Korea's general trading companies are expanding into new businesses in energy such as solar power and in strategic minerals such as rare earths. They are overhauling their traditional trading-centered structures and diversifying their portfolios.
On the 31st, according to the trading and energy industries, Samsung C&T is seeking to attract domestic and foreign financial investors (FI) to directly operate solar facilities in the United States. The fundraising target is $300 million.
Samsung C&T is expanding its solar business by shifting from developing solar projects and selling power generation rights to directly operating plants and earning operating revenue.
Samsung C&T has been engaged in the solar business in the United States since 2018. After securing sites in the United States, it has proceeded through permitting and other steps, then sold solar power generation rights at the build-ready stage. Including two new solar development projects totaling 300 MW in progress in Georgia in the Southeast, it is developing about 100 projects across the United States.
Samsung C&T plans to grow beyond development into an independent power producer (IPP) that directly operates plants. While maintaining the practice of selling power generation rights, it plans to directly operate solar facilities in some regions with high energy output.
A Samsung C&T official said, "To secure operating revenue after building solar power plants, we are targeting the IPP business and are currently reviewing prime sites in the United States."
LX International is expanding its bioenergy business. LX International is currently pushing to build a new plant to directly produce wood chips (a biomass fuel made by finely shredding wood) used in biomass power generation. The site under review is Andong, North Gyeongsang Province.
Earlier, in 2022, LX International acquired a 63.34% equity stake in Poseung Green Power, which operates a biomass power plant. An LX International official said, "As we reviewed establishing wood chip production facilities, we considered possibilities for business expansion such as supplying biomass feedstock to Poseung Green Power."
POSCO International is linking its existing mobility parts manufacturing business with its new rare earth supply chain. POSCO International, through its subsidiary POSCO Mobility Solution, produces drive motor cores, a key component of electric vehicle drive motors.
It plans to expand its business scope to include rare earth raw material procurement, separation and refining, and permanent magnet production, building a supply chain that extends to EV drivetrain components. In May, after establishing a joint venture with U.S. rare earth refining company ReElement, POSCO International began building a plant in Marion, Indiana, for rare earth separation and refining and permanent magnet production. Basic construction is underway, with mass production targeted for the second half of next year.
The shift by general trading companies into new businesses is seen as a strategy to reduce high earnings volatility from raw material price swings and improve the low-margin structure of distribution. Han Seung-hun, an analyst at Shinhan Investment & Securities, said, "In the case of Japanese general trading companies, the core sectors of the five to seven major companies differ, and each has diversified its portfolio by playing to its strengths," adding, "Korean trading companies are also accelerating new businesses as the share of traditional trading declines."