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ADM and LG Chem sign MoU for US production of lactic acid and PLA

US-headed Archer Daniels Midland Company (ADM), one of the world’s largest agricultural processors and food ingredient providers, and South Korean-headed LG Chem Ltd, a leading global diversified chemical company have signed a Memorandum of Understanding (MoU) to explore US-based production of lactic acid to meet the growing demand for a wide variety of plant-based products, including bioplastics.

Under the terms of the agreement, which was signed by ADM Chairman and CEO Juan Luciano (left) and LG Chem Vice Chairman and CEO Hak Cheol Shin at ADM’s global headquarters in Chicago, Illinois (IL) on September 13, 2021, the two companies plan to take steps toward launching a joint venture (JV) in early 2022 that would build, own and operate a US-based facility to produce high-purity corn-based lactic acid on a commercial scale (photo courtesy Business Wire).

According to Grand View Research, global demand for lactic acid – which is used broadly in food, feed, and cosmetics in addition to industrials like bioplastics – was valued at approximately US$2.7 billion in 2020, with an expected annual growth rate of 8 percent.

In addition, the companies will collaborate on a second joint venture that would use lactic acid produced by the first joint venture to produce and commercialize polylactic acid (PLA), a plant-based, biodegradable plastic that can be used in a wide array of products, from food packaging to clothing to upholstery.

Tap into global biobased demand

According to new market research by MarketsandMarkets, demand for global bioplastics and biopolymers is projected to grow from US$10.7 billion in 2021 to US$29.7 billion by 2026, representing a compound annual growth rate (CAGR) of 22.7 percent.

Consumers today are increasingly prioritizing environmentally-friendly, responsibly-produced products when they make buying decisions. ADM is meeting that demand for both nutrition and biomaterials customers alike. For non-nutrition customers, our BioSolutions growth platform is using our product streams to grow our presence in sustainable, higher-margin demand areas as wide-ranging as pharmaceuticals and personal care, textiles, paper products, and even adhesives for helicopters, said ADM Chairman and CEO Juan Luciano.

The two companies also agreed to actively cooperate in the joint development of technology for other biomaterials that can be applied in the biochemical and sustainability sector in the future.

The establishment of a joint venture with ADM would be the beginning of a new journey, formalizing our cooperation and advancing us toward a sustainable business structure for the benefit of the environment and society, said Hak Cheol Shin Vice Chairman and CEO of LG Chem.

In addition to its use in the production of PLA, the lactic acid produced by the proposed joint venture would be sold for use in a wide variety of food and pharmaceutical applications.

Once the joint venture is established, LG Chem would receive a stable supply of raw materials needed to enter the bioplastics market in earnest. As a part of our sustainable business strategy, LG Chem plans to accelerate the commercialization of biodegradable resins that can contribute to solving environmental problems such as climate change and waste plastics. As a leading company in sustainability, LG Chem will actively seek new ways to contribute to carbon-neutral growth, Hak Cheol Shin said.

Expand existing collaboration

This is not the first time LG Chem and ADM have worked together to meet the growing demand for biobased products.

In 2019, the companies signed a joint development agreement (JDA) to secure mass production technology to create biobased acrylic acid, which can be used for the manufacture of superabsorbent polymers used in diapers and other hygiene products.

Today’s agreement is yet another way in which we’re delivering on growth opportunities in plant-based solutions. We’re excited to work with a global leader like LG Chem to expand US production of lactic acid and continue to expand our capabilities to meet the growing demand for responsibly-produced products, Juan Luciano said.

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