On August 15, LG Chem and ADM held a signing ceremony launching two joint ventures for U.S. production of lactic acid and polylactic acid to meet growing demand for a wide variety of plant-based products, including bioplastics.
Pending final investment decisions, the joint ventures have chosen Decatur, IL, as the location of their intended production facilities.
First joint venture: Corn-based lactic acid
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.
Second joint venture: bioplastics
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.
“Sustainability is one of the enduring global trends that is powering ADM’s strategy and growth," said ADM CEO Juan R. Luciano.
"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."
Luciano said BioSolutions is already growing rapidly, with $136 million in year-over-year revenue growth in the first half of 2022.
"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," said Luciano.
"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.”
Lactic acid, bioplastics demand grows globally
Global demand for lactic acid – which is used broadly in food, feed and cosmetics in addition to industrials like bioplastics – was valued at approximately USD 2.9 billion in 2021, with an expected annual growth rate of 8%.
Global demand for bioplastics and biopolymers is projected to grow from USD 10.7 billion in 2021 to USD 29.7 billion by 2026, representing annual growth of 22.7%.
“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,” said LG Chem CEO Hak Cheol Shin.
“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.”
The joint ventures, which are subject to required regulatory approvals, hope to make final investment decisions around the Decatur projects in 2023.
Pending final investment decisions and approvals, construction would be 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.
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.
This is not the first time LG Chem and ADM have worked together to meet growing demand for bio-based products. In 2019, the companies signed a joint development agreement (JDA) to secure mass production technology to create biobased acrylic acid, which can be used for the manufacture of superabsorbent polymers used in diapers and other hygiene products.
