Resources as a political football

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Resources as a political football

Kang Chon-gu
The author is a visiting professor of energy resources engineering at Inha University.

Whether they be conservative or liberal, Korean governments have tried to secure natural resources overseas — until the Moon Jae-in administration defined it as one of the “past evils.” Despite some differences in priorities, overseas resources development was always at the center of government policies. It was the Kim Dae-jung administration (1998-2003) that first drew up a “Basic Plan to Develop Overseas Resources” for the following 10 years. The Roh Moo-hyun administration took the baton from the liberal administration to help lower Korea’s over-dependence on foreign commodities through so-called “resources diplomacy.” An example was the development of nickel and cobalt in the Ambatovy mine in Madagascar. That mine — one of the top three nickel mines with 146.2 million tons in reserves — can produce 48,000 tons of nickel annually.

Overseas resources development gained further momentum after the launch of the conservative Lee Myung-bak administration in 2008. After putting top priority on development, the businessman-turned-president led the country’s export of nuclear reactors to the UAE in 2009. After being briefed about troubles the Korea Resources Corporation (now Korea Mine Rehabilitation and Mineral Resources Corporation) faced in buying a stake in a copper mine in Panama, Lee immediately flew to the country to help the corporation develop copper in the mine. Lee’s trip was successful. With 3.18 billion tons of copper in reserves, Cobre Panamá — an open-pit copper mine 120 kilometers (75 miles) to the west of Panama City — produces 350,000 tons of copper annually after the corporation invested in a joint development project.

The Lee administration exerted considerable effort securing lithium, a core material for car batteries, in its resources diplomacy. The government was interested in the Lithium Triangle of Chile, Argentina, and Bolivia, which have 72 percent of global reserves of lithium carbonate. But all the projects stopped later.

The Moon Jae-in administration went a step further. After stigmatizing the past governments’ overseas resources development as “past evils,” the government banned investments in such projects. If it chose not to follow policies of past governments, it should have come up with better options. But it did not. Without any evidence, the administration was bent on digging up possible corruption in public corporations handling overseas resources development after mobilizing the Board of Audit and Inspection and the prosecution. The government indicted heads of such corporations but they were found not guilty in trials. Resources development takes at least 10 years to see results. It is not aimed at using resources now. It is an insurance policy for the future. The overseas mines the Lee Myung-bak administration invested in still help the country address a lack of natural resources. But the Moon administration has been engrossed with selling Korea’s stakes in overseas mines to other countries. The Korea Resources Corporation already sold 11 out of its 26 assets overseas. The government’s relentless drive to root out “past evils” over the past five years has caused serious ramifications beyond the level of the lost five years.

Even after inheriting precious assets from past governments, the Moon administration could not take advantage of them. The burden will be borne by the incoming administration. No government should expect immediate results from developing resources overseas. If prices of natural resources are constant, it could be better to buy them from foreign countries. But prices of natural resources fluctuate. Overseas resources development helps the country to prepare for an uncertain future.

Korea ranks ninth in consuming energy and fifth in importing minerals among the world’s nations. The country relies on imports for 94 percent of its energy consumption. A global resource war has started, and Korea is not prepared. The new government must roll up its sleeves to help private companies. It must encourage the private and public sectors to cooperate. Instead of being swayed by political logic, the new government must secure natural resources based on science and manage them efficiently. That is the right approach to an uncertain future.
Translation by the Korea JoongAng Daily staff.
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