By Heejin Kim, Jihoon Lee and Joyce Lee
SEOUL, Sept 22 (Reuters) – South Korea confirmed its first project under a $350 billion US investment pact on Tuesday and said it is considering two others, moving ahead despite profitability concerns and criticism from President Donald Trump over the pace of implementation.
Seoul has selected a gas-fired power plant project in Texas, while also considering a proposal to invest in two South Korean-designed nuclear reactors as part of a broader nuclear investment initiative, lawmaker Chung Chin-ook said on the sidelines of a briefing by Industry Minister Kim Jung-kwan.
Kim briefed lawmakers in a closed-door meeting as Seoul and Washington seek to finalise implementation of a trade deal agreed in November last year that cut US tariffs on South Korean goods to 15%.
The investment plans require approval by a US government investment committee and further negotiation with US Commerce Secretary Howard Lutnick, Kim told Reuters after the briefing. Trump would make the final announcement on the US investment plan, news agency Yonhap reported.
TRUMP THREATS
US officials have criticised Seoul for moving too slowly on the investments, especially compared with countries such as Japan and Trump had threatened higher tariffs as a result.
Seoul wants to avoid further friction with Washington after Trump also criticised South Korea for not providing assistance over the Iran war and US officials aired concerns over the treatment of US companies, including US-listed Coupang.
President Lee Jae Myung said on Friday that commercial viability had become a sticking point as negotiators moved from a broad agreement to the details of individual projects and Seoul had sought to ensure “commercially reasonable” investments.
“The announcement of the first project would be a meaningful initial step,” said Hyun Jung Je, a Washington-based senior fellow at policy group Korea Economic Institute of America.
“It would demonstrate that the two governments have made progress in identifying an investment opportunity that they believe can serve the interests of both countries. Ultimately, the deal will need to be judged by its implementation and results, rather than the commitment itself.”
POWER AND NUCLEAR PROJECTS
South Korea is also considering the purchase of a 5% to 10% stake in US nuclear technology firm Westinghouse, while a decision on participating in a long-delayed Alaska liquefied natural gas project had not yet been made, Chung said.
The confirmed project – a 6.3-gigawatt gas-fired power plant in Encinal, Texas – is valued at more than $20 billion and would supply electricity to AI data centres and chip factories, according to media reports.
The two countries have also been discussing construction of as many as eight large nuclear reactors in the United States, two of which would be built using Korea’s APR1400 model while the remaining six will deploy Westinghouse’s AP1000 design, a source briefed on the negotiations said.
A separate source also said South Korea was seeking to cap annual investment at $20 billion to limit the potential impact on the won’s exchange rate.
Lawmaker Bae Jun-young said a “significant” payment would be required by the end of September after a formal announcement.
Funds could be remitted within 45 days if requested by Washington, Yonhap reported. South Korea will provide the full investment for a gas-fired power project in Texas while ownership would be split equally with US partners, the news agency also reported.
Kim Yong-jin, management professor at Sogang University, said the Texas power plant project could help other Korean companies enter the US market with their technologies.
A deal to build Korean-designed nuclear reactors and secure a stake of around 10% in Westinghouse would also help South Korea protect its intellectual property, he said.
“That will be the best-case scenario because there is a high possibility that it will open up markets in Europe and the Middle East as well.”
COMMERCIAL VIABILITY CONCERNS
Lawmakers from the opposition conservative party told reporters they had raised concerns about the commercial viability of the investments but the government had told them it believed the Texas project would be viable under a 20-year profit-return structure.
The lawmakers have demanded closer parliamentary scrutiny of the projects. The government does not need parliamentary approval but does need to brief the chamber about projects deemed commercially reasonable.
Projects that are not commercially feasible, but that the government wants to pursue on national security grounds or for supply chain stability, would require parliamentary consent, according to the South Korean bill on US strategic investment.
(Reporting by Joyce Lee, Heejin Kim and Jihoon Lee; Additional reporting by Jack Kim and Kyu-seok Shim; Writing by Brenda Goh; Editing by Ed Davies)
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