Korean Minister Kim Jong-kwan Heads to U.S. for Final Investment Talks

Korean Minister of Trade, Industry and Energy Kim Jong-kwan has traveled to the United States for final negotiations ahead of a $350 billion investment plan. Key issues include the first investment project, the scale and timing of investments, and the structure that will affect the recovery of investment funds and loss burdens.

According to the Ministry of Trade, Industry and Energy, Kim did not return to Korea after a trip to France and Belgium, instead heading directly to the U.S. He is expected to remain in the U.S. until September 12, engaging in discussions with U.S. officials, including Secretary of Commerce Howard Lutnick, regarding the investment.

The $350 billion investment promised by Korea consists of $150 billion for shipbuilding cooperation and $200 billion for strategic investments. Both sides are currently negotiating specific investment conditions, including the first project.

The construction of the Ensinal gas combined cycle power plant in Texas is being considered as the first project. Initially, the total project cost was estimated at $19.8 billion, with plans to build a total of 6.4 GW of power generation facilities, including 1.4 GW of gas turbine power and 5 GW of gas combined cycle power. The U.S. side later proposed a $25 billion investment, and recent reports suggest that both sides are negotiating a compromise around $22.3 billion.

Subsequent projects may include the construction of large nuclear power plants in the U.S. Both countries have been discussing various options, including the scale of nuclear power construction and the acquisition of shares in Westinghouse.

Additionally, the development of liquefied natural gas (LNG) in Alaska is being considered as a follow-up investment candidate. The Alaska LNG project involves transporting natural gas produced from northern Alaska through a 1,300-kilometer pipeline to Nikiski in the south for export to Asia and other markets. The total project cost is estimated at around $44 billion.

The investment structure is also a key point of negotiation. The memorandum of understanding (MOU) between Korea and the U.S. includes a plan to manage profits and losses from multiple investment projects through a special purpose vehicle (SPV). Instead of settling the performance of individual projects separately, this structure aims to pool the profits and losses of various projects to distribute overall investment risks.

Recently, the U.S. side proposed a plan to settle profits and losses for each project individually, leading to ongoing discussions about how the existing structure will be applied in the actual investment process. The method of settlement could affect Korea's recovery of investment funds and loss burdens, making the final negotiation results particularly significant.

The government has stated that specific investment projects and amounts have not yet been finalized. A Ministry official noted, "There are no confirmed details regarding specific investment destinations, announcement timing, or the scale and timing of the first investment remittance related to U.S. investments," adding that while various discussions are ongoing regarding nuclear power investment cooperation, specific details have yet to be determined.

The Ministry plans to report on the U.S. investment projects and negotiation progress to the National Assembly in a closed session on the morning of September 17. Given that the detailed investment conditions could impact future negotiations and project implementation, it has been decided that related materials will not be made public. There are also discussions about sharing related information under enhanced security measures during the National Assembly's deliberation process.