South Korea Mining Report Q1 2008

South Korea relies on external sources for much of its mineral requirements. The country imports as much as 87% of its mineral and a significant percentage of its energy resources, including almost the entire demand for bituminous coal, ores and concentrates of copper, iron, lead and zinc. However, the country does host small reserves of gold, molybdenum, silver, tin, tungsten and zinc. As can be inferred, the South Korean mining industry contributes very little to its GDP.

Compensating for the lack of mining activities on the domestic front, South Korea has been entering into partnerships worldwide to develop impressive mining properties including the 125mn-tonne nickel mine in Madagascar. The Republic of South Korea has also signed agreements with Laos, Ukraine, Indonesia and the Ivory Coast to exploit mines in these regions. Further, the country is also building large-scale steel plants in many countries to leverage resource potential around the globe. At the forefront of this intent is the state-owned Pohang Iron and Steel Company (POSCO), which plans to build a US$12bn plant in India and a US$4.5bn project in Vietnam. Possible Free Trade Agreements (FTAs) with the EU further would expand the business opportunities for the country.

The Ministry of Commerce, Industry and Energy is the apex body that governs the minerals and mining sector of South Korea. The country is planning to build-up strategic reserves of 13 metals that it considers of prime importance for the local economy. Some of these metals are chrome, cobalt, indium and molybdenum. State-run mining company Korea Resources (Kores) will bear the onus of managing the purchase of these metals. To secure raw material supply, the country also opened the first joint office of Inter-Korea Economic Co-operation, in 2005. Its main objective is to promote bilateral trade.

South Korea has created a global name for itself by developing impressive refining and processing facilities despite a paucity of resources at home. However, it needs to be cautious as the cost of imports continues to rise significantly. BMI forecasts a moderate rate of 3.51% industry growth per annum over 2008-2012.