[2020 National Audit] Kim Kyung-yul "Mineral Corporation's Overseas Mines Have No Productivity... Ministry of Industry Has No Intention to Sell"

The Ambatovy Plant facility in Madagascar, Africa, where Korea Resources Corporation has been producing nickel since 2013. (Photo by Korea Resources Corporation)

[Asia Economy Reporter Moon Chaeseok] "I can assert that the productivity of Korea Mineral Resources Corporation's mines in Mexico and Madagascar is nonexistent. The biggest issue, I believe, is that the Ministry of Trade, Industry and Energy has no intention of selling overseas assets."

At the National Assembly audit, there was a claim that the government lacks appropriate means to induce financial improvement of the three resource public enterprises?Korea Mineral Resources Corporation, Korea National Oil Corporation, and Korea Gas Corporation?and that even selling overseas assets should be supported.

On the 7th, Kim Kyung-yul, head of Economic Democracy 21, stated at the National Assembly Industry, Trade, Energy, Small and Medium Enterprises Committee audit, "The Boleo mine in Mexico and the Ambatovy mine in Madagascar operated by the Mineral Resources Corporation have no meaning in terms of continuous production and continuous management."

In response to People Power Party lawmaker Koo Ja-geun's question asking for an evaluation of the Ministry of Trade, Industry and Energy's 'Overseas Resource Development Innovation Task Force (TF)' activities to improve the financial structure of the three resource companies, Kim replied, "There were virtually no meaningful achievements."

Kim said, "Neither the three resource companies nor the Ministry can control mineral resource prices," adding, "The only thing the Ministry can do is to sell overseas assets, but after reviewing the financial statements of the three resource companies, especially the Mineral Resources Corporation, I judge that there have been no meaningful asset sales."

Lawmaker Koo reported that the reasons for the poor performance of the three resource companies' overseas resource development included ▲poor economic feasibility assessments ▲lack of safety measures ▲insufficient internal checks and monitoring functions within the public enterprises' boards ▲and lack of management and control by government ministries.

Kim explained, "Whether the internal control of the three resource companies has improved can be estimated and evaluated by their financial structure improvement results," citing the Mineral Resources Corporation as an example, "The scale of its complete capital erosion increased threefold from 840 billion KRW in 2016 to 2.5 trillion KRW."

He pointed out, "The Mineral Resources Corporation's asset size is about 5 trillion KRW, but its sales are only 500 billion KRW, which is quite serious," adding, "Judging from this, it does not appear that meaningful improvements have been made in internal control structures or decision-making processes."

Lawmaker Koo asked about measures to improve the Mineral Resources Corporation's accounting, noting that it incurs 1 trillion KRW in financial debt annually.

Kim asserted, "I can confidently say that the productivity of the Ambatovy mine in Madagascar and the Boleo mine in Mexico is nonexistent," explaining, "For example, in the Ambatovy mine, the variable cost alone is 7,000 to 8,000 KRW to produce a mineral worth 5,000 KRW, indicating no productivity."

He added, "Since these projects have no meaning in terms of continuous production and management, selling them in some way is the solution," and said, "The biggest problem seems to be that the Ministry of Trade, Industry and Energy lacks the will to sell such overseas assets."

This content was produced with the assistance of AI translation services.