[The Editors' Verdict] Securing Resources Is the Foundation for the Nation's Future

Resources are essential elements for humans to live comfortably and abundantly. The problem is that as humanity's resource consumption rapidly increases, the Earth's resources are gradually depleting. In response, humanity is striving to secure alternative resources through technological development, but there is still a long way to go before these alternatives become practically useful in everyday life.

For this reason, competition among countries to secure resources is fiercer than ever. China has long been aggressively targeting Africa and South America with financial backing, and India, Brazil, and others are actively joining the race.

In this competition to secure resources, cases of acquiring or merging resource companies to grow into global resource majors have been frequent from the past to the present. The Japan Oil, Gas and Metals National Corporation (JOGMEC) is a representative example. In 2004, the Japanese government integrated public enterprises dispersed across oil, gas, and metal minerals to grow into a global resource major.

South Korea, during the Lee Myung-bak administration, took a pilot step by having the Korea Resources Corporation acquire overseas resource companies to secure resources. In April 2011, the Korea Resources Corporation successfully acquired and merged PaweWest Mining, a copper-specialized listed company, jointly with Canada's Capstone Mining. At that time, the Korea Resources Corporation acquired mines in Chile, which accounted for 40% of copper production, completing a belt of seven copper mines stretching from the United States to Chile (Rosemont in the U.S., Boleo in Mexico, Capstone in Canada, Marcona in Peru, Shakespeare in Canada, Cobre Panama in Panama, and Santo Domingo in Chile). This initiative raised the copper self-sufficiency rate from 6% to 32% in one leap, and by 2015, when the seven copper projects began production, it secured about 670,000 tons of copper, increasing the share of total domestic copper imports to 72%.

Governments after the Roh Moo-hyun and Lee Myung-bak administrations, which laid the groundwork for Korea's future economy, stigmatized overseas resource development as a corrupt practice. The Moon Jae-in administration even took legal measures to sell off all these projects, resulting in some assets being sold below their value or the projects being abandoned altogether. Of 26 overseas assets, 11 were sold, and 15 remain. It is true that debts increased significantly due to aggressive overseas ventures. However, at that time, the debt ratios of the Korea Resources Corporation and the Korea National Oil Corporation did not exceed the government guideline of 200%. Moreover, if the secured resources had been well managed and maintained, the current rise in resource prices could have reduced debts and yielded substantial profits. But the government's overall poor management and the wrong business decisions by the heads and executives of these public enterprises led to increased debts.

To win the resurging resource acquisition war, a global resource major that leads the resource market is necessary. Just as Samsung Electronics leads the global semiconductor market, Korea needs global resource majors like BHP Billiton (Australia/UK), Vale (Brazil), Rio Tinto (Australia/UK), Glencore (Switzerland), Anglo American (UK), and Freeport-McMoRan (USA). In an era where resources equate to national power, building a stable resource supply network has become more important than ever. Past mistakes should serve as lessons, and Korea must leap forward again. Efforts to preempt pure resources should not be disparaged.

Kang Cheon-gu, Invited Professor, Department of Energy Resources Engineering, Inha University