A US$10 Billion Mega Project
Korean institutional investors including KB Financial Group will invest US$400 million in a petrochemical complex in Ohio, the United States, promoted by Daelim Industrial. It is a mega project that will cost a total of US$10 billion.
Daelim Industrial is promoting an ethane cracking center (ECC) and a polyethylene production plant in Ohio along with Thai petrochemical company PTTGC. The ECC can produce 1.5 million tons of ethylene a year.
Of the US$2 billion to be invested by the Daelim Industrial consortium, domestic institutional investors will shell out US$400 million. KB Financial Group will provide US$250 million, and the remaining US$150 million will come from the Export-Import Bank of Korea and Korea Overseas Infrastructure & Urban Development Corp. (KIND).
However, as other institutions expressed their interest in the project, the list of final investors and the size of their investment have yet to be confirmed. The total project cost will reach US$10 billion including US$2 billion from PTTGC and US$6 billion to be borrowed from banks.
It has been a big challenge for Korean petrochemical companies to penetrate the U.S. petrochemical market due to high transportation costs. The project is expected to help reduce logistics costs as it is located in the eastern part of the U.S., which accounts for 70 percent of the nation’s polyethylene demand. Moreover, Daelim Industrial is expected to be able to procure raw materials (ethane) cheaply as Ohio is a representative shale gas production region in the United States.