SKC to build world's top biodegradable plastic plant in Vietnam

The plant, aimed to launch operations in Q3 2025, will produce 70,000 tons of polybutylene adipate terephthalate a year

SKC Chief Executive Park Woncheol speaks at the groundbreaking ceremony for a biodegradable plastic plant in Hai Phong, Vietnam on May 11 (Courtesy of SKC)

Sang Hoon Sung 2

2024-05-12 18:07:20 uphoon@hankyung.com

Chemical Industry

SKC Ltd., a chemicals arm of South Korea’s second-largest conglomerate SK Group, said on Sunday its biodegradable material unit has broken ground on a plant in Vietnam, which is expected to be the largest single factory for polybutylene adipate terephthalate (PBAT) in the world.

SK Leaveo, the biodegradable material unit, will inject $100 million into the new plant and aims to start production of 70,000 tons of PBAT in the third quarter of 2025. This will be the biggest annual production capacity of the eco-friendly plastic for a single plant in the world, SKC said.

The plant will have 22,389 square meters of floor area in the economic zone of Hai Phong, an industrial gateway and key port city in Northern Vietnam. SKC said it has secured another site to expand the production in the future.

PBAT is widely used for flexible and resilient bioplastic, a key material for food packaging films and shopping bags. SK Leaveo plans to develop high-strength PBAT by using reinforcement material nanocellulose to expand the bioplastic’s applications to textiles and nonwovens, SKC said.

The new plant will use only renewable energy for the electricity it needs under the Vietnamese government’s clean energy initiative RE 100.

SK Leaveo will also partner with Vietnam’s leading plastic maker An Phat Holdings, which plans to buy a stake in the Korean firm’s Vietnamese affiliate, sign a long-term contract to purchase the new plant’s PBAT and export the material.

Formerly named Ecovance, SK Leaveo was established in November 2021 by SKC, Korea’s leading food maker Daesang Corp. and trading company LX International Corp. The three shareholders. The three stakeholders initially owned 57.8%, 22.2% and 20% of the biodegradable material maker, respectively.

LX International expressed its intention to divest its holding late last year as the PBAT producer decided to build the plant in Vietnam, shifting its plan to construct the facilities in Korea, according to market insiders.

SKC has acquired LX International’s holding, raising its ownership in SK Leaveo to 77.8%, while Daesang maintains its 22.2% holding, according to SKC’s regulatory filing on May 7.

Write to Sang Hoon Sung at uphoon@hankyung.com

Jihyun Kim edited this article.