"The LINE Project serves as a key strategic expansion for the Group to solidify LCT’s position as a top-tier petrochemical company in Southeast Asia."

Park Hyun Chul

PRESIDENT AND CEO, LOTTE CHEMICAL TITAN

March 31, 2023

Could you introduce LOTTE Chemical Titan?

LOTTE Chemical Titan is proud to be Malaysia’s first standalone producer of polyolefins and one of the largest olefins and polyolefins producers in Southeast Asia. We have come a long way, from producing 100,000 t/y in 1991 when we started our commercial operations, to the acquisition by LOTTE Chemical Corporation with 2,538,000 t/y production capacity, and to our listing on Bursa Malaysia’s Main Market in 2017 with 3,014,000 t/y production capacity. As of today, we have a total production capacity of 3,568,000 t/y with 3,116,000 t/y from our plants located in Pasir Gudang & Tanjung Langsat, Johor, as well as 450,000 t/y located in Merak, Indonesia. Furthermore, our LINE Project in Indonesia will contribute an additional 65% production capacity to the Group.

How has LOTTE’s product portfolio evolved and what are your key markets?

We principally produce polyolefins (polyethylene and polypropylene) and olefins (comprising ethylene and propylene, and other derivatives such as butadiene, tertiary butyl alcohol, benzene, and toluene). Our products reach the domestic market in Malaysia and Indonesia, where we have a diverse customer base of plastic manufacturers in electronics, packaging, healthcare, automotive, construction, and consumer packaging, but we also export to customers in 60 countries.

The LINE project in Indonesia is one of the largest such investments globally. What are the advantages of this expansion?

The LOTTE Chemical Indonesia New Ethylene Project (LINE Project) is a US$3.95 billion JV between LOTTE Chemical Titan (51% equity interest) and our parent, LOTTE Chemical Corporation (49% equity interest). Located in the Banten Province, the integrated petrochemical facility will produce 1 million t/y ethylene and 520,000 t/y propylene. Upon completion, the production capacity of the Group will increase by 65% to 5.878 million t/y from its existing production capacity of 3.568 million t/y. The LINE Project serves as a key strategic expansion for the Group to solidify LCT’s position as a top-tier petrochemical company in Southeast Asia. The project also provides synergistic advantages to the Group’s three existing standalone polyethylene plants which are in the vicinity of the project by reducing feedstock transportation and logistics costs. Indonesia is a net importer of petrochemical products, so the expansion will enable us to capitalize on the anticipated increase in demand for our products in the country. Indonesia is expected to remain a net polyolefins importer. The additional supply will most likely be targeted for import substitution in the domestic market.

As a leading polyolefin producer, what are the key demand trends you observed in the PE and PP markets?

Demand for polyethylene (PE) and polypropylene (PP) moves in tandem with economic growth, which is why demand is expected to increase in the long run. Currently, we are seeing a challenging environment caused by a culmination of factors, including the Ukraine crisis, high inflation, and the lingering effects of the pandemic.

What symbolizes LOTTE’s new ESG tagline “Every Step for Green”?

As the largest overseas subsidiary of LOTTE Chemical Corporation, we embrace our parent company’s new corporate vision of “Every Step for Green” in all our business ventures. Our parent company, based in Seoul and with global operations, is highly sensitive towards the need to promote ESG and stay accountable for our stakeholders. LOTTE Chemical Titan recognizes the importance of our role as a responsible petrochemical player. On climate change, our goal is to continuously reduce GHG by focusing on sustainable manufacturing practices and further improving the setup of our energy installations. We have engaged a reputable consultant to establish the GHG baseline data for our plants in Malaysia, and we are cooperating with renowned companies on exploring opportunities for chemical and mechanical recycling of post-consumer plastic wastes.

Do you have a final message?

Moving forward, the LINE Project serves as one of our near-term growth catalysts, which will strengthen our market presence in the petrochemical industry. Despite the current market uncertainty, LOTTE Chemical Titan continues to explore new growth engines for the sustainable future of the company by incorporating ESG criteria in the assessment of investments. LOTTE Chemical Titan remains committed to its aspirations to be a people-centric, forward-thinking and life-enriching organization in our efforts to build a sustainable business, enhance our competitiveness, and actively foster a strong culture of safety and sustainability.

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