Lotte Group Chairman Shin Dong-bin.

Lotte Group Chairman Shin Dong-bin’s announcement of a plan to nurture the petrochemical business as a core part of its business portfolio through M&As has shifted the limelight to corporate growth.

Lotte Chemical ranks first in terms of producing ethylene among Korean chemical companies. Lotte Chemical is a huge chemical company, which stands shoulder to shoulder with LG Chem.

Many people know that Lotte is a logistics group, but the chemical business unit, including construction businenss, accounted for 33.3 percent of the group’s total sales in 2018, emerging as one of its core businesses.

In an interview with the Japanese newspaper Nikkei on March 5, Chairman Shin revealed a plan to aggressively expand business in the petrochemical sector through M&As.

“An ethylene plant was built in the state of Louisiana, the United States, last year, and an additional $1 billion investment will be made this year to expand production capacity to 1.4 million tons, a 40 percent jump from 1 million tons,” he was quoted as saying. Lotte Group is considering acquiring a Japanese chemical company, he added.

Chairman Shin, which once served as vice president of Honam Petrochemical, predecessor of Lotte Chemical, has expanded the physique of Lotte Chemical through M&As.

Shin, returning back to management in October 2018, revealed his determination to nurture the petrochemical business by making Lotte Chemical one of the subsidiaries of Lotte Holdings, the holding company of Lotte Group. Chairman Shin’s intent of nurturing the chemical business has been reflected in the group’s investment plan.

Lotte Group plans to channel 50 trillion won by 2023, and 20 trillion won or 40 percent of the total will be poured in Korean and overseas chemical industries.

Lotte Group’s chemical business unit consists of Lotte Chemical, Lotte Fine Chemical, Lotte BP Chemical.

An aerial view of Lotte Chemical’s ethane cracker in Lake Charles, Lousiana, the United States. (Photos: Lotte Chemical)

Lotte Chemical specializes in basic materials ranging from basic household items to medical, automobile, and cutting-edge aerospace materials, as well as water treatment.

Lotte Chemical has a two-track strategy of building up its physique and simultaneously diversifying business portfolio.

According to Hana Financial Investment, Lotte Chemical ranks 12th and 13th with a capacity of producing 4.5 million tons of ethylene globally, but the upcoming joint-venture with HOB and expansion in the plants in the United States and Malaysia are forecast to raise ethylene production capacity to somewhere between 6 million tons and 7 million tons and rising to sixth or 7th ranked company in the world between 2022 and 2024.

Lotte dedicated an ethylene production facility based on shale gas in Lake Charles, Louisiana, last May. The first shale-gas-based ethylene production plant in North America cost Lotte $3.1 billion.

The bill is the second biggest investment by Korea in the United States. Lotte Chemical Titan plans to build a massive petrochemical complex, including a naphtha cracker and downstream products plants near its Java plant.

Lotte Chemical has reached a new growth strategy stage through downstream expansion and expanded specialty product and business diversification, an analyst with Hana Financial Investment said.

Lotte Chemical failed in a bid to acquire Hitachi Chemical specializing in anode, a Key EV battery material, and semiconductor material technology last year.