LG Chem wins water treatment deals
LG Chem completed its first order for reverse osmosis (RO) filters at its manufacturing facility in Cheongju, North Chungcheong Province, on Friday. / Courtesy of LG Chem
By Lee Min-hyung
LG Chem is cutting its reliance on conventional businesses because the company wants to hedge against risk in the chemical sector through diversification.
With batteries for electric vehicles (EVs), which LG Chem is currently leading the global market, the nation’s biggest chemical company has identified reverse osmosis (RO) filter as another next revenue stream.
Its bets for RO market seem to be successful as the LG’s chemical affiliate won exclusive deals for RO filters to be exported in eight separate projects from five countries.
In a statement, LG Chem said it struck $8 million (9.1 billion won) deals to provide its RO filters. The company will provide 17,000 RO filters to five countries including Egypt by the end of next year. The 17,000 RO filters can turn some 200,000 tons of sea water into fresh water, according to the company.
This is the company’s largest-ever RO filter deal since it completed the construction of RO filter factory in August in Cheongju, North Chungcheong Province, said C.S. Song, head of the company’s public relations office, adding that the Cheongju site was a result of 40 billion won investment.
“The latest deal will pave the way for LG Chem to increase the company’s footstep in other countries. LG aims for 10 percent of the global RO filter market share by 2020,” Song said. The statement read that LG was named the exclusive provider for eight projects from the countries in recognition of our differentiated water treatment technology.
The move comes amid an increasing demand for water treatment equipment, with the global RO filter market which is expected to rise by 10 percent annually, according to the company. It said the market was worth 1.2 trillion won last year, and expected to reach 1.8 trillion won by 2018.
The RO is a water treatment solution widely used to purify water for both domestic applications and industrial purposes. A membrane separation process takes place to remove salts from sea water, thereby helping get fresh water.
The water filtration system employs a semi-permeable membrane to desalinate sea water and remove organic molecules, according to the company.
In April 2014, the company expanded its business into the water treatment industry by acquiring U.S.-based NanoH2O, which obtains nanotechnology to be used for developing membranes for water desalination.
The deal has enabled LG Chem to expand its business into the water treatment industry. The company has since obtained patents to develop RO filters for especially industrial and commercial uses.
Following the deals, the company will export the RO filters to its key partners in the Middle East, Europe and North America. Partnering countries include Egypt, Israel, Span and Mexico, the company said.
LG Chem said its nano-composite membrane technology made the company gain up to 30 percent more efficiency in producing its own RO filters. LG Chem RO filters remove more than 99 percent of the salt from sea water, the company added.
LG Chem said it will step up drive to increase its global presence by expanding partnership with more countries. The company plans to expand its business into 17 countries including United Arab Emirates, Spain and Singapore.
LG Chem Vice Chairman and CEO Park Jin-soo said in the statement, “The latest deals have proven our technological expertise in the RO filter industry and stable supply capacity.” Park added the company will increase investments in the research and development to become a global key player in the water treatment sector.
The company chief previously said the water treatment business will be the company’s next growth area amid growing demands for more efficient water purification technology from various industries.
LG Chem’s major competitors include German-based chemical market leader BASF and Japan-based TORAY Industries.