South Korea Approves Petrochemical Restructuring Plan for Yeosu Complex

SEOUL, July 22 (Yonhap) -- South Korea has approved a restructuring plan submitted by petrochemical companies at the Yeosu industrial complex amid a prolonged downturn in the petrochemical industry, the industry ministry said Wednesday.

The plan was submitted after the government announced last August measures to support petrochemical companies' "voluntary" self-restructuring efforts to address an industrywide crisis caused by a global oversupply.

It marks the second restructuring project approved under the government's initiative to reform the petrochemical industry, following approval of a plan for the Daesan petrochemical industrial complex in February.

Under the plan, Lotte Chemical Corp. will spin off its naphtha cracking center (NCC) operations at the Yeosu petrochemical industrial complex, about 320 kilometers south of Seoul, and merge them with Yeochun NCC Co., the Ministry of Trade, Industry and Resources said in a press release.

The merged entity will integrate core businesses of other companies at the complex -- DL Chemical and Hanwha Solutions Corp. -- including DL Chemical's polyethylene (PE) operations and Hanwha Solutions' PE and petroleum resin businesses, to streamline NCC facilities and production lines for commodity petrochemical products, the ministry said.

The company also plans to shift its business portfolio toward higher-value products, including chemical materials for the medical and automotive industries, as part of its efforts to strengthen its long-term competitiveness.

DL Chemical and Hanwha Solutions plan to inject a combined 800 billion won (US$576 million) to repay debt and finance business restructuring, the ministry said.

Following the approval, the companies will receive more than 700 billion won worth of government support, including financial assistance, tax incentives and regulatory relief, it said.

In February, the government approved a business restructuring plan by Lotte Chemical and HD Hyundai Chemical at the Daesan complex aimed at voluntarily reducing their combined NCC capacity by 1.1 million tons.

The government also plans to begin discussions on restructuring the Ulsan petrochemical industrial complex at the earliest opportunity.