LG International Wins Large High-end Steel Pipe Contract to Australia (July 16, 2002)
▶Based on strong alliance with Korean steel maker(SeAH Steel) ▶Establishes strong foothold to enter protectionist Australian steel market ▶Exploration of new customers overcomes strong protectionist sentiment LG International signed a US$20 million steel pipe contract for the Sea Gas Pipe project on July 14, in alliance with Korean steel maker SeAH Steel Corp. This is the largest gas pipe project in Australia. A total of 650 km of gas pipe will be laid from Adelaide to Minerva to cover southern Australia. GI will provide 23,000 MT of API X-70 grade steel pipe. The API X-70 grade steel pipe will be fabricated by SeAH Steel using H/R (Hot Roll) coil produced by POSCO the world's steel leader known for high quality. It is one of the most high value-added steel products made anywhere, requiring very advanced steel manufacturing technology. The interest and exposure garnered from being part of the largest gas steel project in Australia is expected to generate higher demand for quality Korean made steel products in the future. LGI's feat is all the more significant in light of the high barriers to entry that new and foreign players have long faced in the Australian steel market. What is more, this is actually a repeat success for LGI. In 1998, it had won a US$10 million contract for high value-added steel pipe for the Australian GGT (Goldfield Gas Transmission) project. LGI managed to edge out tough competition from both Japan and Europe because of the expertise it had gained from the GGT project and tight cooperation between the LGI Sydney Office and its headquarters in Korea. As the world's third largest natural gas producer, Australia is expected to undertake more pipe projects in the coming years. The Sea Gas Pipe project positions LGI well to receive future large volume steel orders from Australia. Korean steel exporters are currently facing difficulties due to strong protectionism. Both the U.S. and China, which account for 50% of Korea's steel exports, have leveled anti-dumping charges against Korea. LGI is turning the challenge into opportunity by exploring new markets. In addition to expanding its presence in Australia through the Sea Gas Pipe project, LGI is also actively developing the Middle East and Africa as alternative markets. It has already won a large waterway construction project in Libya and a pipeline construction project in Egypt. LGI is also working to overcome the strong protectionism by diversifying its product line for export. The significance of the contract is borne out by the fact that it will account for a huge percentage of the total costs of the Sea Gas Pipe project US$20 million out of US$150 million. Although LGI achieved over US$100 million in steel sales in 2001 (US$110 million), the company is confident that the project will push its sales to another record in 2002, despite the less-than- favorable export environment.