The Export-Import Bank of Korea (KEXIM) announced on Oct. 7 that it had signed a memorandum of understanding with the Korea Defense Industry Association (KDIA) to promote mutual growth with the Korean defense industry and revitalize exports by small and medium-sized enterprises.
Under the agreement, the two organizations pledged close cooperation in various areas, including exploring ways to foster mutual growth between large Korean defense companies and SMEs; collaborating on financial support to enhance the export competitiveness of SMEs; and exchanging information for mutual development.
This agreement was signed to actively contribute to the Korean government’s national agenda of becoming one of the world’s top four defense industry powers and to expand mutual cooperation.
Its primary goals are to create a healthy industrial ecosystem where large companies and SMEs can grow together in the defense sector and to boost SME exports.
KEXIM has previously focused on building a robust defense industry ecosystem.
Notably, the company signed mutual growth agreements with five leading Korean defense companies in April and provided 120 billion won in financial support — a first of its kind — in August to facilitate payment settlements for partner SMEs.
To ensure this MOU leads to tangible results, KEXIM will participate in a defense export briefing session for all KDIA member companies on Oct. 8.
During the event, the bank will present a comprehensive financial support package designed to help Korean defense companies scale up their exports.
Financial Cooperation Agreement with BANCOMEXT
The Export-Import Bank of Korea announced on Sept. 25 that it signed a memorandum of understanding (MOU) with Banco Nacional de Comercio Exterior (BANCOMEXT) which is Mexico’s foreign trade development bank to provide $100 million in on-lending support.
On-lending refers to a form of indirect financial support where KEXIM lends funds to a local foreign bank which in turn provides loans to its local companies importing goods from Korean firms.
Under the agreement, the two institutions will pursue financial cooperation focusing on sectors such as automotive, bio-medical, mineral resources and energy, and aerospace sectors.
KEXIM has resumed its on-lending operations in Mexico after an eight-year hiatus.
Through this initiative, the Korean state-run bank aims to assist Korean companies facing challenges amidst shifting North American trade conditions and supply chain restructuring as they expand into the Americas market.
As Mexico possesses key minerals such as fluorspar, copper, and zinc, the cooperation between the two institutions is expected to contribute to strengthening economic security by establishing critical supply chains.
“We will open the door for policy financing in the Mexican market which was previously a blind spot for on-lending and expand the horizons of our financial support,” KEXIM CEO Hwang Ki-yeon said.
Funds in Support of LG Chem’s SAF Facility
KEXIM will provide approximately 250 billion won in support for the construction and operation of Korea’s first sustainable aviation fuel (SAF) facility, a project led by LG Chem.
KEXIM announced on Sept. 22 that it would provide approximately 250 billion won in loans to support LG Chem’s SAF facility project.
The bank participated as the lead arranger, spearheading the financial structuring and securing the participation of Korean commercial banks and Seoul branches of foreign commercial banks to successfully close a project financing deal.
This project involves constructing an eco-friendly biofuel production facility with an annual production capacity of 340,000 tons at LG Chem’s petrochemical complex in Daesan, South Chungcheong Province.
The facility will produce SAF, biodiesel, and bio-naphtha using a hydrotreated vegetable oil (HVO) process which involves adding hydrogen to bio-based feedstocks such as waste cooking oil and palm oil by-products.
KEXIM estimates that the fuels will reduce carbon emissions by 60% to 80% compared to conventional fossil fuels.
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