Hanwha Chemical Corp., one of South Korea's leading polyethylene and polyvinyl chloride producers, said Thursday that it has signed a letter of intent (LOI) to build a petrochemical plant in Iraq.
The LOI was signed between the company president, Bang Han-hong, and Iraq's Vice Industry Minister Mohammed Zain in Seoul. Under this joint investment contract, the South Korean company will build an ethylene cracking center and a plant to produce petrochemical products. These facilities will be part of a larger ethylene and natural gas processing complex planned to be built in southern part of Iraq.
Petrochemicals such as ethylene are key materials used in almost every modern product from cars to electronics to consumer goods.
Once completed as planned in 2020-21, the complex will have facilities to produce 1 million tons of key petrochemical products per year and could attract investments worth US$4 billion, improving the industrial competitiveness of the oil-rich Middle East country, Hanwha Chemical said.
On prospects for the plant, a Hanwha representative claimed there is a growing need in the industry to become "ethylene oriented" as soaring crude oil prices are undercutting profits in conventional naphtha processing method.
He opined, "By building a plant in Iraq where base material prices are cheap, Hanwha has effectively gained a level of competitiveness enjoyed by regional rivals."
The company said the Iraqi project is its second deal in the country. In 2009, it formed an alliance with Saudi partner Sipchem to set up the International Polymers Company. This venture is expected to start producing 200,000 tons of polyethylene per year starting in the first half of 2014.