hankyoreh

Members of a group calling for an investigation into the “resource diplomacy” of the Lee Myung-bak administration rally in front of the Seoul Central District Court on Sept. 30. (Kim Seong-gwang

Amid restructuring procedures for the Korea Resources Corporation (KORES) – which has been hemorrhaging capital due to overseas resource development improprieties by the Lee Myung-bak administration – it has emerged that around half of its overseas resource development projects are “failures.” It was also concluded that some 1.8 trillion won (US$1.51 billion) in debt will remain once all of the projects are liquidated, which translates into a financial burden for the state.

Figures received from KORES on Oct. 9 by the office of Choi In-ho, a lawmaker with the Democratic Party, showed that 13 of the corporation’s current overseas resource development projects – over half the 23 total – are already being predicted to lose money. Five of them are expected to lose all of the money invested into them (US$54 million). While 655.4 billion won (US$548.52 million) may be recoverable from the other 10 projects not included in the loss predictions, the amount is still far short of what would be needed to make up for the 2.24 trillion won (US$1.87 billion) in anticipated losses for the 13 projects. While 5.7 trillion won (US$4.77 billion) has been or is scheduled to be invested in the 23 projects, anticipated net losses amounted to 1.58 trillion won (US$1.32 billion), or 27.7% of the investment amount.

The administration previously ruled KORES to be “unsustainable” after hemorrhaging capital to the tune of 1.96 trillion won (US$1.64 billion) due to ill-considered investments and risk management failures under the Lee administration (2008–13). The 23 projects are going through individual liquidation procedures this year following a decision to merge KORES with the Mine Reclamation Corporation (MIRECO).

KORES estimates the asset value for the 23 projects at a total of 4.12 trillion won (US$3.45 billion. The problem is that its liabilities as of 2018 amounted to 5.92 trillion won (US$4.95 billion) – meaning it would still have 1.81 billion won (US$1.51 million) of liabilities even after spending the entire amount from its state. The liabilities are set to be transferred to MIRECO following the merger, but their repayment appears unlikely without government support.

The last task facing KORES is to reduce its remaining liabilities by selling its overseas assets for as much as it can get. But with word having already spread to overseas markets about the corporation’s management woes, attempts are already being made to bargain prices down. The administration initially planned to set sales deadlines for the overseas assets associated with each project, but finally changed strategies and decided not to assign deadlines out of concerns about asset value declining.

“Of the 11 projects sold off and completed over the past five years, seven of them suffered losses,” said Choi In-ho.

“The government is going to need to be very careful with its sales negotiations on the overseas resource development projects that remain to be sold to avoid letting them go for less than they’re worth,” he stressed.

By Lee Ji-hye, staff reporter

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