SKC president Lee Wan-jae (third from left) shakes hands with Mutlaq Rashid Al-Azmi (fourth from left), president of PIC, after signing a contract on Aug. 7, 2019. [Photo provided by SKC Co.]

South Korea’s SKC Co. will establish a propylene chemicals joint venture with Kuwait’s state-owned Petrochemical Industries Company (PIC) to set up a chemical joint venture worth $1.2 billion before March next year.

SKC, chemical unit under Korea’s third largest conglomerate, disclosed Wednesday that its board approved a plan to spin off propylene oxide (PO) and propylene glycol (PG) operations and establish a JV with PIC. It will own a 51 percent stake and sell the rest to its Kuwaiti partner.

Their partnership also allows the JV to command a 45 percent stake in SKC Evonik Peroxide Korea, a hydrogen peroxide making joint venture between SKC and German chemical company Evonik.

SKC earns a total 556 billion won ($559.8 million) from the stake sales.

As of 12:40 p.m. on Thursday, SKC shares gained 1.41 percent to 43,100 won in Seoul.

“This joint venture is based on the long-term trust developed through multiple strategic cooperative projects between KPC, PIC’s parent company, and SK Group. SKC and PIC aim to explore opportunities to further develop their PO business globally through this joint venture,” the company stated in a press release.

SKC’s mainstay products are PO and PG. PO is a base material for PPG (polyol) used in polyurethane foams and textiles and PG, materials used in making cosmetics and medicine.

SKC is No. 1 in the Korean PO and PG market, dominating over 70 percent in the entire market, and ships the products to over 60 countries across the worlds. It pulled in the new investment to reach the goal of achieving annual PO capacity of 1 million tons by 2025, the company said.

PIC is a wholly-owned subsidiary of state-run Kuwait Petroleum Corp. that had been in the chemical business for a half a century. It invests in various areas including petrochemicals. The Kuwait company runs a polyolefins and ethylene glycol producing joint venture with Dow Chemical as well as owns stakes in Kuwait Paraxylene Production Company and The Kuwait Styrene Company.

In 2016, PIC acquired 25 percent stake in SK Advanced, SKC’s propylene producing affiliate.

By Noh Hyun and Cho Jeehyun

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