Sabic in $595m joint venture for plastics production

By Eliot Beer

- Last updated on GMT

Sabic: “These technologies will benefit both converters and end customers through better performance, processibility and final product properties."
Sabic: “These technologies will benefit both converters and end customers through better performance, processibility and final product properties."

Related tags: Joint venture, Petroleum

Saudi Basic Industries Corporation (Sabic) is to form a US$595m food packaging joint venture with Korean petrochemical firm SK Global Chemical, the firms have announced.

Subject to regulatory approval, the 50-50 joint venture will be based in Singapore, and will manufacture plastics using SK's proprietary metallocene polyethylene technology, which allows better-performing plastic products, according to the firm. The joint venture's first plant will be the newly-completed SK factory in South Korea, with an annual capacity of 230,000 tonnes.

The firms plan to open the next plant in Saudi Arabia, with more following at other locations around the world. This is Sabic's second Asian joint venture, following a partnership with Chinese state-owned petrochemical company Sinopec in 2012.

Advanced packaging technology

Its partnership with SK will give Sabic access to Nexlene, the Korean firm's metallocene liner low-density polyethylene (mLLDPE) technology. Packaging made with mLLDPE offers greater optical clarity, strength, and a number of other advantages, which allows for thinner, lighter packaging.

These technologies will benefit both converters and end customers through better performance, processibility and final product properties. Excellent impact strength, enhanced toughness, superior transparency, low heat seal temperature, incremental output and improved organoleptic properties are just a few of the competitive advantages that this technology can deliver​,” said Ernesto Occhiello, vice president for technology and innovation at Sabic.

SK chief executive Cha Hwa Youp said: “Nexlene will serve as a growth engine for both of our companies. The joint venture will continue to upgrade Nexlene technology and set up production bases at locations that exhibit competitiveness in the high-end polyethylene industry​.”

Saudi's petrochemical giant

Sabic is one of Saudi Arabia's largest and most profitable companies, benefitting from the country's abundant oil supply and revenues to develop petrochemical-based products, including plastics and a wide range of chemicals. The firm is the third-largest polyethylene producer in the world.

Thanks largely to Sabic, Saudi Arabia produces 90% of its flexible packaging domestically, according to PCI Films. Sabic is also a major exporter of plastics, and once the Sabic-SK joint venture opens its Saudi plant, it will be able to boost its flexible packaging exports even further.

We are happy to establish this partnership with SK Global Chemical and bring the best in advanced material science closer to our expanding customer base in Asia. The joint venture is a clear demonstration of our commitment to continually deliver efficient, technology-based solutions to our customers and further improve the way we face major growth markets​,” said Mohamed Al-Mady, vice-chairman and CEO of Sabic.

Related topics: Middle East

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