An avenue I can see possible funding occurring is through involvement from South Korea’s ECA’s (export credit agencies) particularly Kexim and possibly K-Sure. I view this as a huge strength in the relationship with SK as Kexim has a long track record of backing Korean companies operating offshore through various financial means. Fundamentally it exists to :
- Provide export credits to promote the export of capital goods such as ships and industrial plants, high technology industries such as IT.
- Provide credits to support overseas investments, overseas projects, and natural resource development projects.
View attachment 1551955Financial ProductDescription
Overseas Investment Loan The Bank provides financing necessary for Korean companies to invest in foreign companies in the form of share capital and/or shareholder loan.
Overseas Project Loan The Bank provides financing to Korean companies conducting projects abroad without establishing an overseas subsidiary.
Overseas Business Loan The Bank provides financing to foreign subsidiaries of Korean companies.
Overseas Business Facilitation Loan The Bank provides financing to the counterparts or other parties that contribute to the facilitation of Korean companies’ overseas business in case where Korean companies or their foreign subsidiaries conduct projects overseas.
Import Facilitation Loan The Bank provides financing to the counterparts or other parties that contributes to import transactions that are essential to the national economy.
Financial Guarantee The Bank guarantees to pay the aggregate principal and interest on loans made by domestic or foreign financial institutions to borrowers in eligible transactions, in the event the borrower fails to make such a payment.
Kexim has a budget this year of nearly US$60 billion U.S. While of course it provides cash loans to projects with significant South Korean involvement finance guarantees to commercial finance operations form an important part of its activities.
All who are close to this ‘new energy’ space know just how much potential exists. This would not have been missed by these ECA’s especially when some of South Korea’s firms are positioned so perfectly to take full advantage of it. Above all the sector has been highlighted as an area of focus, i.e., in the national interest. Resource risk imo would have been identified as the most severe threat to downstream economic benefit for South Korea as a whole.
Kexim was involved in the Ichthys LNG development in Northern Australia not only in direct funding of over 1 billion U.S. but support for South Korean companies who won enormous contracts connected to the project. Any financing for Sconi may have South Korean content requirements inbuilt should Kexim play a part.
Another example amongst many is support for the Mina Justa copper mine in Peru contributing 200m in support of a Korean-Japanese consortium that will take 30% of the copper over the next decade.
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