To Set up PLA and LA Plants in the U.S.
LG Chem has joined hands with Archer Daniels Midland (ADM), one of the world's four major grain processing companies, to establish a bioplastic joint venture.
LG Chem vice chairman Shin Hak-chul exchanged heads of agreement (HOAs) with ADM chairman Juan Luciano at ADM's main office in Chicago, Illinois, on Sept. 13 (local time) to establish a joint venture to produce lactic acid (LA) and poly lactic acid (PLA). An HOA is a document that contains agreements reached before signing the main contract. The two companies are scheduled to sign the main contract in the first quarter of next year.
The two companies will start plant construction in as early as 2023. They will build PLA and LA plants in the United States by 2025. The PLA plant will have a production capacity of 75,000 tons a year. The LA plant will churn out LA, the raw material for PLA. The investment amount has been kept under wraps according to an agreement between the two companies, but some analysts estimated it at hundreds of billions of won. The site for the plants will be selected after the main contract has been signed.
PLA is a representative biodegradable plastic made of LA, which is produced by fermenting and purifying glucose extracted from corn. It is made of 100 percent bio raw material and used mainly for food packaging containers and tableware.
LG Chem announced in July that it will invest 3 trillion won by 2025 to make eco-friendly bioplastics one of its three new growth drivers.
Market research companies forecast that the global bioplastic market will grow 23 percent annually from 12 trillion won in 2021 to 34 trillion won in 2026 due to stricter regulations on the use of disposable products.