South Korean chemical company SK Geocentric has started the construction of a new advanced plastic recycling cluster -- the first of its kind in the world -- in the southeastern city of Ulsan.

With the new cluster, named the Ulsan Advanced Recycling Cluster, or ARC, the company aims to expand its presence in the eco-friendly plastic solution market as well as bolstering its response to escalating regulatory pressure and corporate demand for recycled plastics.

The company held the ground-breaking ceremony of the new mega facility, with some 250 government and company officials in attendance, including Prime Minister Han Duck-soo and Ulsan Mayor Kim Doo-gyeom.

"Plastic is crucial to the circular economy, a new economic model. The government is committed to reducing plastic waste and boosting industrial competitiveness," Han said at the ceremony.

Kim June, vice chairman and CEO of SK Innovation, the parent company of SK Geocentric, also said “Ulsan ARC, a cornerstone of SK Innovation's Green Transformation, embodies sustainability and heralds Ulsan as a hub for the circular plastic economy.”

Once operational in 2025, the Ulsan ARC will have the capacity to recycle 320,000 tons of waste plastic annually, representing about 10 percent of South Korea's yearly plastic waste that is currently incinerated or landfilled.

The project, involving an investment of 1.8 trillion won ($1.38 billion), is estimated to generate approximately 700 billion won in sales and 250 billion won in operating profits annually.

The cluster will integrate advanced recycling technologies from three global partners alongside SK Geocentric’s own chemical processing technology. This synergy is expected to enable the efficient recycling of challenging plastic types and ensure low-cost procurement from local waste collection companies.

The Ulsan ARC will feature three major plants: PureCycle's polypropylene purification plant, Loop Industries' PET depolymerization plant, and a pyrolysis plant developed jointly with Plastic Energy and SK geo centric. These facilities will tackle hard-to-recycle plastics, converting them into valuable resources.

PureCycle's process, likened to a molecular washing machine, will produce high-quality, odor-free polypropylene from contaminated waste, suitable for applications such as vehicle interiors. Loop Industries will specialize in transforming colored PET bottles and polyester fabrics into high-quality raw materials, as demonstrated in Evian’s 2020 launch of a label-free bottle made entirely from recycled plastic.

Additionally, the ARC will have Plastic Energy convert challenging plastic types, such as HDPE, LDPE, and PS, into synthetic crude oil, which SK Innovation will then purify for use in petrochemical processes.

The cluster is already attracting significant interest, with about 30 percent of its future production capacity in pre-sale negotiations, aiming to pre-sell 70 percent of capacity by completion.

This demand is driven by global regulatory changes and commitments from major corporations like Coca-Cola, Unilever, and Procter & Gamble, who are pledging to increase recycled plastic use. The European Union, for instance, has set mandatory recycled content percentages in plastic packaging by 2030, ranging from 10 to 35 percent depending on the product type.

"Our goal with the ARC is clear: turn plastic waste into a resource, ushering in a sustainable era for the chemical industry," said SK Geocentric CEO Na Kyung-soo during a press conference held a day before Wednesday’s ceremony.