Minister defends overseas resources initiative

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Minister defends overseas resources initiative

Finance Minister Choi Kyung-hwan said government plans to develop natural resources need to be pushed forward, despite criticism of budget deficits in the ongoing projects.

“For natural resources security and stable growth of our economy, I think overseas natural resources development plans need to be pushed without suspension, keeping a long-term perspective,” Choi said at a National Assembly hearing Tuesday. “It is still too early to say we have succeeded or failed.”

Seeking overseas natural resources was “an inevitable choice” also made by former administrations, liberal and conservative, since 2001, he said.

“It is true that the overseas resources development business has a high risk of failure, but it also has a possibility of immense investment benefits,” he said. “If we define a certain case as a failure of policy, we cannot understand the characteristics of those projects in a balanced perspective.”

As a former knowledge economy minister in the Lee Myung-bak administration, Choi has been under fire over losses at government-run companies due to the projects.

“When the Lee Myung-bak government began, oil prices skyrocketed worldwide,” he said. “With increasing demand for a stable supply of energy, we expanded investment in overseas natural resources development and vigorously pushed forward with exploration, acquisition of mines and M&A [with foreign companies].”

A National Assembly report said in December the combined deficit of three major public companies grew by 32 trillion won ($28.7 billion) since 2008 due to the Lee government’s ambitious four-river restoration project and overseas natural resources development initiatives.

Opposition lawmakers at the hearing Tuesday barraged Choi with questions on the deficit, saying he was evading responsibility for the debts of the government-run companies.

“You said you have never been engaged in the businesses managed by the state-run companies, even though you were a minister in charge of the so-called ‘natural resources diplomacy,’” said Noh Young-min, a lawmaker of the opposition New Politics Alliance for Democracy. “But there was testimony that you clearly agreed with the buyout of Narl [the Canada-based North Atlantic Refining Limited oil refinery] when the former Korea National Oil Corporation chairman, Kang Young-won, tried to acquire it.”

Buying the debt-ridden Canadian refinery has been criticized since the government sold off the Narl plant for 100 billion won to U.S.-based investment advisory firm SilverRange Financial Partners in August 2014, resulting in the state losing 2.5 trillion won.

“It is true that energy-related public companies business had increased debts under the Lee Myung-bak administration,” he said. “Although one of the causes was the overseas investment at a time when oil prices were high as well.”

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