Korea weighs $120 billion investment in 8 nuclear reactors in U.S. as part of tariff deal

The Korean government is considering spending $120 billion of its U.S. investment package on eight nuclear reactors in the United States, with negotiations potentially resulting in a memorandum of understanding as early as Sept. 18.

Of the first four, Korea would build two and the United States would construct the other two.

The Ministry of Trade, Industry and Resources told the ruling Democratic Party during a closed-door government-party meeting Monday that Washington proposed last month using Seoul's U.S. investment fund to build nuclear power plants under a “comprehensive framework” and that the government is reviewing the proposal, according to multiple attendees.

A comprehensive framework refers to a binding agreement that establishes the overall structure and direction of a deal while leaving detailed rules to be worked out later.

According to insiders, the United States demanded $120 billion in investment, and the Korean government is heavily considering the deal as part of the $350 billion package initially agreed upon in a deal to limit tariffs, with an MOU signed in October of last year pledging $200 billion in cash.

Should the deal proceed, each of the eight reactors would cost an average of $15 billion and amount to almost 60 percent of all promised investment. 

Notably, the two Korean reactors could be exported to the United States. Washington initially insisted on 10 1.1-gigawatt AP1000 reactors through 2030 built by U.S. nuclear company Westinghouse, while Korean companies would supply equipment and other components.

Seoul, on the other hand, wanted the plants to use Korea's independently developed APR1400 model, which has a capacity of 1,400 megawatts. Splitting the first batch of reactors between the two countries would spell a peaceful compromise. The remaining four are reportedly up for further negotiation.

“There is a possibility that Korea and the United States will announce an agreement on the U.S. investment project on Sept. 18,” a ruling bloc source said. “Matters regarding nuclear power could also come up at that time.”

The government-party meeting took place to brief lawmakers on a $22.3 billion combined-cycle gas power project in Encinal, Texas, selected as the first U.S. project under Korea's special law on U.S. investment, but the government also provided details on additional projects.

Also expressed by the ministry was the view that Korea should actively pursue the Alaska liquefied natural gas (LNG) development project. It is also likely that the MOU will state that the project would be pursued based on a comprehensive framework.

"Of the $200 billion investment, $120 billion would go to nuclear reactors, $22.3 billion to gas projects and the rest to projects like the Alaska LNG one," said an insider from the ruling bloc.

The ministry added that Washington's pressure for greater investment from Seoul would not negatively affect the semiconductor megaproject in the southwestern region of Korea. The government announced in June that Korean chip giants Samsung Electronics and SK hynix would construct large-scale facilities in the Honam region, which encompasses the Jeolla provinces and Gwangju. 

Lawmakers asked whether the United States had raised objections to Korea investing in a megaproject at home while facing U.S. pressure to invest more in the United States, and whether that pressure could affect the relocation of Gwangju's military airport, the planned site of the semiconductor fab.

Ministry officials answered “no” to both.

“If speculation like this emerges, the government should respond proactively,” one lawmaker at the meeting said.

BY PARK JUN-KYU, LEE CHAN-KYU, OH SO-YEONG [[email protected]]