Trump Administration Announces Japanese Investments Worth $36B in Energy, Industry

On Tuesday, Feb. 17, the Trump administration announced that Japan would be financing three major projects worth $36 billion. This trio of projects is part of the $550 billion in investments pledged during talks that the United States held with the Japanese government.

The three projects include a planned Ohio-based power plant using natural gas, a Georgia-based plant producing industrial diamonds, and a facility in Texas focused on exporting oil. These projects have been hailed by U.S. officials as initiatives that will boost advanced manufacturing and energy security within the U.S.

Howard Lutnick, the U.S. Commerce Secretary, revealed that the power plant that will be established in Ohio will be the largest-ever plant generating electricity from natural gas. He added that this power will help to address the skyrocketing demand for electricity by data centers built to advance artificial intelligence. Lutnick said the crude oil facility in Texas is projected to generate between $20 billion and $30 billion each year.

On the other hand, the industrial diamond production facility planned in Georgia is expected to fully address domestic demand for artificial diamond grit used in several industries like the production of semiconductors and in other advanced manufacturing applications. A unit of De Beers called Element Six will run this facility worth $600 million. SB Energy, a unit of SoftBank Group, will operate the power plant in Ohio, while the oil export terminal in Texas will be run by Sentinel Midstream.

Ryosei Akazawa, a minister in charge of trade and economy in Japan, said that those projects are a result of a strategic partnership geared toward building supply chains that are resilient. He explained that those investments are a combination of Japanese government guarantees, loans and equity designed to nurture long-term energy and manufacturing sector collaboration between the U.S. and Japan while also protecting the forex reserves of Japan.

These three projects are just the beginning and many more are expected to materialize after Japan pledged to invest a total of $550 billion in the U.S. before the term of President Trump comes to an end. Japanese officials revealed that many Japanese firms, such as Toshiba, Hitachi, Nippon Steel and OSK Lines had expressed a desire to either participate or supply the projects under this deal. This shows how much economic cooperation is growing between Japan and the United States.

The energy sector is especially likely to draw considerable investment given the rapid pace at which demand is threatening to outstrip supply, and conglomerates like Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) with a stake in the energy sector could be thinking of ways to expand their footprint in order to harness this exploding demand.

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