South Korea’s Hyosung says it will invest KRW 1 trillion (about $830 million) in a project to become the world’s third-largest carbon fiber producer. It has pledged to boost capacity at its site in Jeonju City, South Korea, by more than 10 times, to 24,000 metric tons per year by 2028.
That level of output would give Hyosung about 10% of the global carbon fiber market and put the firm on a more even footing with dominant producers—Toray Industries, Mitsubishi Rayon, and Teijin—all of which are Japanese.
The announcement comes amid a trade dispute between South Korea and Japan. In July, the Japanese government imposed controls on exports of critical materials used in South Korea to produce semiconductors and organic light-emitting diode displays. It blamed a deterioration in the “relationship of trust” between the two countries.
Media reports suggest that historical as well as new grievances are behind the breakdown. In Japan, the export limits were seen as reprisal for a court decision last year requiring Japanese firms to compensate Koreans who were forced to work in Japan during World War II. In addition, Japanese officials have vaguely claimed that South Korean companies have not adequately controlled the flow of sensitive materials and information, implying that they could end up in the hands of North Korea.
The dispute is not expected to abate soon and may expand to include the export to South Korea of items like auto parts and electronics. Carbon fiber is used to produce lightweight parts for cars and airplanes, as well as hydrogen fuel tanks for cars.
Hyosung did not address the current trade problems, but Chairman Hyun-Joon Cho sounded a note of economic nationalism in a statement. “We will play a major role in turning Korea into ‘a materials powerhouse’ through a further development of carbon fiber because possibilities of its downstream industries are endless,” he said.
The company said the giant expansion will create 2,300 new jobs. It will be helped by an alliance with two other South Korean carbon fiber companies, Iljin Composites and KAI, as well as with the country’s Ministry of Trade, Industry, and Energy.