Lotte Ube Synthetic Rubber joint venture to be ‘liquidated’

Tokyo - Ube Elastomer Co. Ltd. has announced the “dissolution and liquidation” of Lotte Ube Synthetic Rubber Sdn Bhd (LUSR), its 50/50 Malaysian synthetic rubber joint venture with petrochemicals major Lotte Chemical Corp.

“Although nine years have passed since LUSR commenced commercial production in 2015, it has not been able to achieve the initially anticipated performance due to market downturns,” said Ube Elastomer’ 25 Oct statement.

“Given the expectation that the business environment will remain tough, it has decided to dissolve,” added Ube – echoing a similar announcement made by its Korean JV partner.

Ube Elastomers said it will continue to meet customer requirements by providing butadiene rubber from UEC (Japan), Thai Synthetic Rubbers Co. Ltd (Thailand), and TSRC-UBE (Nantong) Chemical Industrial Co. Ltd (China).

For Lotte Chemical, CEO Lee Hoon-ki said: "The liquidation of LUSR is part of the recovery of financial strength and the transformation of our business portfolio." 

Established in 2012, Pasir Gudang, Johor-based LUSR was involved in the manufacture and sales of butadiene rubber, for which Ube Elastomer “mainly handles the sales of the butadiene rubber.”

The Japanese partner did not provide a timescale for the liquidation process, noting that it is expected to be finalised once all necessary procedures in compliance with local laws and regulations are completed.

LUSR was originally started as a JV between Lotte Chemical Corp. (40%), Lotte Chemical Titan Holding Sdn Bhd (10%), Ube Industries Ltd (40%) and Mitsubishi Corp. (10%).

Butadiene feedstock supplier Lotte Chemical Titan divested its stake in LUSR in December 2021, while ERJ is checking the position regarding Mitsubishi's holding in the JV.

At the time of its operational start-up in 2015, Ube Industries listed LUSR's 50ktpa unit as its fourth butadiene rubber production facility, alongside those in Japan (126ktpa), Thailand (72ktpa), China (72ktpa).