LG Chem and ADM to set up bioplastic production joint ventures in U.S.

[Photo provided by LG Chem Ltd.]

LG Chem, South Korea’s global chemical firm, and ADM, an American leading firm in nutrition and bio-solutions, will together set up lactic acid and polylactic acid production joint ventures in the United States to produce compostable bioplastics whose demand is burgeoning in an increasingly environment-conscious world.

LG Chem announced Tuesday that it signed a final deal with ADM to launch two joint ventures – one for lactic acid (LA) production and the other for polylactic acid (PLA) production – in the U.S. to meet the global demand for plant-based solutions and bioplastics. They aim to complete the construction of the two production facilities in Decatur, Illinois, U.S. by 2025 with final investment decision to be made in 2023 after regulatory approvals for the JVs.

According to the agreement, their first JV GreenWise Lactic will produce up to 150,000 tons of high-purity corn-based lactic acid annually, while the second one, LG Chem Illinois Biochem, will use the lactic acid from GreenWise Lactic to churn out 75,000 tons of polylactic acid, a plant-based, biodegradable plastic that can be used in a wide array of products, from food packaging to clothing.

The latest agreement was a follow-up to their earlier deal sealed in September last year. ADM is one of the four major grain producers in the U.S. with massive global supply networks and advanced processing technologies. LG Chem has since jointly worked with the Chicago-based firm for plant-based bioplastics.

With the JVs, LG Chem would be the only Korean firm with U.S. production facilities for end-to-end processes from lactic acid to polylactic acid. The joint effort is expected to help LG Chem step ahead in carbon neutrality with a strong presence in the U.S. market.

“Based on eco-friendly materials, which is an axis for new growth engines, we will respond to the rapidly changing market and customers, while becoming a market leader,” LG Chem CEO and Vice Chairman Shin Hak-Cheol said in the press release.

Polylactic acid is in high demand worldwide thanks to its eco-friendly, biodegradable feature. Its market has expanded, but its production highly depends on lactic acid supplies, the key bioplastic raw material that is also used in food, feed and cosmetics but hard to mass produce.

Global demand for lactic acid was estimated at $2.9 billion in 2021, with an expected annual growth rate of 8 percent, according to the companies’ press release. Global demand for bioplastics and biopolymers is projected to grow from $10.7 billion in 2021 to $29.7 billion by 2026 at an annual average growth rate of 22.7 percent.

“With these two joint ventures, we’re planning to take the next growth step, greatly expanding our ability to meet growing demand for plant-based solutions,” ADM CEO Juan R. Luciano was quoted to say in the press release.

LG Chem shares rose 0.45 percent to 665,000 won in the early session on Wednesday.

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