Business Weekly - Cambridge, UK

Driven by government initiatives, one of the world’s largest steel manufacturers and world-leading electronics and automotive firms, the new Daejeon, South Korea, facility already has space allocated for a second and third Keronite line as the business expands and is ready to start producing Keronite ceramic surfaces.

The plant will initially focus on the application of Keronite’s Plasma Electrolytic Oxidation (PEO) to the 3Cs market – computers, cons-umer electronics (not white goods) and communications – before progressing to auto-motive, military and aerospace and domestic appliances.

A fully automated line with a 2,000 litre tank capacity, the new Keronite G3M machine – a world first – is capable of handling high volume production runs. Once the other lines are installed, it would represent a total investment of up to $5m.

Dr Park, president and CEO of Havit, had been seeking to expand further into the surface treatment industry, and was on the look-out for innovative and environmentally-friendly coating technologies.

Keronite’s technology transforms light alloy exteriors – principally aluminium and magnesium – into dense and hard ceramic surfaces using a process that also impacts favourably on design, fuel efficiency, emissions and recyclability.

He said: “The use of light alloys is continuing to expand, not only in the markets traditionally served by Havit, but in the longer term, I believe that there will be more and more opportunities in the automotive and aerospace markets.

“There are already plans to produce lightweight high-speed trains in Korea and with the help of Keronite, projects like these can open many new doors for Havit.”

Keronite CEO Lars Olrik agrees and in Daejeon has a location perfectly suited to hi-tech, electronic advances. The Daedeok Innopolis Complex in Daejeon houses over 800 companies involved in the electronics and 3Cs markets.

This cluster of high-tech businesses is expected to number 1,500 by 2010 and 3,000 by 2015. The city already employs 10 per cent of all the PhDs in South Korea, and 25 per cent of the country’s patent applications emanate from this region.

“The market here is strongly driven by a South Korean government enticing local businesses to become more involved in cleantech processes, POSCO which is a very large aluminium and magnesium smelter and by the presence of companies such as LG, Samsung and Hyundai who are all looking to offer new coatings,” adds Olrik.

This ramp-up in production activity is vital for a six-year old company determined to hit profitability:

“We want to make 2007 the year when we provide a return to investors,” said Olrik, who has also stated he plans to make Keronite a $100m company within five years.

“We have up to six lines planned for installation in the south of China for this year and will be making a major announcement within the next six weeks about a line in Germany linked to the automotive market.”

Keronite is also planning heavy expansion in the US where Olrik believes the company can meet an enormous desire for a reduction in emissions and use of chemicals and where Keronite believes there’s a potential $1 billion market.

Olrik expects to announce a new partnership in May with a US defence and aerospace firm from Orange County working on aluminium and magnesium coating. Further work with a hi-tech firm in the Palo Alto region of Silicon Valley is also lined up.

Away from the US West Coast, Keronite is hoping to announce a new Detroit venture within the next four to eight weeks, laying the groundwork for a full serving of the US automotive industry. The oil and gas sector is being approached through Houston, Texas, and further hi-tech companies are being targeted in the New Jersey and New York areas.

Each production line is valued at £1-2m and is designed and built by Keronite before being leased out to the partner firm.

Current production is being underpinned by funds raised in the middle of last year. Keronite doesn’t expect to need to go back to investors again before it lists on AIM, most probably at some point in 2008.