Invest KOREA

Tongsuh Petrochemical Corp., Ltd. boasts several claims to fame.

In 1969, it became Korea’s first company to produce acrylonitrile, a chemical compound used to make acrylic fiber and ABS resin. The company boasts a total acrylonitrile production capacity of 560kt, the world’s largest for a single site. Tongsuh Petrochemical is also one of the world’s largest producers of sodium cyanide.

It’s no wonder the company’s president, Jong-Pil Huh, has just two words for those considering doing business here: “Believe Koreans.”

Asahi Kasei Corp., which today wholly owns the company, did just that in 1974. At the time, Tongsuh Petrochemical had been a joint venture between Korea’s Hanil Synthetic Fiber and the U.S.’ Skelly Oil Co. The Japan-based Asahi Kasei acquired 25 percent of Skelly Oil’s shares, increasing its ownership to 50 percent of Tongsuh Petrochemical in 1975 and then 100 percent in 1998.

“We made remarkable growth after we became 100 percent Asahi Kasei-owned company,” said Huh, who has been with the company since 1977 and its president since 2009.

Today, Tongsuh Petrochemical produces mainly acrylonitrile and sodium cyanide, as well as acrylamide, EDTA 4Na and ammonium sulfate — chemical compounds we indirectly come into contact with daily. The acrylic fiber made from acrylonitrile is typically used as a wool substitute in blankets, carpets, sweaters and other garments, as well as to make carbon fiber, which can be used to create the body of an airplane. The ABS resin made from acrylonitrile is widely used in the electronic and automobile industries. Sodium cyanide is an efficient reagent for extracting gold from ores, while the company’s other products are used to manufacture everything from detergent to fertilizer.

Exporting more than half of its products around the world, the company serves a wide range of customers. Major clients include LG Chem Ltd., Kumho Petrochemical Co., Ltd., Cheil Industries Inc. and Styrolution Korea Ltd. Tongsuh Petrochemical’s 210 employees serve customers through their main office in Yeouido and a plant/office in Ulsan, in the southeastern region of Korea.

The adoption of Asahi Kasei’s catalysts in the production of acrylonitrile about 15 years ago significantly improved productivity and efficiency. Annual turnover increased about 3.7-fold during the first 10 years after Asahi Kasei’s takeover, with Tongsuh Petrochemical recording 57 percent growth in the last three years. The company’s new acrylonitrile plant, which opened last December and is its fourth, expanded its production capacity by 245kt to reach 560kt. It also increased its sodium cyanide production capacity by 28kt, for a total of 70kt.

“Tongsuh Petrochemical has become one of the most successful subsidiaries of Asahi Kasei Corp.,” said Huh.

Of course, the company’s journey has not been without bumps. The oil shock of the 1970s presented challenges, as did the years following the startup of its third acrylonitrile plant in 2003. Mechanical and process-related problems, safety accidents and weak market conditions brought losses for years. But thanks to cost-saving initiatives, support from suppliers and measures to improve facility safety, Tongsuh Petrochemical has maintained accident-free operations since 2005 and improved profitability.

Later this year, the company plans to open a new acetonitrile plant it is currently building. For the long-term, Tongsuh Petrochemical is considering investing in new petrochemical products by adopting some of the technologies of Asahi Kasei Chemicals Corp., an operating company in the chemical sector of Asahi Kasei Corp.

“As a location for the petrochemical industry, Korea is better than Japan — lower costs, adjacency to China... low logistics costs, many things,” Huh said. “So Asahi Kasei is positively considering building such kind of plants to produce competitive products in Korea.”