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| The state-run Korea Resources Corporation (KORES) sold shares of its nickel mine and related facilitates in Madagascar. Korea Times file |
By Yi Whan-woo
The loss-making overseas projects of the Korea Resources Corp. (KORES), a state-run firm cherished by the Lee Myung-bak administration from 2008 to 2013, appear to be getting a second chance with the rise of next-generation industries.
KORES was among the public enterprises that were at the forefront of the Lee government’s buying spree of energy and key raw materials but were criticized afterward for their heavy losses.
KORES is capital-impaired, and thus, it has been forced to sell shares of its key projects abroad, such as its copper mines in Chile and Panama, as well as its nickel and cobalt mines in Madagascar.
The sell-offs were considered appropriate to improving the state-run corporation’s balance sheets and to appeal to the liberal Moon Jae-in administration, which has negatively assessed the Lee administration’s policies in general and had accordingly sought to “drain the swamp.”
With the sell-offs, the assets of KORES have been on a downward trend: 4.15 trillion won ($3.5 billion) in 2017, 3.95 trillion won in 2018, 3.93 trillion won in 2019 and 3.28 trillion won in 2020.
However, the company is still struggling with increasing debt: 5.43 trillion won in 2017, 5.92 trillion won in 2018, 6.41 trillion in 2019 and 6.65 trillion won in 2020.
Despite such unfavorable business circumstances, industry sources say that the selling off of KORES’ assets should be done in a prudent manner, noting that the minerals it has invested in are essential to manufacturing large-capacity batteries, electric vehicles (EVs) and other renewable energy-related products.
“The company needs to take into account both improving its balance sheets and the business potential of its projects at the same time,” an industry source need. “Selling off all of its valuable assets may help financially in the short term, but not in the long term.”
A different source noted that the price of cobalt went up by 82 percent year-on-year in July, while the price of nickel rose by 42 percent during the same time period.
“Korea relies on imports when it comes to those minerals, and you can’t expect the country to survive the global battle for tech supremacy if the supply of strategic materials isn’t secure.”
A third source pointed out the fact that private firms, such as POSCO, have aggressively been investing in the overseas energy and minerals market in recent years.
For instance, POSCO bought lithium mining rights in Argentina from Australian lithium miner Galaxy Resources for $280 million in 2018. The steelmaker holds the mining rights for an area of 22,800 hectares in the region.
Hyundai Motor and LG Energy Solution have partnered in Indonesia to make batteries for electric EVs. The manufacturing facilities are expected to be built in Kota Karawang, 50 kilometers east of the country’s capital of Jakarta, with an annual production capacity of 10 gigawatt hours. This capacity is enough to outfit 130,000 EVs with 80 kilowatt-hour batteries.
Public firm urged to be prudent in selling loss-making projects
Source: Buhay Kapa PH
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