By Kang Doo-soon and Lee Ha-yeon
With the South Korean industry having finished last year at record earnings due to global petrochemical boom, the industry second GS Caltex Corp. vowed 2 trillion won ($1.8 billion) in capital expenditure this year to expand petrochemical capacity.
Unlisted GS Caltex said on Wednesday it would invest 2 trillion won to build its first mixed feed cracker to produce olefins at its second manufacturing site in Yeosu, South Jeolla Province, Korea.
Shares of GS Holdings, the holding company of GS Caltex, closed Wednesday 4.05 percent down at 63,900 won from the previous session.
Olefin, also called alkene, is a compound made up of hydrogen and carbon that contains one or more pairs of carbon atoms linked by a double bond like ethylene and polyethylene, which are a core material for petrochemicals.
The company will break ground this year for the factory with capacity to produce 700,000 tons of ethylene and 500,000 tons of polyethylene a year once it becomes operational in 2022.
The investment is a part of the company’s evening out its business portfolio to reduce its reliance on highly volatile oil refining. It expects at least 400 billion won addition to the bottom line from the increased capacity.
The company currently owns refining facilities with a capacity of 790,000 barrels per day, hydrodesulfurization facilities with a capacity of 274,000 barrels per day, an aromatics plant with an output of 2.8 million tons per year, and a high-quality polypropylene plant with an output of 180,000 tons per year.