LG Chem, ADM Complete Agreement for ‘Eco-friendly Bio Plastic’ Joint Ventures in Illinois, USA
■ On 16th, entered joint venture agreement for bioplastic PLA with ADM (Archer Daniels Midland), a global leader in nutrition and sustainable products and solutions
LG Chem and ADM (Archer Daniels Midland) have completed agreement for ‘Eco-friendly Bio Plastic’ Joint Ventures.
LG Chem announced on the 16th at the LG Chem Magok R&D Campus in Gangseo-gu, Seoul that it held the ‘Celebrating the Launch of LA (lactic acid) and PLA (poly lactic acid) Ventures’ with ADM. ADM (Archer Daniels Midland), a global leader in nutrition and sustainable products and solutions, has a global agricultural supply chain and processing technology, and LG Chem has cooperated in developing plant-based bio materials. This agreement is the main contract following the conclusion of the Heads of Agreement (HOA) signed by the two companies in September of last year.
The two companies will establish two joint ventures to respond to the demand for plant-based products and bioplastics. The LA production corporation ‘GreenWise Lactic’ will be in charge of the raw materials to produce 150,000 tons of high-purity corn-based lactic acid annually.
The second joint venture, ‘LG Chem Illinois Biochem,’ will use GreenWise Lactic’s lactic acid to produce 75,000 tons of bioplastics annually. If LG Chem Illinois Biochem makes 500ml eco-friendly water bottles with bioplastics from the factory, it can produce about 2.5 billion bottles. The production facility will be built in Decatur, Illinois, U.S., with the aim of completing it in late 2025 or early 2026. Construction is scheduled to begin in 2023, when the final decision of the boards of both companies are completed.
LG Chem is the first Korean company to build a PLA plant with integrated production capacities ranging from raw materials to the final product. With the establishment of these JVs, LG Chem will not only procure production capacities for highly pure lactic acid needed for commercial-scale PLA production, but will also be able to apply bio-materials in the development of various high value-added bio-materials.
PLA is a representative biodegradable bioplastic made with lactic acid produced by fermenting corn, and is mainly used in food containers, straws, water bottles, tableware, and tea bags that are harmless to the human body. PLA is naturally decomposed within a few months by microorganisms when certain conditions are met. It also emits only a quarter of greenhouse gases during the production process compared to general plastics, and is thus drawing attention as a sustainable eco-friendly material. Global demand for bioplastics is projected to grow from USD 10.7 billion in 2021 to USD 29.7 billion by 2026, representing annual growth of 22.7%.
ADM CEO Juan R. Luciano stated, “Sustainability is one of the enduring global trends that is powering ADM’s strategy and growth.” and added, “We’re pleased to expand our collaboration with LG Chem, and we’re planning to take the next growth step, greatly expanding our ability to meet growing demand for plant-based solutions.”
LG Chem Chief Executive Officer Hak Cheol Shin commented, “The establishment of this joint venture is a sustainable growth strategy that can directly contribute in solving environmental issues such as climate change and waste plastics,” and added, “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.”