Gangwon iron mine to be reopened in 2011

In response to rising raw material prices, Korea will resume operating an abandoned iron mine located in Yangyang, Gangwon, starting next year.

“We decided to redevelop the iron ore mine that had been closed for 15 years to stabilize supply and demand for mineral resources used in making metals for industrial goods,” said the state-run Korea Resources Corporation yesterday.

A consortium will be established by Kores, the Korea Electric Power Industrial Development Corporation (Kepid), and Daehan Iron to undertake the project, which will be financed with a total of 17 billion won ($15.4 million).

A rampway will be built next year and actual production will begin in 2012. A total of 2.8 million tons of iron is expected to be produced over a 10-year period, with an estimated value of 240 billion won.

Iron will be shipped to local steel mill companies, such as Posco and Hyundai Steel.

The mine in Yangyang produced around 300,000 tons of iron ore per year from 1973 to 1995 before its closure because of a drop in the international price of iron, which made the mine economically uncompetitive.

The price for a ton of iron fell to $18 in 1994, whereas the price is now $157. The move to reopen the mine comes as the government is seeking to reduce the country’s dependence on overseas supplies of natural resources.

There is only one iron mine in Korea that is operational and it is located in Jeongseon, Gangwon. It supplies 455,000 tons annually, or about one percent of Korea’s total demand. The Yangyang mine will increase the total iron production to 769,000 tons, or 1.7 percent of total demand.

“Last year, Korea’s total demand for iron ore was around 46 million tons,” said Kim Shin-jong, chief executive of Kores. “And predicting that demand for iron ore is to grow continuously, especially with the expansion of Hyundai Steel mills, it is important that the minerals stored in Korea be developed efficiently. Although the amount is small, it will still contribute to stabilize supply and demand.”

Meanwhile, Korea’s state-run Korea Coal Corp. (Kocoal) said yesterday it will invest 20 billion won in a coal mine in northwestern Mongolia.

It will have a 50 percent stake in the coal mine, which is estimated to have a soft coal reserve of 79 million tons. Kocoal said the mine will produce 1 million tons per year and some will be sold to Russia, China as well as Mongolia.

By Lee Eun-joo [angie@joongang.co.kr]