[Let's Run Again, Construction Korea] Water Treatment Business Grows 10 Times in 9 Years... Future Food Source is Eco-Friendly

<2> GS Construction Acquires Spanish 'GS Inima' in 2012
Leading Water Treatment Technology Using Reverse Osmosis
Secures Korea's Largest 'Daesan Coastal Seawater Desalination' Project

Modular Construction, Secondary Battery Recycling, and More
Rapid Investment in Future-Oriented New Businesses
Strengthening Corporate Fundamentals and Pursuing Sustainable Growth

The Lagares water treatment facility, completed by GS Inima in Spain in 2018. With a daily treatment capacity of 230,000㎥, it is the largest biological filtration water treatment facility in Spain. (Provided by GS Construction)

[Asia Economy Reporter Kim Hyemin] An unexpected event occurred in the domestic water treatment market this August. GS Construction, which had no prior domestic experience, was selected as the contractor for the ‘Daesan Coastal Seawater Desalination’ project commissioned by Korea Water Resources Corporation. This project involves constructing a seawater desalination facility with a daily capacity of 100,000 tons in Daejuk-ri, Daesan-eup, Seosan-si, Chungnam Province. The freshwater obtained here will be supplied as industrial water to the nearby Daesan Coastal Industrial Complex. As the first seawater desalination project led by the public sector and with the largest project cost in Korea amounting to 251.3 billion KRW, it attracted industry attention even before the selection.

◆ GS Inima’s Reverse Osmosis (RO) Technology and Design Expertise Were Decisive = The foundation for GS Construction winning this project, which was conducted through a 100% technology-based bidding process, was the technology of its Spanish subsidiary GS Inima, acquired in 2012.

Seawater desalination refers to the process of removing salt and organic substances from seawater to produce freshwater usable for drinking or domestic purposes. While traditional methods are heat-based technologies that evaporate water to produce freshwater, the recent market is rapidly shifting to membrane technology using reverse osmosis phenomena. This method purifies water by applying pressure to a membrane with fine pores, allowing water molecules to pass from a higher concentration side to a lower concentration side, similar to the principle of water purifiers. It causes less environmental pollution and consumes relatively low energy. GS Inima ranks among the top 10 worldwide in reverse osmosis desalination plants.

GS Construction leveraged Inima’s experience, which has constructed over 200 water treatment plants worldwide, to achieve successive contract wins after the acquisition. In 2013, the year following the acquisition, it secured a 210 billion KRW integrated water and sewage operation project in Spain. This was the first entry into integrated water and sewage operation business by a domestic private company.

In 2014, GS Construction won a 69.4 million euro (approximately 100.6 billion KRW) seawater desalination plant project in Djerba commissioned by Tunisia’s waterworks corporation, marking its first entry into the Tunisian construction market. It also secured a 767 million USD integrated sewage management project commissioned by Casalsa, the water and sewage company of Alagoas state in northwest Brazil.

Domestically, GS Construction entered the smart aquaculture business using water treatment technology. Smart aquaculture refers to farming seafood on land by applying information and communication technology (ICT). Technologies for purifying seawater and treating wastewater from aquaculture farms are crucial. Maintaining clean water quality using water treatment technologies such as seawater desalination is essential. GS Construction signed a business agreement with Busan City for the ‘Smart Aquaculture Cluster Development Project’ and plans to establish a testbed at Pukyong National University’s Fisheries Science Research Institute by next year.

Through successive contract wins, GS Inima’s net profit has grown more than tenfold compared to the time of acquisition. Sales first exceeded 200 billion KRW in 2016 and approached 295 billion KRW last year. During the same period, net profit more than doubled from 11.6 billion KRW to 30 billion KRW.

A 21-story modular building under construction in London, UK, by Elements, a British company acquired by GS Construction last year. (Provided by GS Construction)

◆ GS Construction’s New Business Keywords: ‘Eco-friendly’ and ‘Digital’ = GS Construction judged that sustainability could not be guaranteed by its existing construction business focused on orders and contracts alone, and is rapidly increasing the proportion of new businesses. In addition to water treatment, it has expanded into modular construction, solar power, and lithium-ion battery recycling.

Modular construction is a technology that assembles buildings like Lego blocks. Most of the building’s basic framework, electrical wiring, ondol (underfloor heating), and other housing materials are pre-manufactured in factories, and only assembled on-site. This minimizes on-site work, reducing construction time by 20-50%, and is eco-friendly due to less noise, dust, and waste during construction.

GS Construction officially entered the modular business last year by acquiring overseas modular companies such as Danwood in Poland and Elements in the UK. The modular market has traditionally been centered on developed countries where securing construction labor is difficult and wages are high, but recently, GS Construction has focused on the growth of this market domestically due to aging populations, labor shortages, and stricter environmental regulations.

In June this year, GS Construction completed a factory on a 150,000㎡ site in the Jungbu General Industrial Complex, Eumseong-gun, Chungcheongbuk-do, capable of producing 120,000㎥ of precast concrete (PC) components annually. The PC method involves pre-manufacturing concrete structures such as slabs, columns, beams, and walls in factories and assembling and installing them on-site.

GS Construction also entered the lithium-ion battery recycling business, a secondary battery recycling sector. It established a subsidiary specializing in energy materials, Enerma, in October last year, and since September this year, has been constructing a secondary battery recycling plant in the Battery Recycling Regulatory Free Zone within the Yeongilman 4 General Industrial Complex in Pohang. This business involves collecting used secondary batteries, physically crushing them, producing black powder (a black mass containing lithium, cobalt, nickel, manganese, etc., obtained by finely shredding and heat-treating batteries), and extracting secondary battery metal materials through a wet smelting process. Enerma plans to invest approximately 100 billion KRW initially and commence commercial production from 2023.

As part of its eco-friendly energy business, GS Construction also entered the solar power generation sector. In January 2019, GS Construction was selected as the independent power producer (IPP) developer for a 300 MW solar power plant near Jaisalmer, Rajasthan, in northwest India. IPP refers to a private company building and operating a power plant for a certain period to recover investment costs. GS Construction invested 23.5 million USD out of the total project cost of 185 million USD. The project began phased commercial operations in September and is expected to enter full commercial operation this month.

A GS Construction official stated, "While strengthening the foundation of existing businesses such as construction and housing, we plan to actively promote new businesses to secure future growth engines. Through stable profit generation and proactive investment for the future, we will grow into a leading sustainable company in Korea."