver,” it said.

The joint venture was first proposed by SK Group chairman Chey Tae-won when he met Al-Mady, vice chairman of SABIC, in March 2011 during his Middle East visit to promote energy resources management.

SK Global Chemical built the nation’s first naphtha cracking facility in 1972, and has maintained its market leadership through continuous facility investment, R&D and technological improvement.

By Seo Jee-yeon
(jyseo@heraldcorp.com)