A bird’s-eye view of LS C&S’ offshore wind power plant in Taiwan. (Photo: LS C&S)

Korea Trade Insurance Corp. (K-sure) will provide a $260 million (303 billion won) trade financing to a Taiwanese offshore wind power project in which a Korean consortium of LS Cable & System and Samkang M&T and others will participate.

K-sure played a leading part of managing to win the Formosa 2 Project from the Taiwanese government about three months after the trade insurance agency began to provide support for it.

The project calls for the construction and operation of a 376MW offshore wind power plant north of Changhua, Taiwan. The cost of the project is $3.5 billion. The owner of the project is Copenhagen Infrastructure Partners.

The project established a stable profitability base by inking a 20-year contract to purchase the power generated by the upcoming offshore wind power plant.

Copenhagen Infrastructure Partners, established in 2012, is Demark-based asset management company specializing in investment in areas such as power generation and infrastructure.

K-sure and Korea Development Bank, as well as export credit agencies from five countries Denmark, UK, Norway, the Netherland, and Japan, have joined forces in offering the project financing.

K-sure had held financing negotiations with business participants by proposing a long-term financing for the project on the condition that Korean companies be allowed to participate.

The banks will extend loans based on a long-term export insurance facility issued by K-sure as collateral, and the project owner uses the loans to procure raw materials and equipment supplied by Korean companies.

LS C&S and Samkang M&T will each participate in the project by signing a $100 million contract to supply the understructure of the planned plant.

In particular, $100 million, or half of the combined contract money of the project for Korean participants, will go to Samkang M&T, a mid-size Korean company. It takes on significance that large- and medium-sized companies have joined forces in capitalizing on an overseas offshore wind power market.

Korean companies’ participation in the large-scale, offshore wind power project being implemented by a global project owner is owed to Korean companies’ continuing implementation of new and renewable energy projects, such as major offshore wind power projects and Korean policy financial institutions’ support through project financing.

The latest project will enable Korean companies to secure credibility in Korea and abroad by accumulating experiences and expertise in the course of the implementation of diverse renewable energy projects, and will pave the way for them to lead related markets and seize more export opportunities.

K-sure Chairman & President Lee In-ho said that it takes time to nurture new industries such as offshore wind power. It is on the right track to ramp up Korea’s export competitiveness and K-sure plan to provide continued support to help Korean companies armed with expertise and competitive edge, he said, by aggressively exploring new industry entrance opportunities.

In a related development, K-sure Chairman & President Lee said K-sure plans to expand support to Korean companies exporting to the “New Southern” region in compliance with the government’s “New Southern Policy” initiative.

If Korean companies are provided with support to advance into countries in Southeast Asia states and India, departing from the conventional export structure in which Korean exports heavily rely on the United States and China, Lee said Korea will cope with fluctuations of the Korean and global economies.

K-sure began to raise the cap of trade insurance facilities extended to companies advancing to new markets such as new southern region countries to up to a two-fold. K-sure also plans to offer financing to foreign businesses who try to award projects to Korean companies and purchase goods from them.

K-sure had provided 33.8 trillion won in loans to Korean companies for exploring new markets such as new southern region countries as of October 2019. The size of such loans extended in 2018 stood at 41.5 trillion won.

A view of the building in Seoul where K-sure has its offices. (Photo: K-sure)