Posco Chemical and OCI Company said Sunday that they will establish a hydrogen peroxide joint venture to tap the semiconductor processing materials business.

According to the announcement, the JV will take shape in the second quarter of 2020, with a 51 percent stake to be held by Posco Chemical and 49 percent by OCI. The groundbreaking will take place this year, and commercial manufacturing is expected to begin in 2022.

Hydrogen peroxide is an environmentally friendly oxidant that is widely used in detergents and sanitizers. It has been used to stop the spread of coronaviruses associated with Middle East respiratory syndrome, severe acute respiratory syndrome and more recently COVID-19.

High-purity hydrogen peroxide is essential for the etching and cleansing of semiconductor chips and display products. In Korea, OCI and Hansol Chemical are the two companies that can provide such top-grade hydrogen peroxide.

Posco Chemical and OCI, formerly partners in coal chemistry, have agreed to set up a joint venture that will produce 50,000 tons of hydrogen peroxide every year in a 42,000-square-meter space in OCI’s plant in Gwangyang, South Jeolla Province.

“Seeing the opportunity in major semiconductor businesses’ large-scale expansion of manufacturing facilities, we have decided to establish a joint venture to provide a stable supply of this essential material,” said the two companies.

Samsung Electronics and SK hynix, the world’s two biggest semiconductor companies, have said they will invest 133 trillion won and 120 trillion won, respectively, to grow their semiconductor business operations.

For the new JV, Posco Chemical will provide the coke oven gas, a byproduct of steel processing, from which hydrogen will be drawn to make hydrogen peroxide. It will also be tasked with business management.

OCI will build the plant and take charge of product sales.

The companies see this deal as a win-win, as Posco Chemical will make valuable use of the coke oven gas in synthetic chemistry and OCI, a company that has been devoted to hydrogen peroxide production since 1979, will get a reliable source of its core ingredient.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)