LG Chem, Saudi’s Alkhorayef join hands for seawater project

LG Chem Ltd. on Wednesday signed an agreement with Saudi Arabia’s Alkhorayef Group to build a water treatment plant in the Middle Eastern nation and jointly invest up to 320 million riyal ($85.3 million) in the facility.

The plant will produce reverse osmosis (RO) membranes, which are used to remove salts and other minerals from seawater and generate potable water, starting in 2026.

LG uses thin film nanocomposite technology to manufacture RO membranes.

The RO membrane facility to be built is expected to serve as LG's foothold for expanding its water treatment business in Saudi Arabia, a fast-growing water desalination market, and exploring new business in the Middle East in collaboration with Alkhorayef Group.

In view of the Saudi policy that prefers domestic-made products for public water treatment, their partnership is expected to raise LG's chances of winning orders from  the country and lead to a cut in tariffs on LG Chem products.

In addition, the facility can help reduce the lead time for delivering products to customers in the Middle East after orders are placed.

Saudi Arabia is the world’s largest market for RO membranes, accounting for 21% of global demand. It relies on seawater desalination for more than 70% of its water supply.

The collaboration between LG Chem and Alkhorayef Group is expected to help the kingdom secure a stable supply of water and achieve its “Vision 2030” goals, of which the $1.5 trillion Neom megaproject is the centerpiece.

Last year, LG Chem secured an exclusive contract as the sole supplier of RO membranes for Israel's Ashdod desalination project.

At home, LG Chem will invest 124.6 billion won ($90 million) to build an RO membrane plant within its factory complex in Cheongju, North Chungcheong Province, with an annual capacity of 400,000 units. It has pledged to double its RO capacity over the next five years.

Presently, LG Chem manufactures enough RO membranes to process 5.1 million tons of seawater into drinking water daily worldwide.

That amounts to 1.86 billion tons of potable water per year, which meets the needs of more than 46 million people based on an average per-capita daily water consumption of 110 liters.

Write to Hyung-Kyu Kim at khk@hankyung.com
 

Yeonhee Kim edited this article