Celanese Corp. and Mitsubishi Gas Chemical Co. Inc. are changing the business model of their Korean Engineering Plastics Co. joint venture.
Under terms of a deal announced Dec. 9, Seoul-based KEP will supply acetal resins and related materials to its shareholders, who will then independently market them globally without restrictions. The agreement "envisions a modernization of the scope" of KEP, officials said in a news release.
KEP formed in 1987 to make and market acetal in Asia, with a focus on serving domestic demand in Korea. Celanese of Dallas owns 50 percent of the JV, with Tokyo-based MGC owning 40 percent and Mitsubishi Corp. — a Tokyo-based conglomerate — owning the remaining 10 percent.
Officials said the change in KEP's business model "is a necessary response to the globalization of the [acetal] industry, the fragmentation of the marketing supply chain, and other changes in market conditions since KEP was first formed."
KEP makes materials at plants in Ulsan and Pyeongtaek. In addition to acetal, the firm makes polybutylene terephthalate and nylons 6 and 6/6.
KEP's shareholders also have committed to increasing the JV's production capacity to improve long-term security of supply to customers and to support growth, officials said. The change in KEP's business model is expected to be completed by the end of 2021. KEP will continue to serve its customers until the restructuring is closed.
Celanese is the world's largest acetal maker as well as producing other specialty materials. The firm employs 7,700 and posted 2019 sales of $6.3 billion.