[Exclusive] Government to Sell 'Prime Mines' Amid Resource Crisis... Australian Thermal Coal Mines to Be Sold Within the Year

Continued Push for Sale of Australia Narrabri Mine... 170 Million Tons of Thermal Coal Reserves
Legal Advisory Firm Selection Started Last Month... Sale Plan Maintained Within the Year
Deemed Economically Unviable Due to 'Decarbonization'... Sale of Australia Wyang Mine Also Underway
Supply Chain Disruptions Cause Thermal Coal Shortages... Prices Quadruple in One Year

A view of the Narrabri mine located in the coalfield area of New South Wales (NSW), Australia.
Photo by Asia Economy DB

[Asia Economy Sejong=Reporter Lee Jun-hyung] It has been confirmed that the Yoon Suk-yeol administration is continuing the sale process of the Narabri mine in Australia, which was decided during the Moon Jae-in administration. The Narabri mine is capable of producing 6 million tons of high-quality coal (thermal coal) annually. Due to the impact of the Ukraine crisis, the supply of thermal coal, which is 100% imported, is facing disruptions, raising concerns about potential gaps in resource security.

According to data submitted by the Korea Mine Reclamation Corporation to Assemblyman Cho Jung-hoon of the Transition Korea party on the 7th, the corporation began selecting a legal advisory firm for the sale of the Narabri mine last month. Earlier, in March of this year, the Korea Mine Reclamation Corporation selected Samil Accounting Corporation as the lead manager for the sale, officially starting the sale process. This was a follow-up measure after agreeing to a joint sale with POSCO International in December last year. The Korea Mine Reclamation Corporation and POSCO International hold 2.5% and 5% stakes in the Narabri mine, respectively.

The Narabri mine is a ‘prime mine’ with an estimated 169 million tons of thermal coal reserves. It can produce approximately 6 million tons of high-calorie thermal coal annually. Additionally, the Narabri mine is almost the only overseas asset of the Korea Mine Reclamation Corporation that has consistently generated profits every year. After recording a net profit of 325.5 billion KRW in 2017, it posted a profit of 66.4 billion KRW last year.

Initially, the Yoon Suk-yeol administration set a policy direction to retain major overseas mines without selling them. This was based on the judgment that the Moon Jae-in administration’s policy of selling overseas assets was not suitable amid supply chain crises. This is also why the sale process of the Ambatovy mine in Madagascar, which produces key minerals such as nickel and cobalt, was recently temporarily suspended.

However, the plan to sell the Narabri mine within this year has been maintained. The government believes that under the ‘coal phase-out’ policy, the economic viability of thermal coal mines will inevitably decline. A government official stated, “Reconsidering the sale of overseas mines means reviewing the fairness of sales from a national interest perspective,” adding, “It is not about uniformly deciding to suspend sales but about individually assessing the economic feasibility of overseas assets.”

This is also why the government is continuing the sale process of the Wyoong mine in Australia. The Wyoong mine is a thermal coal mine with reserves of approximately 1.38 billion tons. In terms of reserves, it is more than eight times larger than the Narabri mine (169 million tons). There is a port located 70 km from the mine, making it optimized for exports. A Korea Mine Reclamation Corporation official said, “There is no change in the policy to sell the Wyoong mine,” and added, “We are internally continuing the sale procedures.”

A view of the Narrabri mine located in the coalfield area of New South Wales (NSW), Australia.
Photo by Asia Economy DB

The problem is that the thermal coal supply chain has been shaken since the Ukraine crisis. Russian thermal coal, a major producer, was preferred by industries such as cement due to its cost-effectiveness (price-performance ratio). However, as major countries imposed economic sanctions against Russia, the supply of Russian thermal coal was disrupted, causing thermal coal prices to surge. The price of Australian Newcastle coal rose from $106.02 per ton in May last year to $406.52 per ton last month, nearly quadrupling in the past year.

Experts unanimously argue that the sale of thermal coal mines should be put on hold. Thermal coal is a strategic mineral with 100% import dependence and is the main fuel for base-load thermal power generation, so its economic viability needs to be reassessed. When selling mine shares, existing shareholders are given preemptive purchase rights, raising concerns about the outflow of national wealth.

Professor Kang Cheon-gu of the Department of Energy Resources Engineering at Inha University said, “When thermal coal prices are rising as they are now, the economic viability of the Narabri mine should be considered high,” adding, “If sold, Korea’s shares are likely to be acquired by Japan or China.”

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