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Gov't revises mining royalties rule to allow more 'business predictability': Industry Ministry

Published: 24 Dec. 2024, 15:49

This file photo taken Dec. 9, 2024, shows the West Capella, operated by Norway-based Seadrill, arriving at an offshore anchorage near the southeastern port city of Busan. [YONHAP]

Korea has revised a maritime resource development rule to offer more business predictability for investors in an ongoing project to search for oil and gas in the East Sea, the Industry Ministry said Tuesday.

The revised enforcement decree on submarine mineral resources development was passed during a Cabinet meeting held on the day, according to the Ministry of Trade, Industry and Energy, after the first drilling operation for the East Sea exploration began last week.

"The revision aims to enhance the existing resource development policy, which previously focused on small-scale projects, by expanding its scope to support larger development explorations," the ministry said in a release.

"The new rule will also aim to achieve a balanced share of profits between the government and investors, offering a more predictable business environment for companies," it added.

Under the revision, mining royalties to be paid to the government by developers will be based on profits, instead of production volume under the current system.

The government will also offer a royalty rate of as low as 1 percent during the early stages of a project to help ease the financial burden on participating companies, according to the ministry.

The revised rule also allows the government to impose additional mining royalties of up to 33 percent on sales exceeding 120 percent of average sales over the previous five years due to a surge in global oil prices, the ministry said, adding detailed terms will still be subject to negotiations.

"Following the improved mining regulations, the government will make efforts for the success of domestic exploration projects, including the ongoing East Sea project," the ministry said.

Yonhap