Daesan petrochemical complex located in Seosan, South Chungcheong Province / Korea Times file
The government announced Wednesday a 2.1 trillion-won (US$1.45 billion) financial package to support the restructuring project of Lotte Chemical Corp. and HD Hyundai Chemical at the Daesan industrial complex, the first authorized project of a broader self-rescue plan of the ailing petrochemical sector.
The two companies finalized their restructuring plan last year, under which Lotte Chemical will spin off its naphtha cracking center (NCC) at the Daesan petrochemical complex in Seosan, about 100 kilometers south of Seoul, to create a new entity with HD Hyundai Chemical.
Under the plan, the first restructuring program in the petrochemical sector approved by the government, the companies aim to voluntarily reduce their NCC capacity by 1.1 million tons amid a supply glut, and work toward a transition to high-value and eco-friendly products.
Fourteen other major petrochemical firms have also submitted their business restructuring plans as the government vowed last year to provide support for companies putting in "voluntary" self-rescue efforts.
The 2.1 trillion-won support package for Lotte Chemical and HD Hyundai Chemical, announced at a meeting of economy and industry-related ministers, includes some 2 trillion won of support to help the companies lessen their financial burden from shutting down their facilities.
The government said it will also provide tax incentives, expedite the review process for the integration of the companies' NCC operations, and support their research and development (R&D) projects for transitioning into high-value and eco-friendly products.
In particular, the government will focus on supporting R&D projects aimed at developing high-value petrochemical products used by advanced industries, such as the semiconductor, display, aerospace and secondary battery industries, officials said.
The package also includes measures to provide electricity to the companies at a cheaper rate by designating the Daesan complex as a special zone for direct transaction of locally produced electricity, while applying zero tariffs on raw materials imported by the companies, including naphtha and crude oil.
To further boost the petrochemical sector's long-term competitiveness, the government said it will also come up with a comprehensive support plan within the first half of the year for the chemical ecosystem, which will likely include measures to foster artificial intelligence (AI) transformation of the industry and expand exports.
Source: Korea Times News
