[Edaily Reporter Park Min-woong ] South Korea’s major trading companies are moving beyond their traditional trading-centric businesses and accelerating their expansion into future growth sectors such as new resource development and renewable energy. They appear to be actively seeking new growth drivers by diversifying their business portfolios to reduce risks associated with fluctuations in resource prices and freight rates and secure a stable revenue base.
According to industry sources on the 4th, LX International is moving forward with plans to enter the bauxite market this year. Bauxite is a key raw material for aluminum production. Demand is expanding, particularly in high-tech industries such as aerospace and electric vehicles, driven by growing demand for lightweight materials. This move is seen as a strategy to diversify the company’s business portfolio, which has traditionally been centered on coal trading.
It is reported that the company is prioritizing Indonesia as a potential investment destination. Since developing new mines carries significant risk, the company is considering acquiring mines already in operation and selling the ore to local smelters.
The company is also cultivating its renewable energy business as a future growth engine. In 2022, it entered the eco-friendly power generation sector by acquiring a 63% stake in Posung Green Power, a domestic biomass power generator. Earlier this year, the “Hasang” hydropower project in Indonesia was approved by the local government as a carbon reduction initiative. This has laid the groundwork for the company to fully monetize carbon credits amounting to 310,000 metric tons (t) annually.
An LX International official stated, “We will focus on delivering tangible results while accelerating the discovery of new revenue streams through the diversification of our business portfolio and geographic expansion.”
POSCO International is cultivating its palm oil business as a future growth engine. Last June, the company finalized the acquisition of Indonesian palm oil firm Sampurna Agro (now PT.PAR) with an investment of approximately 1.3 trillion won. This acquisition is widely regarded as having established a comprehensive palm oil value chain, spanning from seed development to farm operations, palm oil production and refining, and the supply of biofuel feedstock.
This is already having a positive impact on the company’s financial results. In the second quarter of this year, the company’s palm oil business posted an operating profit of 76.8 billion won, driven by the acquisition of Indonesian farms and rising crude palm oil (CPO) prices. This represents a 91.5% increase compared to the same period last year. The company plans to more than double its operating profit from the palm oil business this year.
In addition, Samsung C&T’s Trading Division is expanding its renewable energy business, focusing on solar power and energy storage systems (ESS). In the second quarter, the division recorded a $9.5 million gain on the sale of solar power development projects, marking a significant improvement in performance compared to the same period last year. The company is expanding the development capabilities it has accumulated through its U.S. solar power business into overseas markets such as Australia, while also broadening its business base by pursuing solar power and ESS development in Germany, Canada, and Japan.
An industry official stated, “As the restructuring of global supply chains and the energy transition accelerate, general trading companies are facing an environment where it is difficult to guarantee sustained growth through traditional trading alone,” adding, “It appears that each company will continue to expand the share of future growth businesses based on their global networks and investment capabilities.”
