Four petrochemical companies in South Korea's Yeosu industrial complex received approval on the 22nd for a major restructuring plan that will create a single integrated entity. Yeocheon NCC, Lotte Chemical, Hanwha Solutions, and DL Chemical submitted the final 'Yeosu Project 1 Restructuring Plan' to the Ministry of Trade, Industry and Energy, with three companies — Lotte Chemical, Hanwha Solutions, and DL Chemical — forming a new unified corporation under an equal equity structure. The restructuring follows the Daesan Project 1 approved in February, marking the second large-scale petrochemical industry consolidation in South Korea aimed at enhancing competitiveness through vertical integration and capacity optimization.
Ministry Approves Yeosu Petrochemical Restructuring Plan
The Ministry of Trade, Industry and Energy approved the final restructuring plan submitted by the four Yeosu petrochemical companies on the 22nd. The approval establishes a framework for Lotte Chemical, Hanwha Solutions, and DL Chemical to form a new integrated corporation, while Yeocheon NCC serves as the consolidation vehicle. The three companies will hold equal equity stakes of 3:3:3 in the new entity. Hanwha Solutions and DL Chemical, both major shareholders in Yeocheon NCC, will conduct capital increases of ₩272.5 billion each, totaling ₩545 billion, to repay existing debt.
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Yeosu petrochemical industrial complex restructuring plan [Source: Ministry of Trade, Industry and Energy]
Three Companies Form Integrated Entity with Equal Equity Split
Hanwha Solutions will contribute its PE (polyethylene) and petroleum resin operations to Yeocheon NCC as in-kind capital, while DL Chemical will transfer its PE and other downstream business units. Lotte Chemical will physically split its Yeosu plant's NCC (naphtha cracking facility) and PE/PP (polypropylene) basic materials operations to merge with Yeocheon NCC. The asset contributions replace cash investments, allowing each company to secure shares in the integrated entity while creating a vertically integrated structure connecting raw material production to finished products.
Companies Commit ₩800 Billion in Investments and Capacity Reduction
The three companies will execute ₩253.2 billion in implementation investments to strengthen competitiveness. Of this amount, ₩103.2 billion is allocated to supply chain infrastructure, including utility connections and new warehouse construction within plants. An additional ₩150 billion will fund transitions to high-value-added businesses, including medical-grade LDPE (low-density polyethylene) and adhesive POE (polyolefin elastomer). Total self-rescue measures reach ₩800 billion.
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Yeosu petrochemical complex integration and competitiveness investment plan [Source: Ministry of Trade, Industry and Energy data, Gemini AI image generation]
The integrated entity will reduce ethylene production capacity by 1.39 million tons annually through the complete shutdown of Yeocheon NCC Unit 2 (920,000 tons) and Unit 3 (470,000 tons). The companies will also reduce operations of low-margin commodity production facilities for over three years. Remaining capacity will concentrate on Yeocheon NCC Unit 1 (900,000 tons) and Lotte Yeosu Plant Unit 4 (1.23 million tons), with utilization rates increased to maximize production efficiency.
Moon Shin-hak, Vice Minister of the Ministry of Trade, Industry and Energy, stated that the approval of Yeosu Project 1 holds significant meaning as it marks the full-scale start of restructuring in Yeosu, South Korea's largest chemical industrial complex. He described the preemptive and voluntary structural reform as an uncharted path that will serve as an important milestone in industrial policy.
FAQ
What did the four Yeosu petrochemical companies announce on the 22nd?
Yeocheon NCC, Lotte Chemical, Hanwha Solutions, and DL Chemical received Ministry of Trade, Industry and Energy approval for a restructuring plan that creates a new integrated entity. Three companies will merge operations under an equal 3:3:3 equity structure, with ₩800 billion committed to investments and capacity reduction.
How much ethylene production capacity will the integrated entity reduce?
The integrated entity will reduce ethylene production capacity by 1.39 million tons annually through the complete shutdown of Yeocheon NCC Unit 2 (920,000 tons capacity) and Unit 3 (470,000 tons capacity). Low-margin commodity production facilities will also see reduced operations for over three years.
What asset contributions will each company make to the new entity?
Hanwha Solutions will contribute PE and petroleum resin operations as in-kind capital, DL Chemical will transfer PE and downstream business units, and Lotte Chemical will physically split its Yeosu plant's NCC and PE/PP basic materials operations to merge with Yeocheon NCC. Hanwha Solutions and DL Chemical will each conduct ₩272.5 billion capital increases.
