With metal prices soaring, gov't reconsiders mine sales

The government is reconsidering plans to sell stakes in a number of overseas mines as prices of nickel and other materials needed to make electric vehicle (EV) batteries rise.

The state-run Korea Mine Rehabilitation and Mineral Resources Corporation is considering holding onto two overseas mines that were on the block.

One is a nickel mine in Madagascar and the other is a copper mine in Panama.

They are two of the 15 overseas mines the corporation has stakes in.

The Madagascar mine — in which the corporation has a 33 percent stake — can produce 48,000 tons of nickels per year. It is considered the world's third biggest nickel mine. The Cobre Panama mine, 10 percent owned by the corporation, produces 350,000 tons of copper per year. It is the world's 10th biggest copper mine.

Overseas resources development — Korea securing resources through investments abroad — was a key policy of the Lee Myung-bak administration between 2008 and 2013 and 26 mines were invested in during his term.

After some of the mines failed to make short-term profits, the Moon Jae-in administration abandoned the whole idea and stakes in eleven of the 26 mines were sold off during his term.

With metal prices increasing, however, the government is having second thoughts.

“Even if the mines are sold off as planned, we are considering selling them to domestic companies instead of overseas companies,” an official from the Ministry of Trade, Industry and Energy said.

Prices of nickel and other metals have been on a continuous rise since last year, and that accelerated steeply after Russia invaded Ukraine.

Russia is the world’s third-largest nickel producer, accounting for 10 percent of global supply.

The price of nickel hit $42,995 per ton on March 7, a 132.5 percent year-on-year jump, according to the Korea Mineral Resources Information Service.

On Tuesday, the London Metal Exchange temporarily suspended trading of nickel because of its high volatility.

Prices of copper and aluminum are also on the rise.

The price of cobalt hit $79,000 per ton on March 7, a 54 percent year-on-year jump. Copper reached $10,730 per ton, a 20 percent rise, and aluminum $3,984, 85 percent.

The rise in metal prices is expected to have a negative effect on Korea’s EV and battery makers.

Raw materials account for 70 to 80 percent of battery prices.

Korean battery makers are especially vulnerable to price hikes for nickel as they use nickel-cobalt-manganese chemistry.

“Development of overseas resources has to be planned and carried out with a 10-year and 20-year long-term plan,” said Kang Cheon-koo, an energy resources engineering professor at Inha University.

“The current administration has let go of resources development for political reasons. The development should be considered from an economic perspective.”

BY SOHN HAE-YONG, JIN EUN-SOO [jin.eunsoo@joongang.co.kr]