POSCO INTERNATIONAL : collaborates with GS Caltex on an eco-friendly biotech venture

POSCO INTERNATIONAL collaborates with

GS Caltex on an eco-friendly biotech venture

- MOU concluded between the two companies on the 29th for the joint development of eco-friendly biotech business

- Converging the food and energy businesses into a new business model

POSCO INTERNATIONAL and GS Caltex will be collaborating on a palm-oil based eco-friendly biotech enterprise.

On the 29th, the two companies signed a business agreement for the combined development of an eco-friendly biotech enterprise at GS Tower, attended by POSCO INTERNATIONAL CEO Joo Si-Bo and GS Caltex CEO Heo Se-Hong.

The two firms anticipate this agreement to be the start of the gradual expansion of the value chain encompassing the refinement of raw material, production of bioproducts, and next-generation biofuel business as well.

This strategic alliance is expected to bring synergies the two companies' strengths, namely POSCO INTERNATIONAL's capability in procuring palm oil and GS Caltex's expertise in the biofuel industry, to increase the added value of palm oil and contribute to greenhouse gas reduction.

POSCO INTERNATIONAL will now be able to sophisticate its business structure by expanding into processing and distribution, breaking out of its existing framework concentrating narrowly on palm oil. As a market leader in the energy sector, GS Caltex seizes through this collaboration an opportunity to diversify its business into high value added eco-friendly ventures, including biochemicals and bio-aviation fuels. The agreement holds a great significance as it enables the two corporations to respond to risks associated with food security and climate change hand-in-hand through the convergence of the food and energy businesses.

For their first collaborative effort, the two companies will establish a raw material refining facility and a biofuel plant in Indonesia. In addition, they plan to produce biofuels while also collecting waste oil, as part of the Clean Development Mechanism (CDM) to reduce greenhouse gas emission. The CDM is a system allowing the reduction of greenhouse gas emission through projects conducted in developing countries with technology and capital of developed countries, acknowledged as the latter's contribution to emission reduction.

Approximately 65 countries have either implemented a biofuel use mandate to reduce greenhouse gas emission or are considering implementation, with palm being a more eco-friendly alternative relative to other crops such as soybean, sunflower, or canola. This is because palm has excellent crop yield per area, accounting for one-third of the entire plant crop production worldwide from only 10% of the entire farming area. The crop is also perennial and can be harvested economically for 30 years, helping lessen the environmental damage caused by land cultivation and operation.

"Ever since the outset of our expansion into Indonesia, we grew our business with a focus on the environment and coexistence, implementing environmental policies going above and beyond what is required by the global standards, including the NDPE Declaration of Environmental Society Policies of the Palm Business in 2020, and the RSPO Certification," remarked a POSCO INTERNATIONAL official. "Now that carbon neutrality is more important than ever, this MOU is more significant in its potential as an eco-friendly biotech business to contribute to global greenhouse gas reduction."

Last year, POSCO INTERNATIONAL incorporated a holding company of PT.BIA (AGPA PTE LTD) in Singapore, through which it hopes to expand actively the value chain of its palm business by securing new palm farms and investing in palm oil refining as well as biofuel plants.

* NDPE (No Deforestation, No Peat, No Exploitation), RSPO (Roundtable on Sustainable Palm Oil)