When I first visited Janghang, South Chungcheong Province, I found it particularly dismal. The lonely Janghang Refinery chimneys that were familiar to me from textbooks stood off in the distance. I asked myself, “Is it possible for Korean companies to embrace and grow together with local communities?”
The place is the town of Janghang located in Seocheon County in South Chungcheong Province. This is the motherland of South Korea’s nonferrous metals industry. Nurtured by the town of Janghang, the refinery represented the sprouting of the industry’s first shoots that would then grow into becoming a big gun and is currently ranked tenth in the world. June 3, when the refinery first turned on its furnaces and poured out molten copper, turned into “Nonferrous Metals Day.”
Janghang is also the mother of the LS Group. From the time the Janghang Refinery opened its doors until 1945, it was under the management of the Governor-General of Korea, and from 1945 to 1971 it was run by the state. Following privatization in 1971, it was run by the Korea Mining and Smelting Company, with investment from companies such as GoldStar. In 1982 it became part of the Lucky GoldStar (LG) Group, the previous incarnation of LS. Although the furnaces are now closed, LS affiliates, LS Cable and LS-Nikko Copper, remain owners. It is also for this reason that the first line in the LS history overview reads, “1936: Establishment of Janghang Refinery.”
LS Group is commonly known to be among the cream of companies out there. 2008 sales for its domestic corporation alone were 19.15 trillion Won, with operating profits of 1.2 trillion Won. LS-Nikko Copper, the Janghang Refinery’s direct successor, grew into a company with sales of 5.4 trillion Won with operating profits of 520 billion Won. As Vice Chairman Koo Cha-myung rose to the position of CEO, representing a new generation of management, the company presented its vision of discovering new growth engines and growing into a global company.
However, the town of Janghang, is now suffering from a disease it caught from the refinery it raised. The government announced on September 4 that a study of the soil at the Janghang Refinery and the surrounding region detected heavy metals like cadmium, copper and arsenic above standard levels. As a result, the government has decided to buy up all the surrounding land and relocate the 372 resident households. It also plans to spend the next few years carrying out various cleanup efforts, such as cleaning the region’s soil and planting purification plants. It has also been carrying out a battery of examinations on resident health and things like dioxin contamination.
The question here is why the refinery’s operator and current owner, LS, has taken a step back from this entire process. In fact, the group has even rejected an order from Seocheon County to carry out a close examination of the soil, and it has filed a lawsuit asking that the order be cancelled. They are completely repudiating any responsibility for the effects the refinery has had on the local community.
In fact, the problem of contamination at the Janghang Refinery site is not that of Janghang and LS alone. This is a symbolic incident that shows the relationship and history between companies and Korean society. For a long time, South Korean companies only looked forward as they raced ahead. Growth was swift, but so were destruction and loss. This has been true for the environment, for local communities, and for human rights. Only recently are people starting to open their eyes, look around themselves and ask, “So are we really happy?” This is why “sustainable management” has become a core management keyword for South Korea’s major companies.
Koo Ja-hong, the chairperson of LS Group, is putting forth a strategy of regarding renewable, environmentally friendly energy as a new growth engine, transforming “green” into business competitiveness. However, the phrase, “Green is an opportunity for companies” tells only half of the truth. The other half is “responsibility.” Sustainable management is also sometimes required to sacrifice short-term profits and be appropriately socially responsible.
As a result, I spy the future of the South Korean economy in the choices LS makes. Can South Korean companies embrace their sick ‘mother’ and head into a happier future together? Can companies and local communities prosper together? Can South Korean companies develop a management strategy of searching for opportunity without dodging responsibility? What kind of growth do we want?
The views presented in this column are the writer’s own, and do not necessarily reflect those of The Hankyoreh.
