LG Chem is considering investments in sustainable aviation fuel (SAF) and biodegradable plastic (PBAT) in Indonesia, as it seeks to diversify its business portfolio beyond electric vehicle (EV) materials. The move signals Indonesia’s emergence as a key global hub for LG Chem’s eco-friendly materials business.
According to Indonesia’s Coordinating Ministry for Economic Affairs on the 24th, Minister Airlangga Hartarto recently met with Kim Dong-choon, head of LG Chem’s Advanced Materials Division, in Jakarta to discuss potential cooperation. The two sides agreed to strengthen their strategic partnership in clean energy, covering a wide range of LG Chem’s core businesses—from EVs to SAF and PBAT.
Both parties emphasized the need to build a mutually beneficial cooperation model in the clean energy sector. Minister Hartarto particularly expressed interest in joint SAF development, suggesting that LG Chem could explore new business opportunities in aviation fuel by pursuing SAF production in Indonesia.
The meeting also served as an opportunity to review LG Chem’s ongoing investments in Indonesia’s EV materials sector, including precursors and cathode materials. Kim reportedly discussed not only these existing projects but also broader collaboration possibilities in SAF and PBAT.
SAF and PBAT are key future growth drivers for LG Chem. In his New Year’s address, Vice Chairman Shin Hak-cheol stated, “In the sustainability sector, we will focus on the high-growth aviation fuel business,” adding, “We must internalize core technologies in chemical recycling and bio-based materials to secure a competitive edge when these markets mature.”
To advance its SAF ambitions, LG Chem has established a joint venture with Italy’s ENI Group to build a 300,000-ton hydrotreated vegetable oil (HVO) production plant in Daesan, South Korea, by 2027, investing $46.5 million last month. HVO, a biofuel made from waste cooking oil, serves as a key SAF feedstock due to its resistance to freezing at low temperatures. The company is also conducting a pilot project in BoRyeong, South Korea to produce SAF using carbon dioxide.
PBAT plays a crucial role in LG Chem’s shift from commoditized petrochemicals to high-value materials. This biodegradable resin, which decomposes quickly through microbial action, is gaining traction as a sustainable alternative to single-use plastics, with bio-based raw materials significantly reducing carbon emissions.
However, LG Chem’s PBAT business has recently faced setbacks. The company suspended operations at its DaeSan, South Korea PBAT plant last month, delaying mass production indefinitely due to slower-than-expected market growth.
Minister Hartarto remarked, “LG Group’s support for developing Indonesia’s EV ecosystem and clean energy sector is crucial,” adding, “We look forward to expanding this collaboration.”
Kim responded, “Indonesia is a strategic partner for LG Chem,” and expressed hopes to “further broaden cooperation, especially in green industries.”
