Dec 18 2008
Eastman Chemical Company (NYSE:EMN) and SK Chemicals Co., Ltd. have signed a joint venture agreement to form a company that will construct a cellulose acetate tow manufacturing facility in Korea. The company will be named Eastman Fibers Korea Limited. Financial terms of the agreement, including estimated capital expenditures, were not disclosed.
Under the terms of the agreement, Eastman will have 80% ownership and will operate the facility. SK Chemicals will own the remainder and will be responsible for construction of the facility, which will be built adjacent to an existing SK Chemicals manufacturing site in Ulsan, Korea. Construction is expected to begin in first quarter 2009 and should be completed during the second quarter 2010. Annual capacity at the site is expected to be approximately 27,000 metric tons (MT).
"We continue to see significant demand growth for cellulose acetate tow in Asia. This strategic joint venture will enable us to maintain our market growth and meet customer demands in this rapidly growing region,” said Michael Chung, vice president, fibers international business and business development. “We are pleased to partner with SK Chemicals and feel confident this facility will produce world-class quality cellulose acetate tow.”
SK Chemicals will close its existing acetate fibers plant located in Suwon, Korea within the first half of 2009. The Suwon fibers plant currently has the capacity to produce 12,000 MT of cellulose acetate tow and 9,000 MT of cellulose acetate yarn. Also as part of the agreement, SK will transfer its acetate fibers technology to Eastman.
“These actions are part of SK Chemicals’ ongoing strategy to exit the fibers business and reposition itself as a specialty chemicals and life sciences company,” said Mr. Moon-Suk Lee, senior vice president, petrochemicals and functional materials business group. “We welcome the partnership with a strong global manufacturer of cellulose acetate products like Eastman.”
Eastman also manufactures cellulose acetate tow at its facilities in Kingsport, Tenn., and Workington, England. When the Korean site is completed, Eastman’s total worldwide capacity for acetate tow will exceed 200,000 MT.
Cellulose acetate tow is used primarily as a raw material for the manufacture of cigarette filters. Cellulose acetate flake, a key raw material for the manufacture of cellulose acetate tow, will be provided to the Korean facility from Eastman’s Kingsport site.
“This new facility will be able to take advantage of our Kingsport site’s integration to low-cost coal,” said Rick Johnson, vice president and general manager for Eastman's fibers business. “This joint venture, together with our recent cellulose acetate tow expansion in Workington, is an important part of Eastman’s growth plans.”