South Korea’s Ministry of Trade, Industry and Resources (MOTIR) has approved the country’s first petrochemical industry restructuring project and will provide up to two trillion South Korean won in funding for the project.
MOTIR approved a plan submitted by HD Hyundai Oilbank, HD Hyundai Chemical, and Lotte Chemical, marking the first approval under the government’s Petrochemical Industry Restructuring Roadmap released in August 2025.
Under the plan, Lotte Chemical’s Daesan operations will be spun off and merged with HD Hyundai Chemical to integrate the naphtha cracking center (NCC) and downstream facilities.
HD Hyundai Oilbank and Lotte Chemical will each inject 600 billion won into the joint venture, for a combined 1.2 trillion won. HD Hyundai Chemical’s equity stake will be adjusted to a 50:50 split from the current 60:40 ratio.
The restructuring is expected to take three years, during which Lotte Chemical will suspend operations at its Daesan No. 1 project, which is expected to ease oversupply at the complex.
The government will also provide tax breaks and steps to streamline regulatory approvals—including merger review and permitting/licensing procedures.
For R&D, MOTIR will fast-track support starting this year for two high-value projects requested by the approved companies, totaling 26 billion won.
The combined business is expected to move away from commodity-driven exports by expanding high-value materials, including high-elastic lightweight materials and organic solvents for electrolytes.
The business will also shift to lower-carbon feedstocks and processes by using bio-based naphtha and introducing ethane as a feedstock. Operational integration, backed by shareholder measures, is expected to strengthen the company’s financial position.
The ministry said it also plans to push forward with additional restructuring projects at other petrochemical complexes.
