SK trading international acquires biodiesel material maker Daekyung O&T

[Courtesy of SK trading international]

SK trading international Co., a global trading platform for South Korea’s SK innovation Co., has acquired Daekyung Oil & Transportation Co. (Daekyung O&T), a supplier of raw materials produced from waste and residue, with the Korea Development Bank (KDB) in an effort to secure raw materials for bio-jet fuel.

SK trading international, which specializes in the trading of crude oil products, announced Tuesday that it signed a stock purchase agreement to buy Daekyung O&T on Monday. For the acquisition, SK trading international joined a consortium with KDB’s private equity unit and Eugene Private Equity (PE).

The three entities will establish a special purpose company (SPC) to acquire a full stake in Daekyung O&T. SK trading international will hold a 40 percent stake in the SPC, and KDB and Eugene PE 60 percent.

SK trading international did not disclose details of the agreement other than the stake ownership, but the deal is known to be worth about 400 billion ($294.99 million).

Daekyung O&T, founded in 1995, specializes in the production of waste-based raw materials at 13 work sites across the country. It is Korea’s largest supplier of animal fats from slaughter byproducts and waste cooking oil from restaurants and food factories to be used for raw materials for biodiesel and bio-jet fuel.

Animal fats and waste cooking oil have emerged as core raw materials for bio-jet fuel with the expansion in the sustainable aviation fuel (SAF) market.

Animal fats and waste cooking oil are not regulated globally as they are recycled from waste resources. They also have a greater carbon reduction effect than plant-based raw materials such as soybean oil.

“The latest investment will help us secure raw materials for bio-jet fuel,” SK trading international said.

Unlike land transportation systems which replace fossil fuels with batteries and fuel cells, aviation vehicles will have to continue to use liquid fuels given the limitations in battery density and stability.

As a result, countries around the world are looking for alternatives such as biofuels and synthetic crude oil-based fuels to reduce carbon emissions from the entire aviation fuel consumption process.

In March, SK trading international invested in Chinese waste cooking oil company Sichuan Jinshang Environmental Protection Technology Co.

Founded in 2017, Jinshang is the largest supplier of waste cooking oil in Southwest China, including Sichuan, Yunnan, and Guizhou provinces, and has been expanding its production volume with an early focus on the bio-jet fuel market.

With the investment in Daekyung O&T following that in Jinshang, SK trading international has laid the foundation for securing bio-jet fuel raw materials in both Korea and China.

“It is essential that we prepare for the SAF market in line with SK innovation’s carbon to green strategy to sustain the aviation fuel market,” said Seo Seok-won, chief executive officer of SK trading international.