SK set to buy stake in Bill Gates' TerraPower

SK Innovation Co., South Korea's leading petrochemical company, is planning to buy a stake in TerraPower, a US nuclear power venture founded by Bill Gates, in a bid to make its foray into the carbon-free energy market, according to a source with knowledge of the matter.

Details of the plan will be finalized at the group’s biannual strategy meeting later this month convened by SK Group Chairman Chey Tae-won.

“SK Innovation will enter the SMR market through an equity investment in TerraPower,” the source told The Korea Economic Daily on Wednesday.

“Details such as the size of the investment will materialize around August or September.”

SMR stands for a small modular reactor, regarded as a next-generation energy source due to its lower costs, safety and fewer carbon emissions than existing large nuclear power plants.

The stake purchase plans comes after both SK Innovation and its holding firm SK Inc. signed a preliminary agreement with TerraPower early this month to venture into the SMR business. The Bellevue, Washington-based venture is a nuclear reactor design and development engineering company established in 2008.

UNSUSTAINABLE BUSINESS

SKC Ltd., a chemical materials unit, is selling it polyester (PET) film business for 1.6 trillion won ($1.3 billion) to Seoul-based private equity firm Hahn & Co., accelerating its shift toward eco-friendly businesses such as electric vehicle batteries and turquoise hydrogen, according to investment banking sources on Thursdsay.

For the energy-to-telecom conglomerate, polyester (PET) film used in videotapes and LCD displays had been its backbone over the past 45 years. 

But the group's management has concluded that the PET, a plastic material, is an unsustainable business for the country's No. 2 business group in view of environmental, social and governance standards.

The proceeds will be used to expand the production of copper foil, a core material of EV batteries and semiconductor materials.

In comments on this article, SKC said in a filing that it is reviewing various options on its PET film business, including the sale of the division, and in discussion with Hahn & Co. in that regard. But it was nor decided whether to hold a board meeting over the possible sale of the division.

SK had entered the copper foil market in 2020 through the 1.2 trillion-won acquisition of a domestic firm, now renamed SK Nexilis Co. Almost simultaneously, it sold its polyimide film-making joint venture to Glenwood Private Equity.

SKC plans to select the site of its copper foil plant in the US within the year, with an aim to produce 200,000 tons per year by 2025.

SK Inc. is the top shareholder in SKC with a 40.5% stake. 

NO FRESH INVESTMENT IN PETROCHEMICAL BUSINESS

SK Innovation derives about 70% of sales from the petrochemical market, but it will completely cease new investments in the segment, excluding those for facility maintenance and repairs.

Instead, it will boost eco-friendly businesses to 70% of its sales by 2026 from the current 30%, which would be financed by stake sales of its subsidiaries.

SK Innovation owns 100% of SK Geocentric Co., a petrochemical unit, for which its stake sale plan was indefinitely postponed last year.

SK Group had proposed a package deal to facilitate the sale. Under the plan, it hoped to sell off the group's petrochemical companies in a package, including SK Incheon Petrochem Co. and the Ulsan refining complex of SK Energy Co., along with SK Geocentric. SK Innovation also owns 100% of both SK Incheon and SK Energy.

TURQUOISE HYDROGEN

Regarding the hydrogen business, SK E&S Co., a power utility and city gas provider, is investing $110 million for a 10% stake in Summit Carbon Solutions LLC, which is leading the world’s largest carbon capture and storage (CCS) project in the US.

The investment follows an agreement signed last year that the group's holding firm would establish a turquoise hydrogen joint venture with Monolith Materials Inc., the world’s first mass producer of turquoise hydrogen.

Turquoise hydrogen is an intermediate product between blue hydrogen and green hydrogen. Turquoise hydrogen's byproduct carbon black is used for synthetic graphite, a raw material for tires and EV batteries, as well as for coke used for steelmaking.

(Updated with SKC's upcoming sale of its PET film business to Hahn & Co. and its comments thereon)

Write to Jeong-Min Nam at peux@hankyung.com
Yeonhee Kim edited this article