South Korean oil refiner GS Caltex announced Thursday that it has secured a partnership with Posco International to expand their presence in the biofuel industry, accelerating efforts toward a green transformation.

The agreement was signed at the Posco Center in Gangnam, Seoul, Thursday, with top executives including GS Caltex CEO Hur Sae-hong and Posco International Vice Chairman and CEO Jeong Tak in attendance.

Through a joint venture, the two will build the new refinery facility in Kalimantan, Indonesia, with a combined investment of 260 billion won ($194 million). Starting with construction early next year, the facility is expected to operate in the second quarter of 2025.

The refinery is to boast annual production of 500,000 tons of palm oil as well as cooking oil, the company said.

They will also recover waste materials generated from the facility and later use them for biofuel production, allowing the company to build a whole value chain.

The new business enables the refiner to secure a stable supply chain, which are needed for the development of biofuel production technology.

Amid the global wave for renewable and green business, GS Caltex is leaning toward net zero carbon emissions by investing in biofuels, plastic recycling and hydrogen technology.

“The new partnership will allow us to secure competitiveness in the global bio market,” said Hur. “As GS Caltex has a soaring influence in the bio industry, we are expected to have a high synergy effect with Posco International.”