SK Global Chemical has launched a joint venture firm in Singapore with Saudi Basic Industries Corp. (SABIC) to target the global polyethylene market.
The two companies announced on July 5 that they have agreed to establish a 710 billion won (US631.9 million) joint venture to produce and market high-performance polyethylene products based on SK’s technology.
The 50:50 joint venture, SABIC SK Nexlene Co. (SSNC), will be located in Singapore and operate SK’s polyethylene plant in Ulsan, which was completed last year with an estimated annual capacity of 230,000 tons.
Under the agreement, SK Global Chemical and SK Innovation will provide the joint venture with the technology and production facilities for its flagship product Nexlene, which is worth 540 billion won (US$480 million), while SABIC will focus on marketing through its global networks. Nexlene is the high-performance polyethylene product that SK Innovation developed in 2010. The product is more shock-resistant, transparent, machine-able, and hygienic than existing polyethylene products, and used in a wide range of areas of the automotive, utilities, construction, and other industries. So far, U.S. chemical and gas companies such as Dow Chemical and Exxon Mobile have been dominating its production.
The two parties also plan to build another plant in Saudi Arabia in a few years, but they refrained from detailing the schedule.
“Source technology-holding SK Global Chemical met with SABIC, which can offer raw materials and marketing networks, enabling us to target the global chemical market,” said SK Global Chemical CEO Cha Hwa-yeop.
“SK with its original technology and SABIC with the raw material competitiveness and broad marketing networks have come to join hands, enhancing our capability to target the global chemical market,” SK Global Chemical CEO Cha Hwa-youp said after he signed the agreement with Abdulrahman Al-Fageeh, executive vice president of polymers at SABIC in Seoul on July 3.
“We will continue to upgrade our business portfolio with a series of high-value-added chemical products following Nexlene,” he added.
SABIC is one of the world's largest petrochemical groups based in Saudi Arabia. It is the second time the Saudi company has forged a joint partnership in Asia, following that with the China Petrochemical Corporation in 2009.
The joint venture was first proposed by SK Group Chairman Chey Tae-won when he met Al-Mady, vice chairman of SABIC, in March 2011 during his Middle East visit.