Westinghouse stake emerges as new but potentially risky option in Korea-U.S. nuclear cooperation talks

Korea is considering acquiring a stake in U.S. nuclear giant Westinghouse as it weighs building eight new nuclear reactors in the United States under its U.S. investment package, a move that could bolster Korea's nuclear exports but also expose it to significant investment risks.

Korea and the United States have discussed nuclear cooperation measures that include investing $120 billion from Korea's $350 billion U.S. investment package — split between $200 billion in capped cash installments and $150 billion for U.S. shipbuilding — to build eight nuclear reactors in the United States and acquiring a stake in Westinghouse, according to government and National Assembly sources Wednesday.

During negotiations, the two sides are understood to have moved closer to an agreement under which the first four reactors to be built would consist of two Westinghouse AP1000 units and two Korean APR1400 units. The reactor models and project structure for the remaining four units would be discussed later.

If the two APR1400 units are built, they would mark the first Korean-designed nuclear reactors constructed on the U.S. mainland. The APR1400 received design certification from the U.S. Nuclear Regulatory Commission in 2019 but has never been built in the United States. Establishing a track record of construction and operation in the country could provide Korea with an important credential for securing additional U.S. projects and exports to third countries. 

One option under discussion is establishing a joint venture among Korea Electric Power Corporation (Kepco), Korea Hydro & Nuclear Power (KHNP) and Westinghouse to jointly pursue U.S. nuclear projects. Under such an arrangement, Westinghouse could handle original technology, basic design and U.S. regulatory approvals, while Korean companies could take charge of detailed design, equipment procurement and construction.

The government is also considering the possibility of Korean entities directly acquiring a stake in Westinghouse as part of the broader cooperation framework.

Westinghouse is currently 51 percent owned by Canadian asset manager Brookfield and 49 percent owned by uranium producer Cameco. Westinghouse confidentially filed for an initial public offering in July, the Wall Street Journal and other media reported. Its valuation has been estimated at between $15 billion to $20 billion.

The nuclear industry is paying close attention to the possibility of a stake acquisition because of expectations that it could reduce recurring disputes with Westinghouse over proprietary technology which have complicated Korea's nuclear exports.

Kepco and KHNP ended a technology dispute with Westinghouse in January last year, but the settlement placed constraints on Korea's efforts to enter nuclear markets in North America and Europe. Korean companies also face the issue of having to make substantial payments to Westinghouse each time they export nuclear reactors overseas.

The nuclear industry hopes that aligning the two sides' interests through an equity relationship could create greater room for cooperation, including joint bids for projects not only in the United States but also in third countries.

“To remove obstacles to exports, Korea needs to secure a stake in Westinghouse or establish a cooperative framework such as a joint venture,” said Moon Joo-hyun, a professor of energy engineering at Dankook University. “It is important not merely to own shares but to secure enough influence to have a director with voting rights participate on the board.”

Others caution that an equity investment would not automatically resolve the existing technology rights issues.

“There is no guarantee that acquiring a stake in Westinghouse would overcome the intellectual property rights issue,” said Chung Bum-jin, a professor of nuclear engineering at Kyung Hee University. “We first need to examine what effect the acquired stake would actually have in easing restrictions under the existing agreement.”

The experience of Japan's Toshiba also serves as a cautionary example. Toshiba acquired Westinghouse for $5.4 billion in 2006 but suffered massive losses as U.S. nuclear projects faced construction delays and soaring costs. Westinghouse filed for bankruptcy protection in 2017, while Toshiba was also plunged into a management crisis. 

Another variable in the final stage of negotiations is U.S. President Donald Trump.

Under the $200 billion strategic investment program, projects are recommended by a U.S. investment committee, with the president making the final selections. During tariff negotiations with Japan last year, Trump personally revised Japan's proposed U.S. investment commitment from $400 billion to $500 billion, and the final agreed amount later rose to $550 billion.

Uncertainty surrounding the negotiations has further grown as the issue of deploying Korean troops to the Strait of Hormuz has recently become entangled with the talks. That is also one reason an Alaska liquefied natural gas project, which had not previously been under consideration within the Korean government, is now being discussed as a potential investment target.

Trade and Industry Minister Kim Jung-kwan is also set to travel to the United States after accompanying President Lee Jae Myung on his state visit to France to conduct final coordination on the U.S. investment projects with U.S. Commerce Secretary Howard Lutnick.

The government is considering privately briefing relevant National Assembly committees on the negotiations on Sept. 17 before announcing its implementation strategy on Sept. 18.

“We are closely consulting with the U.S. side regarding potential investment candidates,” the presidential office said Wednesday regarding the possible acquisition of a Westinghouse stake. “We cannot confirm specific investment targets, the timing of an announcement or the size of the investments.”

BY AHN HYO-SEONG [[email protected]]