US President Donald Trump’s administration on Tuesday announced three projects valued at $36bn (R575.71bn) to be financed by Japan:
- an oil export facility in Texas;
- an industrial diamonds plant in Georgia; and
- a natural gas power plant in Ohio.
The projects are the first investments under Japan’s $550bn (R8.80-trillion) US investment pledge as part of a trade deal that cut Trump’s tariffs on Japanese imports to 15%, the US president said on Truth Social. He gave few details about the projects.
Commerce secretary Howard Lutnick said the Portsmouth, Ohio, power plant, valued at $33bn, will be the largest natural gas-fired generating facility in history with a capacity of 9.2 gigawatts.
The facility, to be operated by SB Energy, a subsidiary of Japanese tech investor SoftBank Group, will increase baseload power at a time of fast-growing electricity demand from data centres built to power artificial intelligence applications.
The White House said Japan will invest in the $2.1bn Texas GulfLink deepwater crude oil export facility off the Texas coast.
“This project is expected to generate $20bn to $30bn annually in US crude exports, secure export capacity for our refineries, and reinforce America’s position as the world’s leading energy supplier,” Lutnick said.
Texas GulfLink, which is being developed by Sentinel Midstream, confirmed it is part of the initiative and is “honoured to be a trusted partner with the US department of commerce and the government of Japan”.
Trump said the Texas investments will include a liquefied natural gas (LNG) project, but Lutnick’s statement and a White House fact sheet did not mention LNG.
Lutnick said the third major project in Georgia is a synthetic industrial diamond manufacturing plant that will satisfy 100% of US demand for synthetic diamond grit, a critical input for advanced manufacturing and semiconductor production. The US currently relies largely on China for these supplies.
The high-pressure synthetic diamond plant, valued at about $600m, will be operated by Element Six, the White House said in a fact sheet. The industrial diamond company is a unit of De Beers Group, the world’s largest diamond producer.
All of these projects involve Japan and the United States working together to build supply chains in strategically important fields
— Ryosei Akazawa, Japan’s economic and trade minister
It is unclear how much of the projects’ costs will be funded by Japanese entities and under what conditions. Under an earlier US-Japan agreement, profit from the projects was due to be shared 50-50 between the US and Japan until Japan’s initial investment costs are recouped, after which profit will be split 90-10 in favour of the US.
The administration’s announcements follows meetings last week between Lutnick and Japan’s economic and trade minister Ryosei Akazawa, where they worked out remaining issues before deals could be announced.
“The scale of these projects are so large and could not be done without one very special word, tariffs,” Trump wrote on Truth Social.
More deals coming
“All of the projects involve Japan and the US working together to build supply chains in strategically important fields,” Akazawa told reporters in Tokyo on Wednesday.
He said Japan will continue to work with the US for more investment deals, adding Tokyo has pledged investments of up to $550bn before the end of Trump’s term in office.
While declining to comment on the estimated timing for forthcoming deals, Akazawa said he, as a negotiator, “would keep in mind that Prime Minister Sanae Takaichi’s planned US visit [in March] would be fruitful”.
Many Japanese firms expressed interest in the three initial projects, according to the Japanese government, including:
- Noritake as an off-taker for the diamond project;
- Mitsui OSK Lines and Nippon Steel as suppliers for the crude oil export facility project; and
- Hitachi and Toshiba for the power project.
Japan’s investment package will consist of equity, loans and loan guarantees from state-owned agencies Japan Bank for International Cooperation and Nippon Export and Investment Insurance.
Akazawa has said the investment will have no foreign exchange impact in light of sizeable foreign currency reserves the government could use for loans.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.