experience and goals of the rok in regional mineral sector development cooperation
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Nautilus Institute – East Asia Science and Security Project Meeting. Experience and Goals of the ROK in Regional Mineral Sector Development Cooperation. September, 2010. Chung, Woo Jin Senior Research Fellow. Table of Contents. I. Supply & Demand of Mineral Resources in ROK - PowerPoint PPT PresentationTRANSCRIPT
Experience and Goals of the ROK in Regional Experience and Goals of the ROK in Regional
Mineral Sector Development CooperationMineral Sector Development Cooperation
September, 2010
Nautilus Institute – East Asia Science and Security Project Meeting
Chung, Woo JinSenior Research Fellow
Korea Energy Economics Institute
I. Supply & Demand of Mineral Resources in ROK
II. Overseas Activities and Policies for Mining Investments
Table of Contents
Korea Energy Economics Institute
I. Supply & Demand of Mineral Resources in ROK
Korea Energy Economics Institute
• ROK has very few mineral resources as it has few energy resources
• Non-metallic resources, including limestone are more reserved than metallic resources
1. Reserves of Mineral Resources
4
Source : Korea Resource Cooperation(KORES), 2009.12
Metallic Grade Reserve
Gold Au 7.5 g/t 5,691.8
Silver Ag 170.5 g/t 7,916.8
Copper Cu 2.2% 2,317.5
Lead · Zinc Pb 2.2% · Zn 3.3% 16,907.2
Iron Fe 40.5% 46,011.8
Tungsten WO3 0.5% 16,715.3
Molybdenum MoS2 0.4% 6,865.0
Manganese Mn 19.6% 360.0
Antimony Sb 2.0% 22.0
Tin Sn 2.0% 947.0
Rare-earth metal R2O3 2.13% 25,972.0
Non-metallic
Reserve Non-metallicReserv
e
Limeston 10,334,047.2 Diatomaceous earth 3,439.7
Agalmatolite 73,577.3 Wollastonite 4,234.5
Silicastone 1,461,681.8 Alunite 29,304.9
Feldspar 99,916.1 Serpentine 32,884.5
Talc 11,131.2 Asbestos 695.5
Kaolin 110,773.4 Quartz 45.1
Mica 12,173.4 Barite 842.1
Flaky graphite 2,595.5 Andalusite 1,041.0
Fluorite 477.0 Quartz sand 6,055.4
Zeolite 29,660.9 Nephrite 119.1
<Reserves of Mineral Resources in Korea>
Korea Energy Economics Institute
2. Demand & Supply of Mineral Resources
5
Index Total Metallic Nonmetallic
Demand
Consumption (A) 16,329 14,582 1,747
Export 4,613 4,549 65
Stock 424 372 52
Total 21,367 19,503 1,865
Supply
Production Total 4,339 3,142 1,197
Import 13,827 13,222 605
Previous stock 3,200 3,138 62
Self-sufficiency rate (8.38%) (1.17%) (68.49%)
Note : 1. The numbers are based on current prices., Excluding coal. 2. Gold and silver is also obtained from refinery processes of other minerals. 3. Self-sufficiency rate = (B/A) × 100 (%)
• ROK is dependent most mineral resources on overseas countries
• The ratio of domestic supply for demand : Metallic 1.17%, Nonmetallic : 68.49 %
<Balance of Mineral Resources in Korea, 2009>(Unit: billion won)
Korea Energy Economics Institute
3. Major mineral resources in demand and production
6
• Metallic ores like iron, copper, gold and zinc are major consuming minerals in ROK
• On the other hand, major producing resources are nonmetallic ores
- Limestone is the most major mineral resource that ROK produces
<Demand Shares of Mineral by Type of Mineral ores>
<Production Shares of Mineral by Type of Mineral ores>
Korea Energy Economics Institute
4. Trend of Mineral Import
7
Billion USD
Metallic Minerals
Iron 0.75%Copper 0.00%Zinc 0.27%Lead 0.25%Nickel 0.00%Tungsten 12.80%Molybdenum 2.83%
Non Metallic Minerals
Graphite 0.14%Magnesite 0.00%Limestone 98.93%Kaolin 93.49%Fluorite 0.00%Barite 0.00%
<Imports of Mineral Ores by South Korea><ROK Self-Sufficiency by Type of
Mineral Ore>
• Import cost has highly increased as world mineral prices have risen since 2006
• Last year, due to the global economic recession, the import decreased but will rebound this year
Korea Energy Economics Institute
5. Major minerals and countries for importing
8
• Major importing ores : Iron, Copper, Gold, Zinc, Lead
• Major exporting countries to ROK : Australia, Brazil, Indonesia, Chile, Peru
<Importing ratios by Type of Mineral ores> <Import costs of Mineral ores by Countries>
million USD
Korea Energy Economics Institute
6. Strong downstream Industry of Minerals
9
World’s 6th steel producing country* POSCO : world’s 4th steel producer
Annual production capacity : 62 million tons Exports (2009) : 39 million tons
CopperCopper World’s 2nd smelted copper producing country * LS Nikko : world’s 2nd copper smelter
Annual production capacity : 58 thousand tons Exports (2009) : 14 thousand tons
World’s 4th smlted zinc producing country* Korea Zinc Co. : world’s 1th zinc refiner
Annual production capacity : 980 thousand tons Exports (2009) : 409 thousand tons
Steel
Zinc
Korea Energy Economics Institute
7. Overview of the Mining Industry and Policies in ROK
10
• Mining is very small industry in Korea : 0.15% of GDP(2009)
※ Total number of employee : about 3,200 (2009)
• Due to the high labor costs and strict environmental regulations, many mines have closed and the industry has contracted
※ Number of operating mines : 620(‘95) → 540(‘00) → 451(‘07)
• Korea has pushed its policies for the overseas development of mineral resources stronger than ever as the mineral prices have risen since 2006
※ Korea started overseas development businesses in 1978
Korea Energy Economics Institute
I. Overseas Activities and Policies for Mining Investments
Korea Energy Economics Institute
1. Mining Development Projects by ROK’s Companies
12
Central Asia (12 projects)
Kyrgyz(6), Kazakhstan(4), Uzbekistan(3)Kyrgyz(6), Kazakhstan(4), Uzbekistan(3)
Central &South America(25 projects)
South East Asia(56 projects)
Indonesia(26), Cambodia(10)Philippine(9), Laos(5), Malaysia(2), Sri-Lanka(2)Thailand(1), Myanmar(1)
Indonesia(26), Cambodia(10)Philippine(9), Laos(5), Malaysia(2), Sri-Lanka(2)Thailand(1), Myanmar(1)
( ) : number of project ( ) : number of project
N. America(14 project)
Canada(11), USA(3)Canada(11), USA(3)
Africa(18 projects)
Cameroon (6), Ghuna(3), Tanzania(3), Zimbabwe(1)South Africa(1), DR Congo(1), Chard(1), Madagascar(1)
Cameroon (6), Ghuna(3), Tanzania(3), Zimbabwe(1)South Africa(1), DR Congo(1), Chard(1), Madagascar(1)
Peru(13), Bolivia(4) Argentina(3), Mexico(2), Ecuador(1), Brazil(1), Venezuela(1),Costa-Rica(1)
Peru(13), Bolivia(4) Argentina(3), Mexico(2), Ecuador(1), Brazil(1), Venezuela(1),Costa-Rica(1)
Oceania(35 projects)
Australia(31), Papua New Guinea(3)New Caledonia(1)
Australia(31), Papua New Guinea(3)New Caledonia(1)
North East Asia(52 projects)
Mongol(28), China(24), Russia(5) Mongol(28), China(24), Russia(5)
Development (61) Exploration & Survey (117)
Production (41)
* Mining Development Projects in 39 countries
• As of Dec. 2009
Korea Energy Economics Institute
2. Trends of Overseas Mining Investments
13
Million USD
<Overseas Mining Investments> <Share of Public Company in Overseas Mining Investment>
(Before 2006)
(After 2006)
* Public Mining Company in Korea : KORES
• Since 2006, investment to overseas E&P(Exploration & Production) of the mineral resources has sharply increased
• Public mining company (KORES)has invested to E&P more than private companies since 2006
Korea Energy Economics Institute
3. Major minerals for overseas investment
14
<Ratio of Overseas Mineral production to Mineral Import by major minerals>
<Ratio of Overseas Investment by Type of Minerals>
(2009, Cumulative)(as of Dec. 2009)
• ROK has mainly invested to the E&P businesses for six important minerals - Six important minerals: Coal, Iron, Uranium, Copper, Zinc, Nickel
• ROK recently increases the investment of rare metals as their supplies are expected to be tight in the future
Korea Energy Economics Institute
4. Major countries for Mineral Investment
15
<Share of Mining Investment by Regions> <Major Countries for Mining Investments>
(2009, Cumulative) (2009, Cumulative)
• Australia is the most invested country, Indonesia, Madagascar, Brazil are followed
• ROK intends to increase the investment in Africa and Latin America more than other regions
Korea Energy Economics Institute
4. Government Roles and Policies toward Securing Mineral Resources
16
• Korean government has changed its role in securing overseas mineral resources from a financial supporter to an active participant as the high price, tight supply threatened a resource security
Increase Financial Incentives
• Increase government budget and increasing tax benefit for E&P • Expand Ex-im bank loan program and loan guarantee program for the risky E&P projects
Foster infrastructure for E&P
• Provide government Fund to the universities which are specialized in the E&P departments • Increase R&D investment for E&P technologies and expanding information for E&P business
Strengthen Public Company’s role in Overseas E&P business
• Increase capitals of KORES for its leading role over investing large scale projects with private companies• Transfer the KORES’ s main role from supporting private mining companies to direct investment company
• Establish resource cooperation committee with resource rich countries• Vitalize diplomacy through the meetings of high-level officials
Strengthen Cooperation with Resource Rich Countries
Korea Energy Economics Institute
5. ROK’s Strategies for securing overseas resources
17
Build a human network with resource rich developing countries
• Increase mutual understanding through implementing wide exchange programs
• Share experience in development of resource sector
Enhance partnership in downstream sector of energy and resources
• Power plant, oil refinery, gas pipeline, steel mill , smelting facilities of metallic minerals
Pursue M&A and joint development with foreign E&P companies
• Korea can be a good partner as a buyer of large scale of mineral resources