LG International corporate profile

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Mervyn George
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1 LG International corporate profile

2 Contents 03 The History of Challenges 14 Vision 15 OVERVIEW 16 Our business 30 About LG 31 LG WAY 32 Overseas Network

3 The History of Challenges

4 In 1953, LG International was established as a trading company within LG Group.

5 LG International was an import and export specialty company in the LG Group which opened a new era for chemical and electronics industry in Korea in 1940s and 1950s.

6 Since then, LG International has expanded its business lines from light industries to heavy industries, leading to rapid growth.

At the forefront of international trade, LG International has exerted efforts to increase export of Republic of Korea, and contributed to the rapid

7 At the forefront of international trade, LG International has exerted efforts to increase export of Republic of Korea, and contributed to the rapid growth of Korea economy. Especially, exports of heavy industrial products and plant orders have led to diversification of business items and market.

8 With change coming, LG International responded to the challenges of evolving global markets by focusing on overseas development projects that secured the nation s access to critical raw materials and energy resources.

The first step toward this new strategy was taken in 1983, with LG International s participation in the Ensham bituminous coal mine project in Australia.

9 The first step toward this new strategy was taken in 1983, with LG International s participation in the Ensham bituminous coal mine project in Australia In 1994, LG International became the first foreign company to enter the mine development field in Russia ~ The company has expanded into oil and gas development projects in several international locations. Beginning in the mid 2000s, LG International expanded along the value chain to include direct operations among its core capabilities. 2000~

10 Now, LG International is preparing to meet the challenges of the future by establishing its leadership in green and renewable energy. In 2009, LG International is operating crude palm oil (CPO) plantation businesses in Kalimantan, Indonesia. It is already producing CPO there. 2009

11 2010~ LG International plans to continue expanding its green businesses in various developing nations, including Indonesia, in a bid to lay the groundwork for long-term profits.

12 A history of challenge A story of success and the professionals who make it happen LG International

14 Vision LG International is a Global Business Challenger challenging the future and proactively pursuing businesses in Resource development, Trading and Project business domains. The Way Forward The path to the future growing together with customers, partners, and employees OUR VISION SYSTEM 14

Overview Since its establishment in November 1953, LGI has been part of the driving force behind leading South Korea's trade and economic development.

15 Overview Since its establishment in November 1953, LGI has been part of the driving force behind leading South Korea's trade and economic development. From 1970 to 1980, LGI spearheaded the export and import related activities of the country's major industries. In the 1990s, LGI entered new businesses, such as the natural resource development and plant construction. In 2000, LGI began investment in related fields, and a true specialist in the development of natural resources. LGI has currently secured 80 business hubs globally, including Asia, Europe, and North America. LGI is conducting 30 projects in coal, petroleum, non-ferrous metals, and palms, among others. Furthermore LGI is not only making progress in national development type projects, but also actively fostering project businesses such as power generation and chemical plants which links with natural resources and tradings as engines for future growth. Through change and innovation, LGI will continue to sustainably grow as a global company even in challenging market environment. 15

16 Our business Superior management infrastructure, broader insights into the future, global network with diverse business experience as well as marketing abilities. These are what make LG International successful in our diverse business areas.

17 Energy Raw Materials Development of Resources Green Coal Crude Palm Oil Plantation Petroleum Nonferrous Metals Industrial Materials Project IT, Auto & Aviation Petrochemical Steel Petrochemical Project IT Chemical Fiber Resins Hot-Rolled Iron and Steel Power Generation Auto & Aviation Petrochemical Products Cold-Rolled Iron and Steel Coal Chemical Engineering

Energy Raw Materials Development of Resources Green Business coal Development of Resources Petroleum Nonferrous Metals To build up the business foundation for resources development, LGI has acquired

18 Energy Raw Materials Development of Resources Green Business coal Development of Resources Petroleum Nonferrous Metals To build up the business foundation for resources development, LGI has acquired coal mines beginning in Australia, Russia, and later in Indonesia and Inner Mongolia, China. It has also acquired oil fields beginning in Vietnam, Kazakhstan, and later in Oman and Qatar in the Middle East, and Chile and Colombia in South America. In addition, LGI purchases nonferrous metal materials from suppliers all over the world, and stably supplies them to its domestic and overseas customers. It plans to invest and expand its business in Central America and Africa where resource is rich. Oil Platform in West Bukha, Oman 18

1 2 Coal Coal is one of the initial businesses of LGI s resource development. Beginning from Australia, LGI has expanded its coal business to Russia, Indonesia, China, and Canada.

It was recorded as the first attempt for a Korean trading company to succeed exploration, development and production of coal.

19 1 2 Coal Coal is one of the initial businesses of LGI s resource development. Beginning from Australia, LGI has expanded its coal business to Russia, Indonesia, China, and Canada. By investing in coal mines and securing coal off-takes, LGI has contributed to the increase of Korea s energy independence. LGI started operating the Indonesian MPP bituminous coal mine from It was recorded as the first attempt for a Korean trading company to succeed exploration, development and production of coal. Following this success, LGI acquired the Wantugou bituminous coal mine in Inner Mongolia, China, and the GAM sub-bituminous coal mine in Indonesia. To strengthen its coal trading business, LGI plans to expand its sales network mainly in China and India, and invest in logistic infrastructures such as coal storage yards and port facilities in an attempt to take a giant leap forward to becoming a major coal trader in Asia. 1. MPP bituminous coal mine in Indonesia 2. Oilfield in Kazakhstan Petroleum To stably supply petroleum and gas energy, LGI is operating oil field and gas field businesses in Oman, Qatar, Vietnam, Kazakhstan, and Chile. Beginning in Southeast Asia, it is expanding its business to the Middle East and Central Asia. It recently expanded its investment scope to South America. LGI has acquired stakes in production blocks, exploration blocks, and operations mainly in strategic regions such as the Middle East, Central Asia, and South America. It is further increasing its production and securing reserves in the blocks it has invested in such as Block 8 in Oman, ADA in Kazakhstan, and GeoPark in Chile and Colombia. Through strategic alliances with companies which hold advanced technologies, LGI plans to enter into shale gas business in North America. Nonferrous Metals LGI manages investment and trading business of nonferrous metals commonly used as industrial raw material. We are expanding our investment portfolio to the Americas where non-ferrous metal resource is abundant. Our trading business involves supplying non-ferrous metals domestically and internationally, and at the same time looking to diversify our business portfolio. In addition to participating in the development of the Rosemont mine in the USA to secure copper and molybdenum, LGI is searching for other business opportunities to secure long-term and stable sources of profit. Amid the rising demand for nonferrous metals due to the sophistication of industries, LGI purchases industrial nonferrous metals such as aluminum, copper, tin, and zinc from suppliers all around the world, and supplies them to domestic and international industrial manufacturers. 19

20 Energy Raw Materials Development of Resources Green Business Green Business Crude Palm Oil Plantation LGI creates sustainable green business models such as crude palm oil plantation businesses to stabilize its profits. It is steering its plantation business toward the creation of large-scale palm plantations in Indonesia, the world s largest crude palm oil producer. LGI has built CPO production mills and is now producing and selling CPO. 20

21 Crude Palm Oil Plantation LGI operates crude palm oil (CPO) plantation business in Kalimantan in western Indonesia. After launching the business in 2009, it constructed CPO mills in 2012, and is now producing 40,000 tons of products a year. In line with the increased output of its palm plantations, it is pushing to construct more CPO mills. CPO is a vegetable oil that is extracted by compressing palm fruits using the pure compression method. It is being spotlighted as the main raw material of cooking oil, cosmetics, bio-diesel, and many other products. As such, companies all over the world are investing in CPO production. Palm oil plantation in Indonesia 21

industrial materials Project IT, Auto & Aviation Petrochemical Business Steel Petrochemical Project Power Generation Project LGI is implementing projects that involve investing in, developing, and

22 industrial materials Project IT, Auto & Aviation Petrochemical Business Steel Petrochemical Project Power Generation Project LGI is implementing projects that involve investing in, developing, and constructing various plants and infrastructure facilities for oil & gas, petrochemical business, and power generation. Toward these ends, it forms consortia with domestic and overseas construction companies, and invests in such projects, in what is seen as an intensive business that integrates the information, business development, investment, finance, and required functions. Beyond mere participation in the construction of plants, LGI provides the values its customers need from the initial stage of the business, and extensively explores business opportunities by managing investments and by securing rights to sell products. Galkynysh gas treatment plant in Turkmenistan 22

1 2 Petrochemical Project LGI launched a vinyl chloride business in Saudi Arabia in1983, and has since been earnestly implementing plant projects.

It has also participated in plant businesses as a equity investor, thereby securing country marketing capabilities to be able to provide needed values to its target countries.

23 1 2 Petrochemical Project LGI launched a vinyl chloride business in Saudi Arabia in1983, and has since been earnestly implementing plant projects. It has won orders such as for oil refinery plant in Qatar, gas plant in Iran, and polypropylene and aromatics plants in Oman, thereby expanding its plant businesses in the Middle East. It has also participated in plant businesses as a equity investor, thereby securing country marketing capabilities to be able to provide needed values to its target countries. With such experience, LGI won orders for gas treatment and oil refinery plants and recently has won ethane cracker and polymer plants in Turkmenistan. From its successful business experiences in emerging markets, it is expanding its plant businesses. 1. NODCO oil plant in Qatar 2. Solar power plant in USA POWER GENERATION PROJECTS LGI has been continuing to push ahead with its power generation businesses including fossil fuel thermal and hydroelectric power generation in the Middle East and Southeast Asia. In addition, it is pushing ahead with its renewable power generation businesses such as photovoltaic power generation in United States. We focuses on taking a role of Independent Power Producer in these business fields. In particular, LGI is vigorously participating in equity investments in power generation projects, while combining our capabilities further into construction and operation of power generation plants. 23

We are able to provide greater value and flexibility to our clients by operating a VMI(Vendor Managed Inventory) system that relies on

24 industrial materials Project IT, Auto & Aviation Petrochemical Business Steel IT Auto & Aviation IT, Auto & Aviation LGI is active in the import, export and third-party transaction of Electronic equipments. We are able to provide greater value and flexibility to our clients by operating a VMI(Vendor Managed Inventory) system that relies on strategicallylocated hubs. Such a system allows us to offer on-time delivery, while helping us to expand our customer base and to effectively enter a larger number of emerging markets. Circuit Board 24

1 2 IT LGI markets key IT components through businesses such as supplying displays and electronic parts produced at home and overseas, and

Also, LGI provides consumers optimal supply chain management services by establishing VMI(vendor management inventory) business model

We not only store key materials and components in warehouses, but also develop an infrastructure designed to deliver supplies to our

Manufacturing facility for LCD Auto & Aviation LGI conducts businesses related to automobiles and aviation.

well as elevators and building solutions in the industrial machine field. We aim to become a world-class machinery trader.

25 1 2 IT LGI markets key IT components through businesses such as supplying displays and electronic parts produced at home and overseas, and conducting tripartite trade of LCD panels and wafers. Also, LGI provides consumers optimal supply chain management services by establishing VMI(vendor management inventory) business model which offers new values to consumers. We not only store key materials and components in warehouses, but also develop an infrastructure designed to deliver supplies to our customers at timely manner, thereby offering new values to our customers Manufacturing facility for LCD Auto & Aviation LGI conducts businesses related to automobiles and aviation. We provide diverse services that are focused on automobile design, manufacturing facilities, and key parts in the automobile field, as well as elevators and building solutions in the industrial machine field. We aim to become a world-class machinery trader. In the aviation field, we import Russian-made helicopters, and sell them to major domestic government agencies and private operators. We provide excellent follow-up support services at our maintenance center by supplying helicopter parts, and conducting helicopter maintenance and repair services. In addition, we actively explore energy-related businesses, such as energy storage systems (ESS). 2. VMI center in China 3. Kamov helicopter 25

well as various chemical products such as petrochemical products, methanol, and sulfuric acid. It recently entered the fertilizer business.

26 industrial materials Project IT, Auto & Aviation Petrochemical Business Steel Chemical Fiber Resins Petrochemical Products Coal Chemical Engineering Petrochemical Business In the petrochemical business category, LGI is trading plastic product rawmaterials such as PE/PP and PET, as well as various chemical products such as petrochemical products, methanol, and sulfuric acid. It recently entered the fertilizer business. In particular, by investing in overseas production factories, it secures the manufacture of Korean-made products by laying the groundwork for their stable supply. 26

1 Chemical Fiber Resins LGI s chemical fiber resin business involves various products such as general plastic resins like PP, PE, and PVC, as well as functional plastic resins such as PET and ABS.

China's coal chemical urea plant Petrochemical Products In the petrochemical products business category, under longterm agreements with domestic and overseas companies, LGI, based on its

27 1 Chemical Fiber Resins LGI s chemical fiber resin business involves various products such as general plastic resins like PP, PE, and PVC, as well as functional plastic resins such as PET and ABS. LGI sells the products in major global markets and conducts tripartite trading LG DAGU, the PVC plant in Tianjin, China 2. China's coal chemical urea plant Petrochemical Products In the petrochemical products business category, under longterm agreements with domestic and overseas companies, LGI, based on its information-gathering capabilities and professionalism, trades major petrochemical products such as olefin and the polyester raw materials SM and BTX. In addition, LGI is a major domestic supplier and exporter of general chemical products such as methanol, sodium carbonates, and sulfuric acid. It domestically sells, imports and exports functional chemical products such as alcohols and synthetic rubber. As such, it trades diverse petrochemical products using diverse trading methods. Coal Chemical Engineering In cooperation with chemical companies on projects, LGI has laid the groundwork for operating its petrochemical business, which allows it to stably supply products at the needed volumes and to expand its business. In addition to acquiring LG DAGU (PVC) and LG BOHAI (VCM), LGI recently became the first Korean company to acquire a stake in coal chemical engineering urea plants located in Inner Mongolia, thereby entering the fertilizer business. Through this project, LGI has not only secured volumes of products to sell, but has also undertaken to supply raw materials, securing a source of revenue which differentiates from that of general manufacturers or trading companies. 27

industrial materials Project IT, Auto & Aviation Petrochemical Business Steel Hot-rolled Iron and Steel Cold-rolled Iron and Steel Steel In the steel category, LGI operates a hot-rolled and

For its hot-rolled steel business, it imports and exports, and conducts tripartite trading, of construction materials, thick plates for shipbuilding, and other basic steel material products.

28 industrial materials Project IT, Auto & Aviation Petrochemical Business Steel Hot-rolled Iron and Steel Cold-rolled Iron and Steel Steel In the steel category, LGI operates a hot-rolled and cold-rolled steel business. For its hot-rolled steel business, it imports and exports, and conducts tripartite trading, of construction materials, thick plates for shipbuilding, and other basic steel material products. For its cold-rolled steel business, it exports and sells domestically produced cold-rolled steel materials to overseas end-users such as home electronics and car manufacturing companies. In particular, LGI's investment in coil centers also allows it to manufacture and sell cold-rolled steel products overseas, thereby expanding its overseas markets. Cold-Rolled Steel 28

1 2 Hot-rolled Iron and Steel LGI purchases steel materials from steel suppliers of Korea, China, Southeast Asia, trades and conducts

Though expanding supply volume, it is bolstering its competitiveness in construction materials and thick plates for shipbuilding areas.

developing markets not only in Middle East and Africa but also in Europe, Central and South America which are more distant. 1.

Coil center in Poland Cold-rolled Iron and Steel LGI exports cusomized cold-rolled steel materials which are domestically manufacture

29 1 2 Hot-rolled Iron and Steel LGI purchases steel materials from steel suppliers of Korea, China, Southeast Asia, trades and conducts tripartite trading. Though expanding supply volume, it is bolstering its competitiveness in construction materials and thick plates for shipbuilding areas. In addition, LGI has laids groundwork for tripartite trading via strategic alliance with steel mills in China and is currently developing markets not only in Middle East and Africa but also in Europe, Central and South America which are more distant. 1. Manufacturing facility for hot-rolled steel 2. Coil center in Poland Cold-rolled Iron and Steel LGI exports cusomized cold-rolled steel materials which are domestically manufacture to overseas end-users such as home electronics and car manufacturing companies. In particular, in China, India and Poland, LGI operates Coil Center and provides local customers One Stop Service which include manufacturing, logistics, and financing services. It plans to futher expand business in emerging markets Russia, Thailand, Mexico and Brazil. 29

30 About LG Ever since its first steps over 60 years ago, LG has always committed to be the first. Leading the way in corporate management and customer satisfaction, the LG Group is now one of the largest conglomerates with interests in electronics, chemicals, and telecommunication & services. Without resting on our laurels based on the achievements to date, the LG Group leaps forward to endure another 100 years and more. LG Chem LG Household & Health Care LG Polycarbonate LG U + LG Hausys LG International LG Solar Energy Chemicals LG MMA LG CNS Telecommunications & Services LG Electronics LG N-Sys Electronics LG Management Development Institute LG Sports LG Siltron LG Display LG Innotek 30

31 LG way The LG Way represents LG s core beliefs, values, and aspirations. It illustrates a vision structure that guides the thoughts and actions of LG people in attaining the ultimate goal of becoming a No. 1 LG. It stipulates the way in which this goal is reached through the practice of Jeong-Do Management, and the realization of LG s management principles, Creating value for customers and Respecting human dignity. Vision No.1 LG Code of Conduct Jeong-Do Management Management Principles Creating value for customers Respecting human dignity Vision LG s vision is to become the best in its class by winning customers acclaim as a true leader in the global market. Code of Conduct Jeong-Do Management is LG s unique code of conduct that governs our management activities. The English translation of Jeong-Do is Right Way. Jeong-Do Management is the way we display our uncompromising integrity in pursuing LG s management principles. Management Principles LG s management principles state the purpose of LG s business activities, and also provide a basis for its operations. It embodies the key concepts of Creating value for customers and Respecting human dignity. 31

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34 128, Yeoui-daero, Yeongdeungpo-gu, Seoul KOREA Tel Fax Homepage : lgi@lgi.co.kr

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