CHICAGO — ADM and LG Chem have entered a pair of joint ventures to produce corn-based lactic acid and polylactic acid to meet burgeoning demand for a wide variety of plant-based products, including bioplastics, the companies announced Aug. 15.
Pending regulatory approval and final investment decisions, which are expected to be made in 2023, the joint ventures intend to build their production facilities in Decatur, Ill. Construction would be targeted to begin in 2023, and production in late 2025 or early 2026.
The first joint venture, GreenWise Lactic, would produce up to 150,000 tons of high-purity corn-based lactic acid annually. ADM, a global leader in nutrition and biosolutions based in Chicago, would be the majority owner of GreenWise and contribute fermentation capacity from its Decatur bioproducts facility to the venture.
The second joint venture, LG Chem Illinois Biochem, would be majority-owned by Seoul, South Korea-based LG Chem, a diversified global chemical company. 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 Juan R. Luciano, chief executive officer of ADM. “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.”
Global demand for lactic acid — which is used broadly in food, feed and cosmetics in addition to industrials like bioplastics — was valued at approximately $2.9 billion in 2021, with an expected annual growth rate of 8%. Global demand for bioplastics and biopolymers is projected to grow to $29.7 billion in 2026 from $10.7 billion in 2021, representing annual growth of 22.7%.
Hak Cheol Shin, CEO of LG Chem, said the partnership with ADM is part of a sustainable growth strategy that can contribute directly to addressing environmental issues such as climate change and waste plastics through its use of eco-friendly materials.
“LG Chem is the first Korean company to build a PLA plant with integrated production capacities ranging from raw materials to the final product,” Mr. Shin said. “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.”