South Korean chemical giant SK chemicals has concluded an asset purchase agreement worth $ 100 million with Shantou, China headquartered Shuye Environmental Technologies, a company with PET depolymerisation technology facilities and expertise.
The agreement is evidence of the ongoing relationship between the two companies: in 2021, SK chemicals invested an amount of 23 billion won for a 10% stake in Shuye, and secured an off-take agreement for 20,000 tons of chemically recycled raw material production capacity. At the time, the decision represented a proactive response to the rapidly increasing demand for eco-friendly packaging market, the company explained. In 2022, the companies signed a MOU for the formation of a JV that would see the construction of a 100,000-ton chemical recycling plant for BHET (r-BHET) and a 200,000-ton (CR) copolyester and PET depolymerisation plant at Shantoe, next to Shuye’s first depolymerisation plant.
BHET, or bis(2-Hydroxyethyl) terephthalate, is an intermediate in the production of polyethylene terephthalate.
Under the present agreement, these assets have now been transferred to SK chemicals. As a result, SK chemicals owns the world's first commercially available polyester chemically recycled raw materials and production facility, which can be sold separately. The acquisition has enabled SK chemical to pull well ahead of the other domestic companies in this space, making it a force to be reckoned with.
The company said that, next to expanding its copolyester business, it would therefore also be looking at the newly acquired, high-growth potentials as development drivers. It added that once it had validated its production technology, it planned to build infrastructure in China and other countries - in Europe, North America, and beyond - to meet the rapidly increasing demand for recycled plastic waste around the world.
According to a report from Wood Mackenzie, the global recycled PET market in 2022 amounted to approximately 9.7 million tons, with the majority of the market currently consisting of mechanically recycled PET (MR-PET). The development of the chemically recycled PET market - hampered in the past by raw material shortages - is expected to show rapid growth through 2030 and to reach as much as $7.6 billion in response to factors such as curbs on carbon emissions, regulations on plastic use and recycling, and changing consumer preferences.
The present asset acquisition will allow SK chemicals to benefit from this projected growth. By locating its production in China, a country with and abundant supply of raw materials, SK chemical also expects to gain a high level of price competitiveness, the company said.
It plans to supply chemically recycled PET to the domestic and foreign food packaging and beverage bottle markets as well as to to enter high-value-added markets, such as industrial specialty fibres, for which mechanically recycled PET is less suitable. SK chemicals said the goal is to “take the lead in the global $7.6 billion market”.
The company also plans to sell the chemically recycled BHET as a standalone product to polyester manufacturers who want to produce recycled products.
Looking ahead, the company said it would also be working on the development of depolymerisation technology to produce r-TPA, which could be a game-changer in the recycled plastic industry.