LG Chem to set up J/V ABS plant in China

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By Nam Kwang-sik
SEOUL, July 21 (Yonhap) -- LG Chem Ltd., South Korea's leading producer of
chemicals, said Tuesday it has signed a deal with the state-run China National
Offshore Oil Corp. (CNOOC) on the establishment of a joint venture to build an
acrylonitrile butadiene styrene (ABS) plant in China.
The joint venture, to be named CNOOC & LG Petrochemicals Co., will build the
plant with an annual capacity of 300,000 tons of ABS, a raw material used
primarily in auto parts and electronics.
Construction of the plant, to be built in Huizhou, China's Guangdong Province, is
scheduled for completion in 2013, the company said.
The plant will cost US$370 million to complete, with LG Chem investing $61
million and the remainder to be financed through the joint venture, the South
Korean company said.
LG Chem and CNOOC will each have a 50 percent stake in the joint venture.
The joint venture plan to complete the first phase of the plant construction in
the second half of 2011, when the plant will start producing 150,000 tons of ABS
annually.
The first phase completion will be followed by the expansion of the plant to
increase its annual production capacity to 300,000 tons by 2013, LG Chem said.
The joint venture aims to post $300 million in sales in 2012 and $600 million in
2014 in China, the company said.
LG Chem also said that it will increase ABS annual production capacity of Ningbo
LG Yongxing Chemical Co., a joint venture between LG Chem and China's Yongxing
Chemical Co., to 700,000 tons by 2012 from the current 580,000 tons. The joint
venture was set up in Ningbo, China's Zhejiang Province in 1996.
LG Chem will have ABS annual production capacity of a combined 1.6 million tons,
if the construction and expansion of the Chinese ABS plants is completed, the
company said.
LG Chem produces annually 600,000 tons of ABS at its plant in Yeosu, 445km south
of Seoul.
Chi Mei Corp., a Taiwanese petrochemical producer, secures the top spot in the
global production of ABS with 1.6 million tons, trailed by LG Chem with 1.18
million tons.
Shares of LG Chem fell 2.46 percent to 138,500 won as of 1:43 p.m on the Seoul
bourse as investors took profits from early morning gains.
ksnam@yna.co.kr
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