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LOTTE Chemical 2023 Opening Ceremony


LOTTE Chemical 2023 Opening Ceremony

The year 2022 was a dynamic year preparing for a new future, even amidst the most challenging business environment since our establishment.

Despite the aggravation of negative factors such as China's COVID-19 lockdowns, the prolonged Russia-Ukraine conflict, and persistent inflation, the global economy has been undergoing a paradigm shift from efficiency-oriented globalization to economic hegemony centered around the US and China. Even the financial markets have been shaken by high interest rates, strong dollar currency, and credit crunches. However, the year 2022 was a year of setting a new direction for the company and laying the groundwork for systematic preparation to achieve it.

At the beginning of the year, we reorganized our chemical business unit from the existing system to the LOTTE Group Chemical Group’s headquarters system, establishing a foundation for uniform and systemized strategy implementation, synergy creation, and risk management of the chemical companies. In the first half of the year, we declared a new vision for LOTTE Chemical, "2030 Every Step for Green," re-establishing the existing vision of LOTTE Chemical for sustainable growth, taking into account the trends of new industries. We shared this vision with our employees and officers at each business location.

Not only that, we successfully completed the second phase complex of the HPC project and the C4 process of LOTTE GS Chemical, which we had pursued through joint ventures with oil refining companies to strengthen our cost competitiveness and market dominance. We also completed regular maintenance of the basic materials plant in Yeosu safely and without incident. Through the completion of the ABS expansion project, we have also laid the foundation to take one step closer to becoming the global No.1 compound company in the field of advanced materials.

The business environment in 2023 is still being affected by negative factors carried over from 2022. Due to high inflation, changes in supply chains, and increased insecurity in financial markets, the petrochemical industry has not shown much recovery since the low point in the third quarter of last year. Therefore, I would like to talk about some of the key areas that need to be focused on in 2023.

First, we need to establish a stable basis for generating profits in the petrochemical business.
As a company focused on the petrochemical industry, we have become the leading domestic petrochemical company by actively expanding both domestically and overseas based on stable production. Recently, the petrochemical industry has been undergoing changes in sustainable management in terms of substitution of fossil fuel-based feedstock and carbon reduction growth, due to the ESG and environmental regulations. Moreover, the competition within the industry is becoming more intense. However, the petrochemical industry has contributed to the industrial development by responding to technological advancements and demands for new materials, and is expected to continue its growth in the future. Depending on how we adapt to these changes in the business environment, they can be new opportunities for growth.
To ensure the competitiveness of our existing business in the future, fundamental restructuring of the business structure is necessary to develop new products in line with changing trends and to preemptively respond to regulations for stable profits. Efforts should be made to strengthen research, sales, and production functions for the development of high value-added products, and to secure future technologies in advance. Furthermore, the portfolio should be restructured to fit the business structure that the company aims for, and businesses that do not ensure future profitability or do not align with the company's strategic direction should be boldly adjusted. Even in difficult times, qualitative changes can be made to create a foundation for sustainable development if activities are carried out to strengthen the company's resilience and prepare for the future.

Second, please make every effort to secure future growth engines.
Through our vision for 2030 mentioned before, LOTTE Chemical Group has set the direction of new businesses that respond to ESG trends and is developing concrete execution strategies and roadmaps. The future businesses that LOTTE Chemical should pursue are hydrogen, a clean source of energy for the future, along with battery materials and recycling/bio businesses. The domestic hydrogen market is expected to grow up to 5.8 million tons by 2030 with demand from power plants and fuel cells/mobility at the center. Our company aims to introduce 1.2 million tons of environmentally friendly blue and green hydrogen in the form of ammonia in Korea, and is pursuing various businesses in the entire hydrogen industry value chain both domestically and internationally.
The battery materials market is a high-growth market with an expected average annual growth of 30% over the next 10 years, thanks to the increasing demand for environmentally friendly vehicles towards carbon neutrality. We are already pursuing businesses in cathode materials, organic solvents for electrolytes, and separator materials, and are also considering entering the anode materials business through the acquisition of Iljin Materials. To respond to the regulations in the rapidly growing North American and European markets, we need to quickly develop the business and actively engage in marketing activities to ensure local production and stable operation. As environmental regulations and the trend towards environmental sustainability continue to spread, rapid transition to plastic circulation economies is taking place worldwide. We already have businesses in Bio PET and r-PET, and are expanding the business centered around our Ulsan plant. Let’s secure sustainable initiatives in petrochemicals by expanding polymer product recycling businesses such as plastic heat-decomposed lead and ABS/PC/PP.

Third, please operate an ongoing risk management system.
We need to establish a system that can identify and respond to risks not only in financial performance but also in all areas of corporate operation. All employees should perform their daily work from a risk management perspective, and each area should establish a systematic and proactive risk management process to ensure that risks are managed at the same level in all companies within the chemical group.

Lastly, let's create a corporate culture of "trust and respect".
By establishing a horizontal leadership structure that is appropriate for the new era and given circumstances, we can create a sound corporate culture only when members can freely communicate with each other and pursue common goal through a vital cycle of appropriate feedback and rewards based on performance. And I believe that the foundation that makes this possible is "trust and respect" between the company and its employees, as well as among the employees themselves. The management, including myself, will listen to constructive suggestions and make efforts to improve through communication. Please gather your efforts from each field to establish a corporate culture of "trust and respect".