January 18, 2014 3:57 am JST

JX Nippon Oil to move automobile lubricant output to Korea

TATSUYA OKADA, Nikkei staff writer

TOKYO -- JX Nippon Oil & Energy will launch joint production of automobile and industrial lubricants with SK Innovation of South Korea, ending Japanese output by March.

     Tapping the South Korean partner's network encompassing Asia, Europe and the U.S., the JX Holdings unit seeks to better serve Japanese businesses operating in emerging economies, where construction of factories for autos and industrial machinery is booming.

     JX Nippon is the largest lubricant producer in Japan with a market share of roughly 40%. But the domestic market is topping out at 2 million kiloliters a year.

     By the end of fiscal 2013, JX Nippon's Yokohama works and its Mizushima facility in Okayama Prefecture will cease production, which accounted for about 10% of the firm's lubricant capacity.

     Joint production will begin next fiscal year at SK Innovation's facility in the southeast part of the country. Dedicated equipment has already been built. Output there is expected to come to more than 10 times the sum at the Yokohama and Mizushima sites, likely slashing costs. JX Nippon will supply ingredients, including SK's portion, from the Mizushima facility.