Hyung Hoon, head of LG Water Solutions (far left), Abdulrahman bin Abdulmohsen Al Fadley, Saudi’s agriculture minister (center) and Mohammad Bin Abdullah Al-Khorayef, CEO of Alkhorayef Group
LG Chem Ltd. on Wednesday signed an agreement with Saudi Arabia’s Alkhorayef Group to build a water treatment filter plant in the Middle Eastern country and to jointly invest up to 320 million riyal ($85.3 million) in the facility.
The plant will produce reverse osmosis (RO) membranes used to remove salts and other minerals from seawater and generate fresh water, starting in 2026.
LG employs thin film nanocomposite technology to manufacture RO membranes.
The RO membrane facility to be constructured is expected to serve as LG’s foothold to expand its water treatment business in Saudi Arabia, a fast-growing water desalination market and explore new business opportunities in the Middle East in collaboration with Alkhorayef Group.
Considering Saudi’s policy to prefer domestically-produced products for public water treatment, their partnership is expected to raise the chances of winning orders from the country and lead to a cut in tariffs on LG Chem’s products.
Additionally, they can reduce the lead time to deliver 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 the 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 water on a stable basis and achieve its “Vision 2030” goals, under which the $1.5 trillion Neom megaproject, a desert development, is the centerpiece.
Last year, LG Chem secured the 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 manufacturing 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.
Currently, LG Chem manufactures RO membranes enough to process 5.1 million tons of seawater to produce drinking water per day worldwide, amounting to 1.86 billion tons per year.
That meets the needs of more than 46 million people based on the average daily water consumtion per person of 110 liters.
By Hyung-Kyu Kim
khk@hankyung.com
Yeonhee Kim edited this article
