Week of December 3, 2001
Blockbuster Deal of the Week
from Site Selection's exclusive New Plant database
LG Chem Will Open
$500 Million EDC Plant
By JACK LYNE
Site Selection Executive Editor of Interactive Publishing
SEOUL -- LG Chem (www.lgchem.com), Korea's leading chemical company, has announced that it will locate a US$500 million chemical plant in Gladstone, Australia.
The northern Queensland location won out over competing sites in China, Saudi Arabia, the United Arab Emirates and the United States, according to officials from Seoul-based LG Chem. The Gladstone plant will produce ethylene di-chloride (EDC), the major raw material for PVC. Queensland Premier Peter Beattie (www.qld.gov.au) and LG Chem Senior Executive Vice President C.H. Yoo announced the project in Seoul. Beattie was in the South Korean capital as part of a trade mission to China, Korea and Japan.
LG Chem's plant is one of several major recent Korean investments in Queensland, Beattie noted. "This will be another major investment in Queensland by a Korean company, following the official opening in May last year of Korea Zinc's Sun Metals Refinery in Townsville and LG International's shareholding in the Ensham coal mine," Beattie said. "It will help demonstrate to all Korean companies that Queensland is a great place to establish a project because of our low taxes, competitive power prices and skilled, multicultural work force."
Trade Office in Seoul Accompanied
"Although the office has been running since April, my personal visit and this official acknowledgment of our presence in Seoul will send a very strong message that Queensland is serious about our desire to increase trade and investment opportunities," Beattie said. The Seoul office, in fact, played a significant role in Queensland's winning the project, according to Beattie.
"Our Queensland commissioner in Korea visited Queensland with senior executives from LG Chem in August this year," he said. "The week-long program included meetings, site visits in Gladstone and an official welcome visit hosted by State Development Minister Tom Barton.
"It resulted in LG Chem deciding a preference for this site," Beattie asserted.
Potential 'Synergies' with Nearby OperationsLG Chem officials have not yet estimated total employment at the Gladstone plant, as construction won't begin until November of 2002. LG Chem is projecting a mid-2005 completion date. The plant will be capable of producing 300,000 tons (270,000 metric tons) of EDC a year, company officials explained.
The Gladstone site positions LG Chem to realize a bottom-line bonus from a byproduct. A prodigious amount of caustic soda is one of EDC plants' major byproducts. And LG Chem's EDC plant in Gladstone will be located near two of the world's largest consumers of caustic soda: Queensland Alumina Refinery and the recently announced Comalco Alumina Refinery. "The establishment of an EDC plant at Gladstone has potential synergies with existing and proposed projects in the region," Beattie noted.
Korea's largest manufacturer of PVC, LG Chem plans to export the EDC made in Gladstone for use in its homeland.
That will add to the already sizeable export flow from Queensland to Korea. During 2000, state exports to Korea totaled more than $1.9 billion, an increase of 26.7 percent from 1999, according to Queensland officials.
The heavy volume heading to Korea is part of Queensland's larger reliance on exporting. One in five jobs in the state is export-related, according to government officials. The Gladstone Region, which has a population of some 47,000 residents, is a major contributor to the state's potent export punch. The region taking in part of Queensland's northeast coast reportedly generates 34.6 percent of the state's total export volume and 8.6 percent of Australia's export volume.
The Gladstone Region got another recent dose of Korean investment, when LG International, a sister company of LG Chem, decided to invest in the previously announced $3 billion Aldoga Aluminium Smelter. The Aldoga project will employ 500 workers at a site near Gladstone.
LG Chem Also Expands
Chinese demand for PVC outstrips supply by 1.7 million tons a year (1.53 metric tons), according to officials from Dagu Chemical, LG Chem's joint-venture partner.
"We anticipate the Chinese PVC market to grow at an annual rate of 8 percent until 2005," said LG Chem Vice President Chul Ho Yoo. "Contrary to the global economic slowdown, China's economy is still robust and government reforms in the industrial materials sector are contributing to growth in PVC demand."
As if an accidental doppelganger, Beattie, too, was in China the week of LG Chem's expansion announcement.
Continuing his trade mission. Beattie signed a memorandum of understanding designed to increase trade opportunities between Queensland and Shanghai. The pact is part of Beattie's goals over the next five years to increase Queensland exporters by 20 percent and increase the value of the state's knowledge-intensive exports by 50 percent.
The agreement includes:
©2001 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.