Supply Chain Crisis... Selling Mines Again to Repay Debt

Mining Industry Corp Ambatovy Nickel Mine Sale 'Ongoing'
Sale Lead Managers Are 'Samsung Securities-Rothschild Consortium'
Sale Proceeding as Planned After Reassessing Economic Feasibility
Reserves of 146.2 Million Tons, One of the World's Top 3 Nickel Mines

[Asia Economy Sejong=Reporter Dongwoo Lee, Sejong=Reporter Junhyung Lee] Although the Moon Jae-in administration recently established a policy to reconsider the appropriateness of selling major overseas assets in response to the supply chain crisis, the Korea Mine Reclamation Corporation (formerly Korea Resources Corporation) under the Ministry of Trade, Industry and Energy has confirmed that it will continue to proceed with the sale of the Ambatovy nickel mine as originally planned. Since the sale has been pursued since 2018 and has undergone an economic feasibility evaluation, the judgment is to prioritize debt liquidation through the sale rather than halting it. There are criticisms that the current government, after pushing for overseas asset sales for more than four years since its inauguration, has belatedly changed its existing policy due to growing supply chain instability, showing a discordant approach with the working-level agencies.

According to related ministries on the 21st, the Korea Mine Reclamation Corporation recently reviewed the economic feasibility of the Ambatovy nickel mine together with the lead sales agents, the ‘Samsung Securities-Rothschild Consortium,’ and decided to proceed with the sale as originally planned. Earlier, the corporation had selected the ‘Samsung Securities-Rothschild Consortium’ as the lead sales agent for the Ambatovy mine sale in September last year and planned to push for the sale by the second half of next year.

The reason the Korea Mine Reclamation Corporation decided not to halt the sale of the Ambatovy nickel mine despite recent government policy revisions is largely due to debt. The corporation’s debt has steadily increased from 5.4341 trillion won in 2017 to 6.6517 trillion won in 2020. A representative from the Overseas Asset Management Committee, which controls the corporation’s overseas asset sales, said, "As the corporation’s debt is estimated to be around 7 trillion won as of the end of last year, the sale of the Ambatovy mine is still being actively pursued."

Located on the island of Madagascar in Africa, the Ambatovy mine is one of the world’s top three nickel mines, holding 146.2 million tons of nickel ore. Its maximum annual production capacity is 48,000 tons of nickel and 4,000 tons of cobalt. The corporation holds the right to sell 50% of the annual production. Recently, with international nickel prices soaring to $24,500 per ton (as of February 18), the corporation’s estimated annual revenue is approximately 688.4 billion won.

Some argue that the government’s push to sell the Ambatovy mine stems from defining the deterioration of the financial structure as a failure of the previous administration’s resource diplomacy, and that sufficient reserves are needed from the perspective of recent resource security. Professor Yoon Heo of Sogang University’s Graduate School of International Studies said, "The government needs to strictly evaluate key factors such as the nature of the resources to be sold, the characteristics of the sale targets, and resource supply chains for overseas resources that are absolutely necessary before proceeding."

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