NEL Project on Track... GS Construction Fires Successive Winning Shots in Australia

[K-Construction, A New Leap] GS Geonseol
First Entry in 2021, Tunnel Excavation Begins
Breaking Australia's PPP Monopoly with Technology
CEO Heo Yunhong's First Overseas Site Visit
Additional Subway Construction Contract Secured Last Month

GS Construction is expanding its footprint in overseas markets and finding new opportunities. In particular, it has been solidifying its position in Australia since winning a large-scale road construction project in 2021. Unlike competitors struggling in the domestic construction market, which has frozen due to an economic downturn, GS Construction is recognized for securing competitiveness in overseas markets.

‘3 Trillion KRW Scale’ First Project on Track

GS Construction's first entry into the Australian market at the NEL Road Corporation site.

The North East Link (NEL) project in Victoria, Australia, led by a GS Construction consortium, is progressing smoothly. In July, a ‘Smoking Ceremony’ was held to pray for safety ahead of tunnel excavation. CEO Heo Yoonhong also attended this event, marking his first overseas site visit since his appointment. The Smoking Ceremony is a ritual meant to purify the area and drive away bad spirits. In Australia, it is traditionally performed before important events.

Excavation in tunnel construction signifies the official start of the main construction work. The NEL road project involves building a 6.5 km tunnel connecting the disconnected sections between the northeastern outer ring road and the eastern freeway in Melbourne, one of Australia’s three major cities, in response to population growth and urban expansion. GS Construction is responsible for constructing the parallel tunnels with three lanes each way, ventilation facilities, and surrounding connecting roads.

Notably, the tunnel construction is being carried out using the TBM (Tunnel Boring Machine) method. This technique uses large machinery to automatically excavate circular tunnels. It reduces vibration and noise while enhancing safety.

GS Construction aims to complete the project by December 2028. After completion, it will operate and maintain the facility for 25 years.

This project marks GS Construction’s first entry into the Australian infrastructure market. The construction cost is approximately 2.8 trillion KRW, with GS Construction participating in both financial investment and construction through a consortium. This is the second-largest contract amount after the 2009 plant project in the United Arab Emirates and is the largest single project ordered within Australia.

GS Construction’s Technology Breaks Through Monopoly Market

Huh Yoonhong, CEO of GS Construction (center), and Australian site workers are taking a commemorative photo after completing a smoking ceremony to pray for safety before the commencement of TBM (Tunnel Boring Machine) work at the NEL road construction site located in Melbourne, Australia.

The significance of winning this project lies in breaking into Australia’s PPP (Public-Private Partnership) market, which had been dominated by domestic companies. PPP projects involve collaboration between public funds and private capital. The private sector invests in public infrastructure such as roads and is responsible for construction, maintenance, and operation to generate profits, while the government supports through tax reductions and partial financial assistance. Although Australia has a well-established PPP system, it was difficult for foreign companies to enter as domestic firms typically secured contracts. However, the Australian government encouraged foreign construction companies to participate to foster competition within the domestic market. Since 2012, GS Construction has successfully leveraged this opportunity by closely monitoring overseas PPP projects.

A GS Construction official said, "This is a good example of how Korean construction companies’ technology and financing capabilities are recognized in advanced construction markets with more stringent bidding processes. It is expected to significantly contribute to reducing traffic congestion in nearby areas and revitalizing the local economy through job creation."

Securing Additional Orders This Year... "Active Expansion in Australian Market"

The eastern section of the Melbourne SRL in Victoria, Australia, contracted by GS Construction.

GS Construction is actively pursuing additional orders in the Australian infrastructure construction market.

To strengthen local sales efforts, the Australian overseas corporation was relocated from Perth, Western Australia, to Sydney, New South Wales. This move was made to secure upcoming PPP projects.

The bidding environment in Australia is demanding, but GS Construction is gaining experience by bidding on various projects. Typically, the six-month bidding period requires agreements on technical, contractual, and financial evaluations to be finalized just before signing. All these negotiations must be conducted with Australian experts using specialized terminology.

Overcoming these challenges, GS Construction has recently expanded its order volume. Last month, it won a subway construction project. This project involves the SRL East underground tunnel construction commissioned by the Suburban Rail Loop Authority near downtown Melbourne. The total project cost is approximately 1.6 trillion KRW, with GS Construction holding a 33.5% stake (about 520.5 billion KRW).

Through this project, GS Construction will build approximately 10 km of double-track TBM tunnels in the SRL East section located in Melbourne’s suburbs, 39 emergency connecting roads, and two underground station excavations. The construction will be carried out as a joint venture with WeBuild (33.5%) and VIG (33%). Construction will start this year and the project is scheduled to open in 2035. The SRL East project is part of the larger SRL project, which aims to build a 90 km new urban rail line in Melbourne. Upon completion, six new stations will be constructed along the 26 km route, serving as a central axis connecting various parts of Melbourne and significantly contributing to Victoria’s economic growth.

A GS Construction official stated, "This contract is an important step in expanding our presence in the Australian construction market. Based on the technology and experience accumulated in the global construction market, we will successfully complete the project and continue to strengthen our solid position in the Australian construction market."