SK Group’s chemical unit SKC, food company Daesang and trading company LX International have forged a joint venture to develop and distribute a petroleum-based biodegradable plastic called PBAT, the companies said Tuesday.

SKC will contribute 104 billion won ($87.5 million), while Daesang and LX will provide 40 billion won and 36 billion won, respectively, for the joint venture.

Once commercialization starts, the joint venture will become the second-largest manufacturer of the material in the world, it said.

The PBAT set to be produced by the joint venture uses a material extracted from trees to make it higher in density than normal PBAT, they explained.

Daesang will provide the ingredients, SKC will provide the technology and LX International will manage sales and distribution.

A manufacturing plant capable of producing 70,000 tons of the material a year is expected to break ground around October 2023, Daesang said.