LG Chem, ADM form JV’s for US-based Lactic Acid, Polylactic Acid

August 17, 2022 |

From Chicago and Seoul comes news that LG Chem and ADM have launchedtwo joint ventures for U.S. production of lactic acid and polylactic acid.  The joint ventures, which are subject to required regulatory approvals, hope to make final investment decisions around the projects in 2023. Pending final investment decisions and approvals, the joint ventures have chosen Decatur, Illinois, as the location of their intended production facilities. Construction is targeted to begin in 2023, and production in late 2025 or early 2026, with the two joint ventures supporting more than 125 jobs in the Decatur region.

Fast-rising demand

Global demand for lactic acid – which is used broadly in food, feed and cosmetics in addition to industrials like bioplastics – was approximately $2.9B in 2021, with an expected annual growth rate of 8%. Global demand for bioplastics and biopolymers is projected to grow from $10.7B in 2021 to $29.7B by 2026, an annual growth rate of 22.7%.

Both ventures are participating in the State of Illinois’ Economic Development for a Growing Economy (EDGE) program, which provides incentives to job creators who plan to make investments in Illinois.

The lactic acid venture

The first joint venture, GreenWise Lactic, would produce up to 150,000 tons of high-purity corn-based lactic acid annually. ADM would be the majority owner of GreenWise, and would contribute fermentation capacity from its Decatur bioproducts facility to the venture. 

The polylactic acid venture

The second joint venture, LG Chem Illinois Biochem, would be majority-owned by LG Chem. It would build upon LG Chem’s expertise in bioplastics to build a facility that will use product from GreenWise Lactic to produce approximately 75,000 tons of polylactic acid (PLA) per year.

The ADM backstory

More on ADM’s recent fortunes and forwtard plans in our Multi-Slide Guide to Archer Daniels Midland, here: 

In June we reported that ADM and Marathon Petroleum Corp., along with local, state and federal policymakers, celebrated the groundbreaking for North Dakota’s first dedicated soybean processing facility which will be supplied exclusively to Marathon as feedstock for approximately 75 million gallons of annual renewable diesel and is expected to be online by the 2023 harvest. By harvest 2023, the plant – owned by the previously announced ADM-MPC joint venture Green Bison Soy Processing – is expected to be producing approximately 600 million pounds of refined vegetable oil annually, which will be supplied exclusively to MPC as a feedstock for renewable diesel. When complete, the approximately $350 million complex will feature state-of-the-art automation technology and is expected to have the capacity to process 150,000 bushels of soybeans per day. Vegetable oil from the plant will be supplied exclusively to MPC to serve as feedstock for the production of a targeted 75 million gallons of renewable diesel annually.

The LG backstory

In June, we reported that LG Chem said it will construct a plant in Daesan, Korea, with the capacity to produce 50,000 tons of hydrogen annually by Q2 2024. This plant will be the first LG Chem site to produce pure hydrogen, apart from those earned as off-gases. The new plant employs technology which converts methane to hydrogen by creating a chemical reaction under high-temperature steam. Hydrogen will be made from methane off-gases generated by the naphtha cracking center in the process of producing feedstocks. These hydrogen will then be depolymerized under high-temperature to be used as fuel again. Construction of LG Chem’s hydrogen plant is expected to commence in the first half of 2023 and scheduled for completion by the second quarter of 2024. Once fully operational, LG Chem expects the plant to reduce carbon emissions by 140,000 tons annually – equivalent to 1 million newly-planted trees – by replacing methane used in the NCC process with high-purity hydrogen, which does not create carbon dioxide (CO2) during combustion. The petrochemical industry produces base chemicals such as ethylene, propylene and butadiene which are made by breaking down naphtha at high temperatures. Methane is commonly used as a heat source for the NCC process which generates a large amount of carbon emissions.

Also in June we reported that n South Korea, LG Chem signed a Letter of Intent with GS EPS, South Korea’s leading green energy supplier, to collaborate on a biomass-based ecofriendly energy project – constructing a joint biomass power plant to produce industrial steam and electricity with waste woods by 2025. Under the agreement, both partners will review their business strategies toward constructing a joint biomass power plant at Yeosu Complex on the southern coast of Korea to produce industrial steam and electricity with waste woods by 2025. The agreement also includes cooperating on the establishment of a Power Purchase Agreement (PPA) for renewable energy in collaboration with Korea Power Exchange, the agency under the Ministry of Trade, Industry and Energy responsible for the nation’s electric power system. In addition, the companies agreed to work closely on seeking out various business opportunities in the renewable energy sector to strengthen their competitiveness in the global market. Should the joint venture be established, LG Chem will have the capability to produce steam from biomass to run its petrochemical operations within the Yeosu Complex. The company expects to see significant carbon emission reduction of more than 400,000 metric tons per year, which is equivalent to planting 2.8 million new pine trees.

In November we reported that In South Korea, LG Chem and GS Caltex have signed a joint development deal for a fermentation-based production process for hydroxypropionic acid (3HP). The goal is to accelerate 3HP development by combining LG Chem’s fermentation know-how with GS Caltex’s process facility technologies. The 3HP will be produced using glucose or glycerol. The two companies hope to launch products based on 3HP into the biodegradable materials and bioplastics markets in 2023.

The (poly)lactic acid backstory

In May we reported that CJ BIO and NatureWorks—leading producers of polyhydroxyalkanoate and polylactic acid, respectively—say the LOI is the first step toward a Master Collaboration Agreement. The companies will work together to develop sustainable materials solutions based on CJ BIO’s PHACT® Marine Biodegradable Polymers and NatureWorks’ Ingeo biomaterials technology. 

The goal of the agreement is to develop high-performance biopolymers that will replace fossil fuel-based plastics in applications ranging from compostable food packaging and food service ware, to personal care, and beyond. 

In March we reported that  ABB is to automate NatureWorks’ (world’s leading manufacturer of polylactic acid) new bioplastics plant in Thailand which will convert sugar cane to sustainable plastics. The plant – set to produce 75,000 tons of biopolymer per year – will ferment and distill plant-based sugars, converting the sugars first to lactic acid, then lactide and then polymerize them into Ingeo PLA. Ingeo PLA is an eco-friendly, biobased material used in a wide-range of plastic and fiber products from compostable food packaging – coffee capsules, tea bags, food containers – to 3D printing filament, diapers, and even refrigerator liners. Compared to traditional fossil-based polymers, manufacturing Ingeo produces approximately 80 percent less greenhouse gases and uses 52 percent less non-renewable energy.

In December, we reported that, Cologne-based bioeconomy company BluCon Biotech recently received a commitment of €931.111 in funding from the German Ministry of Economics and Energy (BMWi) for the scaling of its proprietary fermentation technology made from agricultural residue, such as straw, to produce part of the bio-plastic polylactic acid (PLA). The globally unique and highly innovative technology developed by BluCon Biotech provides a decisive advantage over currently available fermentation processes for L-lactic acid which use sugar beet, sugar cane or corn, by not requiring any essential foods as raw materials.

In June 2020, we reported that In India, Praj Industries Ltd. and Lygos, Inc. have signed a Memorandum of Understanding (MOU) to co-develop Lygos’s proprietary yeast for the production of lactic acid. As part of this MOU, Lygos will provide its proprietary yeast platform to Praj for jointly developing into various solutions for commercial applications. Praj has already developed and offers bacterial fermentation technology to produce lactic acid and downstream products from sugary feedstock. Lactic acid is also used in food and beverages, in cleaning agents as well as in the electronic industry. The global lactic acid market size is estimated at around $1 billion (2019). Lygos will provide its innovative and high-performance technology, LP1 Ultra Yeast Platform and Carbon Sequestration Superhighway, which is well suited to produce acid compounds. Praj will assemble other segments of technology backed up by its expertise in process development, optimization, design scale-up and will further integrate lactic acid as a source material in to making PLA Bioplastic,

Reaction from the stakeholders

ADM CEO Juan R. Luciano said, “Sustainability is one of the enduring global trends that is powering ADM’s strategy and growth. Our BioSolutions platform is helping us meet that demand by redeploying Carbohydrate Solutions production capacity to fast-growing, higher-margin segments – including pharmaceuticals and personal care, textiles and paper products. BioSolutions is already growing rapidly, with $136 million in year-over-year revenue growth in the first half of 2022, and with these two new joint ventures, we’re planning to take the next growth step, greatly expanding our ability to meet growing demand for plant-based solutions. We’re pleased to expand our collaboration with LG Chem, and we’re excited at the opportunity to bring this new intended production and all of its economic benefits to Decatur, our North American headquarters.”

LG Chem Chief Executive Officer Hak Cheol Shin added, “The establishment of this joint venture is a sustainable growth strategy that can directly contribute in solving environmental issues such as climate change and waste plastics,” and added, “LG Chem is the first Korean company to build a PLA plant with integrated production capacities ranging from raw materials to the final product. With the establishment of this JV, LG Chem will not only procure production capacities for highly pure lactic acid needed for commercial-scale PLA production, but will also be able to apply biomaterials in the development of various high-value-added products. Based on eco-friendly materials, which is an axis for new growth engines, we will respond to the rapidly changing market and customers, while becoming a market leader.”

“I am thrilled that LG Chem and ADM have chosen Decatur as home for their joint ventures,” said Illinois Governor JB Pritzker. “Our state’s talented workforce coupled with our mission of sustainability make Illinois the best place for these lactic and polylactic acid production facilities. To LG Chem and ADM: thank you for your commitment to our state. It is innovative, plant-based solutions like these that will help us tackle the climate crisis head on.”

“When I led a congressional delegation to South Korea earlier this year, I met with the CEO of LG Chem, Hak Cheol Shin, and shared how Illinois is uniquely positioned for greater investment as a growing hub for innovation, manufacturing and technology. I’m proud my advocacy helped bring this important investment to Illinois,” said U.S. Senator Tammy Duckworth. “LG Chem recognizes what I’ve long known: Illinois is a great place to do business. Building on ADM’s long history in Illinois, I’m glad the leaders at ADM and LG Chem made this decision to help our state lead the transition to a clean energy economy and create good-paying jobs right here so we can help build a better, more sustainable future for communities throughout Illinois. I will continue to spread the message across the country and around the world that entrepreneurs and innovative companies should call Illinois home.”

“Demand for plant-based products is on the rise and it’s no surprise Illinois is attractive to companies looking to expand in this industry,” U.S. Senator Dick Durbin said. “As the federal government seeks opportunities to invest in greener buildings, it will look to states like Illinois that are leaders in the production of eco-products. Today’s news is a positive step and I appreciate the efforts of state and local leaders to bring even more jobs to Illinois.”

“Decatur has a rich heritage in manufacturing products that serve as industry game-changers, and the two ADM and LG Chem ventures announced today are no exception,” said Nicole Bateman, president of the Economic Development Corporation of Decatur – Macon County. “Their collective approach to plant-based innovations are a welcomed addition to the global industry leaders who call Decatur home. ADM and LG Chem will find a great partner in the EDC and City of Decatur to support their infrastructure and operational needs to bring this project to life.”

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