LG Chem Ltd., South Korea’s largest chemicals maker, said on Tuesday it has signed an agreement with Archer Daniels Midland Co. (ADM), a global grain processing company, to build two bioplastics factories in the US.
LG Chem, the chemical unit of LG Group, and ADM said in a joint statement that they will begin building the two joint ventures in 2023 with an aim to begin production in late 2025 or early 2026. The new facilities will be built in Decatur, Illinois.
The size of the final investments will be determined next year, they said.
The first joint venture, GreenWise Lactic, will produce up to 150,000 tons of high-purity corn-based lactic acid per year. The plant will be majority-owned by ADM.
The second plant, LG Chem Illinois Biochem, which will be majority-owned by LG, will use lactic acid produced by GreenWise to manufacture 75,000 tons a year of polylactic acid (PLA), a raw material used in making fully biodegradable plastics.
The facility will be the first PLA plant to be built in the US by a Korean chemical company.
LG Chem’s newly developed LUPOY EU5201 plastic raw material for solar panel frames PLA is a biodegradable material made of lactic acid that is produced by fermenting and refining glucose extracted from corn. PLA is used mainly for food packaging containers and tableware, and decomposes naturally in several months by microorganisms under certain conditions.
“Eco-friendly materials will be our new growth engine. We will strive to become the market leader in this segment,” said LG Chem Chief Executive Officer Shin Hak-cheol.
LG Chem said the two companies will expand their partnership into developing other biomaterials and entering the fast-growing bioplastics market.
Global demand for bioplastics is projected to grow from $10.7 billion in 2021 to $29.7 billion by 2026, representing annual growth of 22.7%, according to industry data.
CEO Shin said at the time the company will aggressively seek mergers and acquisitions and launch joint ventures to achieve sustainable growth in the three key growth areas.
Of the 10 trillion won investment, LG plans to spend up to 3 trillion won in the eco-friendly bio sector, including bioplastics.
In 2019, LG Chem signed a joint development agreement (JDA) with ADM to secure the technology to mass-produce eco-friendly bio-acrylic acid.
In October 2020, LG said it had developed a new biodegradable material using corn-based glucose and crude glycerol that can achieve mechanical properties equivalent to synthetic resins for the first time in the world.
