Business Restructuring
LG Chem is reorganizing its new businesses in earnest through the choice and concentration strategy.
The company announced that it has decided to cancel its plan to make new investment in the petrochemical plant complex and polysilicon projects in Kazakhstan at the board meeting on January 26.
In 2011, LG Chem agreed to form a 50-50 joint venture with the Kazakhstan Government-owned UCC and a private company SAT. The joint venture intended to invest a total of US$4.2 billion (5.05 trillion won) in the construction of ethylene and polyethylene plants with annual capacities of 830,000 tons and 800,000 tons, respectively.
Additionally, LG Chem also scrapped its plan to invest in new polysilicon production facilities. In a bid to push into the polysilicon market, the company decided to invest in building a polysilicon production plant with annual production capacity of 5,000 tons in June 2011.
In this regard, a LG Chem spokesperson said, “As the company has decided to clear up new investment projects, which have been put on hold for a long time due to global economic recession and growing uncertainty in the related industry, LG Chem intends to remove business uncertainty and focus on investing in new businesses that are more promising and have growth potential. Through new businesses, such as energy storage system (ESS) and electric vehicle (EV), and water treatment filter business, the company is planning to turn crisis into opportunity this year.”
LG Chem currently leads the global ESS market with the world’s best competitiveness in the ESS sector, which is a key technology in the next-generation eco-friendly energy market. In December last year, the company signed an agreement with AES Energy Storage, the No. 1 ESS company in the world, to supply batteries that can provide 1 gigawatt-hour (GWh) for the first time in the ESS industry, establishing a strong foothold to lead the global market. After it first supplied home ESS batteries in the North American region in 2010, LG Chem has gradually expanded its power in the global market by supplying ESS batteries to major regions around the world, including Europe, Asia, Oceania and Africa. Based on the competitiveness, global market research firm Navigant Research said LG Chem has maintained its top place in terms of the global competitiveness since 2013 in its ESS sector global competitiveness business evaluation report released in June last year.
The company also leads the global EV battery market by supplying batteries to 20 global automakers. LG Chem’s major customers, which can be currently disclosed to the public, include Hyundai-Kia Motors of Korea, General Motors and Ford of the U.S., Volkswagen, Renault, Volvo, Audi of Europe and Shanghai Automotive Industry Corporation of China. In particular, the company has secured more than half of China’s top 10 automakers as its clients, winning the most number of orders in the market.
For the water treatment filter business, LG Chem signed a deal to exclusively supply reverse osmosis (RO) filters for eight seawater desalination projects in five nations all over the world in August last year, leading the global water treatment filter market in earnest. With the takeover of U.S.-based NanoH2O, which has the unrivaled technology in the seawater desalination RO filter sector, the company has tapped into the water treatment market in earnest, and held various patents in water filter manufacturing technologies for industrial water and domestic use, securing the best technology competitiveness.