• Agreed
  to terminate the j/v agreement established in 2015 with Mitsui Chemicals of
  Japan, with the remaining corporation relaunched as a 100% SKC subsidiary

• The
  firm to expand eco-friendly materials business and accelerate global growth
  while maintaining close cooperation with the former Japanese business partner

Following the
termination of the MCNS joint venture contract with Mitsui Chemicals, Japan,
SKC (CEO Lee Wan-jae) pursues an independent growth of its polyurethane (PU)
raw material business through the 100% subsidiary company that will further its
business competitiveness to increase its global presence and boost its market
share worldwide.

On 29 September
2021, SKC held a board meeting to terminate the joint venture contract with
Mitsui Chemicals for MCNS (Mitsui Chemicals & SKC Polyurethanes Inc.)
established in 2015. Mitsui Chemicals of Japan also held a board meeting on the
same day to make the same decision about MCNS. Dissolution will be conducted in
a way that the partners will each have finished recovering their assets from
NCNS by May 2022. After that, the surviving corporation will start anew as a
100% subsidiary of SKC. The two companies, however, decided to continue their
cooperative relationship even after the j/v contract is terminated.

Since the
establishment of MCNS in 2015, the two companies have been maximizing synergistic
effects with the goal of advancing into growth markets, developing new
businesses globally, and improving profitability. MCNS has expanded its systems
house, which produces customized PU raw materials, from China, the United
States, and Poland to Mexico, India and Russia, increasing its annual output
from 60,000 tons to 110,000 tons over the years. Most notably, MCNS has more
than doubled the sales volume of its high value-added PU raw materials during
the period.

However, there has
been a strategic difference in the business direction that the two companies
aspire to pursue: SKC has emphasized growth, including in the global market
while Mitsui Chemicals has preferred to have a steady increase in profits from high-performance,
bio-products in particular. Following careful consideration, the two companies
have decided that it would be more appropriate for them to pursue business
separately according to their own strategies and agreed to terminate the j/v
contract.

Once the contract
is terminated, SKC will encourage the subsidiary to expand its global presence
and its environmentally conscious businesses. To increase its global market
share, the subsidiary will make inroads into Southeast Asia, Latin America, and
the Middle East. The firm will also contribute to resolving the plastic waste
issue by strengthening its eco-friendly material business, including the
flagship example of the bio-PU raw material business using castor oil instead
of petroleum-_ base_d raw materials as well as the repolyol business that recycles
waste PU as a raw material. The new subsidiary is planning to top KRW 1
trillion in sales by 2025.

An SKC official
said, "SKC will continue to cooperate with Mitsui Chemicals even after the
j/v contract is terminated so that we can increase our global competitiveness and
enhance our eco-friendly material business at the same time as part of our constant
efforts to increase our corporate values.”

PU is widely used
as an insulation material for automobiles and LNG/LPG ships. In the era of
electric vehicles, keen attention is also drawn on the noise/vibration
reduction products and the low-density, lightweight products that MCNS has
developed. SKC has been actively promoting the PU raw material polyol business
through MCNS and the polyol raw material PO business through SK picglobal.