Ministry approves SK Global Chemical’s ownership stake in Ulsan Aromatics

28-Apr-14

The Ministry of Trade, Industry and Energy (MOTIE) has approved SK Global Chemical’s ownership stake in Ulsan Aromatics in its first foreign investment committee meeting on April 24. The joint venture between the SK Group and a Japanese company has come to fruition after three years of negotiations. Ulsan Aromatics manufactures paraxylene and was founded with investment from SK Global Chemical (SK’s affiliate), and the JX Nippon Oil & Energy. The Korean company holds a 55.9% stake in the joint venture, and the Japanese firm 44.1%. The investment partnership started in 2011, but almost foundered owing to the Monopoly Regulation and Fair Trade Act. The law stipulates that when a holding company’s sub-subsidiary creates a great grandson subsidiary, the sub-subsidiary is required to own a 100% stake in the great grandson subsidiary. The provision is aimed at preventing conglomerates from making cross investments. Petrochemical companies, on the other hand, have maintained that a joint venture between local and foreign firms is necessary for a several-trillion-won project. In May 2013, the government accepted the industry’s suggestion, introduced a measure to revitalize investment for the first time, and tried to amend the FIPA. Finally, the revised bill was narrowly passed by the National Assembly at a plenary session at the end of 2013.