K-SURE signs MOU with Trafigura to bolster Korean firms' raw material supply chains

Korea Trade Insurance Corporation has partnered with the world's largest commodity trading firm to help Korean companies secure stable access to raw materials amid ongoing tensions in the Middle East.

Korea Trade Insurance Corporation (K-SURE) President Jang Young-jin signed a memorandum of understanding with global commodity trader Trafigura on Wednesday (local time) in Geneva, Switzerland, covering financial support and mutual cooperation.

Trafigura is a major intermediary in crude oil, minerals and other key raw materials, operating supply networks across the globe. The MOU outlines cooperation measures to boost raw material trade between Trafigura and Korean companies.

Trafigura has primarily supplied energy and minerals to South Korea while purchasing petroleum products from Korean firms. K-SURE will back such transactions through financial support.

K-SURE previously extended $200 million in medium- to long-term financing in July last year to cover charter fees that Trafigura charged to domestic shipping companies.

K-SURE said it expects the partnership to help Korean companies secure raw materials reliably and diversify their trading partners amid geopolitical risks such as a potential blockade of the Strait of Hormuz.

"For a country like ours that relies on imports for more than 90 percent of its energy consumption, securing key raw materials is essential," Jang said. "We will continue to provide financial support to strengthen the import supply chain for critical raw materials."

Meanwhile, K-SURE has launched a trade finance product called the "Industrial R&D Innovator Preferential Finance" program targeting research and development innovators. The product supports small and medium-sized enterprises and mid-sized companies that have successfully completed government R&D projects in their overseas expansion, helping translate R&D achievements into business results.

IBK Industrial Bank and Hana Bank, designated as R&D partner banks, contributed a combined 20 billion won ($14.4 million), which K-SURE will use as the funding base to provide preferential guarantees totaling 300 billion won. The trade finance limit will be raised from two times to a maximum of 2.5 times, and the guarantee ratio will expand from 90 percent to 100 percent. Guarantee fees will be discounted by 20 percent to reduce costs for companies.

To support the government's "Five Poles, Three Specials" regional development initiative and its manufacturing AI transformation policy known as M.AX, companies based outside the greater Seoul metropolitan area and those participating in the M.AX Alliance — an industry-academia-research cooperative — will be eligible for a special limit of up to 2.5 times.