(Korea Mine Rehabilitation and Mineral Resources Corp.)
South Korea’s state-run resource companies have sold off or liquidated a large number of overseas resource development projects last year as they failed to recover their investments or showed poor development performance, data showed on Tuesday.
According to a filing by Korea Mine Rehabilitation and Mineral Resources Corp., the company sold its entire 80 percent stake in the Teguida uranium project in Niger, Africa, on December 10 to China’s Trendfield Holdings Ltd. for $1,000.
The company invested $14.8 million in 2010 to secure a 5 percent stake, targeting annual output of 700 tons of uranium, but exited without achieving production. The project was estimated to hold about 13,000 tons of uranium reserves.
Teguida faced higher-than-expected costs and weak profitability, with no uranium produced before the sale. However, industry observers say the exit may have been premature given a sharp rise in uranium prices.
Data from the Korea Mineral Resource Information Service showed spot prices climbed more than 30 percent from $67.91 per pound in the first quarter of last year to $88.96 in the first quarter of this year, driven by the phaseout of Russian supply and stronger nuclear demand. Prices are forecast to reach $98.31 per pound in the first quarter of next year.
Korea National Oil Corp. also recently disclosed it liquidated four overseas entities between April and October last year linked to the Fergana 1 and 2 blocks in Uzbekistan, the Kamchatka block in Russia and the Inam block in Azerbaijan.
“The entities were set up in the early 2000s for exploration in Uzbekistan and Azerbaijan but were dissolved after unsuccessful drilling and contract terminations,” said a company official.
Korea Gas Corp., a joint investor in the Kamchatka project, also liquidated its local entity last year.
Experts attribute the setbacks to government-set targets and a pricing-driven approach focused on near-term economics.
Shin Hyun-don, a professor of energy resources engineering at Inha University, said earlier efforts prioritized securing volumes over profitability to meet “resource development rate” goals.
“Projects should not be assessed solely on commodity prices,” Shin said. “State firms need greater autonomy to invest based on economic security and long-term considerations.”
Cho Seong-jun, head of the Korean Society of Mineral and Energy Resources Engineers, said the industrial and security importance of resource development, including rare metals, has intensified, limiting reliance on private firms alone.
“Public institutions should be leveraged to expand supply chains beyond extraction into downstream processes such as refining,” Cho said.
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