HYOSUNG's Bio Business Story PART. 1 On March 30th, Hyosung TNC received an investment approval regarding ‘HYOSUNG BDO project’ from the government of Bà Rịa–Vũng Tàu Province at the 'Bà Rịa–Vũng Tàu Vision Declaration and Investment Approval Ceremony' held at the Phú Mỹ Industrial Complex 2 in Vietnam. Along with this, Hyosung TNC announced plans to invest a total of KRW 1 trillion to establish a Bio BDO production plant capable of producing 200,000 tons annually by 2040. This marks a significant step forward in HYOSUNG’s green vision towards sustainability, a key aspect of its ‘100-Year HYOSUNG’ initiative. Through securing core technologies and establishing a consistent production system, HYOSUNG’s bio business is steadily advancing, and here is the first story of this journey. ‘Sustainability,’ the survival strategy in the era of climate change In the spring of 2024, the impact of climate change is felt acutely in reality. Days pass without flowers blooming due to abnormal cold, only to be suddenly hit by scorching summer heat exceeding 30 degrees Celsius. The resulting poor harvests lead to sky-high prices, with a single apple costing more than a kilogram of pork due to deformities caused by climate change. Such shocks are not unique to South Korea alone. Around the world, there is a growing chorus urging for any kind of action, even if it may be late. Climate change evokes a sense of urgency for survival among businesses. The future world shaped by climate change is uncharted territory for both businesses and consumers alike. Therefore, the need to pursue sustainability goes beyond traditional goals like scale expansion and profit-seeking. It's about fundamentally changing the paradigm of business through environmentally conscious management, as we venture into this unknown realm. Grounded in a stark reality check, HYOSUNG has set the goal of sustainability for its core businesses such as chemicals, materials, and fibers. Industries reliant on fossil fuels have reached their limits in terms of sustainability. With a focus on sustainable bio-material development and production, as well as the manufacturing of environmentally friendly products using bio-based materials, HYOSUNG aims to preemptively adapt to the shifting currents of the global market, reorienting towards an sustainable paradigm with a vertically integrated system spanning from raw materials to finished products. ▲ Vietnam Sugercane The core of HYOSUNG’s sustainable bio-business: 'Bio BDO' First, let's take a look at Bio BDO, a crucial component in HYOSUNG's sustainable bio-business. BDO (Butanediol) serves as a raw material for PTMG (Poly Tetramethylene Ether Glycol), which is used in the production of spandex fibers. Besides being a raw material for spandex fiber, BDO is also utilized in various chemical products, including TPU (Thermoplastic Poly Urethane) for automotive interiors, biodegradable resin PBAT (Poly Butylene Adipate Terephthalate) for sustainable packaging materials, shoe soles, industrial compounds, and more. However, traditional BDO extraction from fossil fuels like coal not only generates carbon dioxide but also leads to soil and water pollution, posing a burden on the environment. Hyosung TNC, the core subsidiary of HYOSUNG’s sustainable bio-business, has identified the production and introduction of bio-based BDO extracted from natural sources like sugarcane and corn as a crucial task in line with the environmental trends in the global market. In 2023, they entered into a technological partnership with Geno, a leading biotechnology company based in the United States. Geno is renowned for its unique ability to convert plant resources such as sugarcane into specific chemical compounds, a key technology in transitioning the chemical industry towards sustainable practices, known as the "white biotechnology industry." Through this partnership, Hyosung TNC has acquired the technology to ferment and process sugar cane-derived components, enabling the production of bio-based BDO. The Bio BDO produced in this way boasts a reduction of over 90% in carbon dioxide emissions compared to conventional products derived from fossil fuels. It adds eco-friendliness to HYOSUNG’s spandex products, which are the world's best-selling. Hyosung TNC has introduced various products through its sustainable brand, regen. In the mid-2000s, it became the first domestic company to launch polyester and nylon fibers made from recycled PET bottles and discarded fishing nets. And now, by introducing bio spandex products made from bio-based materials, it plans to continue leading the premium spandex market, which is increasingly demanding sustainable alternatives. ▲ Bio BDO is produced through fermentation of sugarcane sucrose Establishment of an integrated production system from raw materials to finished products through vertical integration Another noteworthy development is the announcement of Hyosung TNC's investment approval for the establishment of a new Bio BDO production plant in Bà Rịa–Vũng Tàu, Vietnam at the end of March. Through this investment, Hyosung TNC has secured the world's largest bio spandex factory in Vietnam, marking a significant step towards achieving the core objective of the ‘HYOSUNG BDO Project’, establishing a consistent production system for bio spandex. ▲ Trần Hồng Hà, Vice Prime Minister of Vietnam(left), and Lee Sang-woon, Vice Chairman of HYOSUNG(right), at the investment approval ceremony held in Bà Rịa–Vũng Tàu, Vietnam, on March 30, 2024. Hyosung TNC's vertical integration of its bio business in Vietnam unfolds as follows: Firstly, the Bio BDO factory in Bà Rịa–Vũng Tàu produces bio-based raw materials. Secondly, at the Đồng Nai facility in the south, Bio BDO is utilized to manufacture PTMG, the raw material for spandex. Finally, at the Đồng Nai spandex production plant, bio-based PTMG is used to mass-produce bio spandex products. This bio spandex integrated production system, pioneered by Hyosung TNC, is optimized for the global eco-premium fiber market, including Europe and the United States. Once established, this system ensures stable raw material supply and enhances production efficiency, catering to customer demands with increased operational speed. Additionally, it secures cost competitiveness through reduced transportation expenses while simultaneously mitigating environmental impact by minimizing fuel usage for transportation. Responding adeptly to environmental demands in the global fiber market For today's companies making their mark on the world stage, sustainability is not just a competitive edge but also a matter of survival. With legal regulations in the environmental sector, including carbon taxes, tightening in regions like Europe and the Americas, the textile and fashion market is transitioning into a realm where survival without sustainable products is increasingly untenable. Particularly, as eco-conscious consumption becomes the norm, driven by the MZ generation, major global brands are showcasing sustainable products as their flagship offerings. Not only are carbon reduction activities in production and transportation logistics stages crucial, but there's also a growing demand for materials that impose minimal environmental burden and generate low carbon emissions from the product's raw materials. HYOSUNG’s sustainable bio-business is a proactive response to such environmental demands, demonstrating the forward-thinking stance of a leading company committed to maintaining its reputation as a global No. 1. It's an initiative that not only listens to the call of the next generation but also aims to nurture and care for the planet and the environment for generations to come, embodying the practices of a century-old company. How did you find the first story of HYOSUNG’s sustainable bio-business? In the upcoming second part, a more detailed insights into Hyosung TNC's production of bio-based BDO, the characteristics of the bio-spandex products derived from it, market applications, customer feedback will be introduced. Even the fascinating story behind the production process of Bio BDO, with its remarkable strength and flexibility derived from sweet sugar cane, causing minimal impact on soil and water resources, will be unveiled. Stay tuned for more exciting and insightful stories about bio-based materials!