Mining Info > Policy > Long Term Policy
Goal and Policy Development Plan Development of deep Seabed Minerals
 
Goal and Policy
Due to Korea's shortage of natural resources, 100% of requirements for petroleum, bituminous coal, uranium and copper and 99% of requirements for iron are dependent on imports. Even with steadily growing economy in the future, demand for energy resources and dependence on imports of natural resources will most likely be stronger. Given such circumstances, our government has been actively promoting overseas development of natural resources in order to give a stable supply of energy resources essential and fundamental for the stabilization of people's livelihood and sustenance of economic growth. Since investment risks involved in overseas resources development projects are high with long investment payback periods, raising private investments for such projects are rather difficult. The government, therefore, intends to encourage private participation by supporting research and geological surveys during the initial stage of the projects.
The government will then expand its technical and financial assistance to include providing support for the safety and economic feasibility of the projects. Furthermore, the government plans to establish its development goals towards self-reliance up to 2010 and expand its independent supply base. This is achieved by carefully selecting the strategic minerals that will promote the efficient management of financial sources for investment purposes through selection and concentration, taking into consideration the security aspects of natural resources and the feasibility of the investment.
 
Import Plan for Overseas Developed Strategic Minerals in 2010
Petroleum Gas Bituminous coal Uranium Copper ore Iron ore Zinc ore Rare earth
10% 30% 30% 10% 20% 10% 20% 5%
 
In February 2001, the government also established ¡º Basic Plans for Overseas Development of Energy Resource, which presents the directions of development from 2001 to 2010 pursuant to the provisions of Article 4 of the Overseas Development of Energy Resources Act. The plan aims to provide positive support to the overseas development of energy resources, taking into consideration the rapidly changing conditions in and outside Korea.

The government intends to further strengthen its support policies, with emphasis on building of environment friendly atmosphere, aiming to turn overseas energy resources development projects into attractive investment opportunities with a high rate of return according to the following guidelines:

Firstly, the government will promote overseas development in order to revitalize overseas development of individual resources by classifying the eight most strategic resources into two groups and examining them based on independent development promotion results. Currently, with respect to in dependent development results, four resources such as Natural gas, Bituminous coal, Copper and Zinc ore have shown satisfactory progress, while another four-Petroleum, Iron, Uranium and Rare earth-need more focused management based on analysis. With respect to these resources that have poorly progressed, the establishment of the foundation for overseas development of resources through the creation of a joint investment council among relevant agencies and revitalized local surveys shall be prioritized.

Second, the government intends to drum up support from the private sector to revitalize overseas development of resources. To this end, it plans to expand its scope of support as a short- term measure. As medium and long-term measures, on the other hand, it intends to expand investment sources by introducing debt-guaranteeing systems and other measures that will actively utilize the finance-supporting overseas investments of the Korea Export-Import Bank. At the same time, the government will strive to revive overseas development of energy resources by intensifying preferential financing support for the projects with the huge effect of securing resources, and by attempting to export plant facilities connected with this type of development.

Third, the government will also strive to strengthen the support functions of professional state-run enterprises such as KNOC and KORES. It will fortify state support for investments in the oil field development projects of KNOC. It will also seek to expand KORES' direct foreign investments.

Fourth, the government intends to strengthen its ties with resource-producing countries and, in the area of energy resources, among Northeastern Asian countries. At present, it will foster cooperation in this area among these countries through the promotion of gas field development projects in Irkutsk, the feasibility study of which is being conducted jointly by Korea, China and Russia. At the same time, as in the case of the newly created Resource Cooperation Council between Korea and Kazakhstan in 2002, the government plans to continue expanding bilateral resource cooperative relations in new strategic areas.
 
Development Plan
In accordance with the Basic Plans for Overseas Development of Energy Resources of the Government (February 2001), the government established the roles of KORES in terms of the investment and investment promotion requirements in order to meet supply and demand, and to secure each of the six strategic mineral resource such as Bituminous coal, Uranium, Iron, Copper, Zinc and Rare earth, excluding petroleum and natural gas. The roles of KORES were also established to meet the import goals of resources developed overseas. The government plans to proactively identify investment opportunities for mineral resources that are necessary for the development of the nation's industries, according to long-term objectives rather than relying on passive surveys requested by private sectors. The government aims to offer enough reasonable investment opportunities by identifying promising projects for investment under the initiative of KORES, The government also plans to identify and prioritize promising projects, and connect these to private investment and direct investment of KORES, depending on private developers' interest and the economic feasibility of the projects. In terms of priority, the project that is first in priority may either be connected to the investment solely by a private developer or transferred to a private developer after KORES takes the lead in investing and developing the project up to the level of normal operation. The project that ranks second in priority requires the creation of a consortium between KORES and a private developer in terms of technology and funding. This project will be jointly funded. Third in priority is a project that is definitely needed by the country but is avoided by private developers. This is to be funded by KORES alone. As for the division of roles between private developers and KORES, a private developer is expected to be the leading investor and to be engaged mainly in development and production of the project requiring a large amount of investment. The private developer is expected to fund 70% or more of the required investment. KORES is expected to identify promising projects for investment and directly invest in projects that are needed by the country, thus taking the lead role of providing support. KORES is expected to fund 30% or less of the required investment. In particular, KORES plans to increase its direct investments in mineral resources of which development investment is poor, such as Uranium, and in Copper and Zinc.

Regarding the goals for the overseas developed-import of the six strategic mineral resources which were established in the Basic Plan for Overseas Energy Resources, the importation of Bituminous coal will be increased from 15 million tons in 2001 to 24 million tons in 2010, accounting for an import ratio of 30%. For Uranium and Iron ore, the present zero import of such resources will increase to 480 tons and 4 million tons respectively in 2010, accounting for a 10% import ratio for each.
 
Goal for Import of Overseas-developed Ore by Mineral
Classification Bituminous coal Uranium Iron ore Copper Zinc Rare earth
* Goal in 2010            
- Total demand 80mil ton 4,800ton 40mil ton 1,525,000ton 1,060,000ton 7,000 ton
- develop-import 30% 10% 10% 20% 20% 5%
- Imported quantity 24mil ton 480ton 4mil ton 305,000ton 212,000 ton 350ton
* As of 2001
- develop-import 15mil ton 0 0 174,000ton 199,000 ton 0
- Attainment ratio 63% 0% 0% 57% 94% 0%
In order to attain the goal for import of overseas-developed ore by 2010, we plan to identify a total of 37 new projects from 2002~2010, or nine Bituminous projects, nine Uranium projects, three Iron ore projects, ten Copper projects, five Zinc projects and one Rare earth project. New investments during this period will total 1,380 million dollars, 1,316 million dollars or 95% of which is to be allotted to the six strategic minerals while 64 million dollars or 5%, to be allotted to investments in other mineral resources.
 
Development of Deep Seabed Minerals
The marine policy of Korea is principally not only a domestic policy oriented towards achieving national objectives, but also can be linked with the broader issues of Korea's rights and obligations as maritime state under the international law of the sea. Due to the poor endowment with mineral resources on land, the dependence on the mineral supply from overseas resources has intensified the vulnerability of Korean economy to sporadic external shocks. It is notable that Korea is evaluating a deep seabed mining venture as a possible option for stable long-term procurement of strategic metals to continue its sustained economic growth.

Through the decision of Economy-related Ministrial Committee in 1991 and 1993, the Korean government prepared a strategy for deep seabed mining program as one of the large-scaled national projects of the Ministry of Commerce, Industry and Energy (now transferred to Ministry of Maritime Affairs & Fisheries). Since 1992, Korea Ocean Research and Development Institute (KORDI) has performed explorations in the Clarion-Clipperton zone in the Pacific Ocean for Korean deep seabed mining program with the cooperation of Korea Resources Corporation (KORES) and Korea Institute of Geoscience and Mineral Resources (KIGAM). As a result, Korea registered a deep seabed mining area as a pioneer investor under the Resolution II of the third United Nations Convention on the Law of the Sea.

In 1994, Korea became the 7th nation in the world to register with the UN its mining area extending 150,000 §´ in the deep-sea floor of Pacific Clarion-Clipperton sea area, and fixed its final mining area of 75,000 §´ on August, 2002. The mining area contains hundreds of millions of manganese nodules and is expected to have an economic effect of more than 1.5 billion US$ annually. In addition to such direct economic effect, a huge ripple effect is anticipated in the shipbuilding, refining, heavy industry, electronics, robotics, telecom and material sectors.

In 1994, Korea Association for Deep Ocean Minerals Development (KADOM) was established. The KADOM is at present composed of 29 members which are research institutes, government companies and private companies such as KORES, KORDI, Samsung, Hyundai, Daewoo, POSCO (Pohang Iron and Steel Co.) etc. KORES is a chair company of KADOM. KADOM is expected to play an important role in combining government initiative with the driving force of the private sector. Moreover, the manganese crust and the submarine hydrothermal deposits in the southwestern Pacific Ocean are planned to be explored in a bid to develop mining and refining technology, and diversify sources of deep sea bed mineral resources to get ready for commercial development of ocean mineral resources.