Unlike Korea, China and Japan eager to secure overseas resources

Unlike Korea, China and Japan eager to secure overseas resources. May. 30, 2016 07:21. by 세종=신민기기자, 세종=박민우기자 minki@donga.com,minwoo@donga.com.

“Mr. A, unless a vessel carrying coals arrives today, we have to turn off the boiler of the plant.”

Literally, there seemed to be a hole in the sky. In January 2011, rain poured for two months in Queensland in Australia. The downpour in the down under had placed Korea in a crisis. Korea imported 35 percent of coal for power generation from Australia. As mines in Queensland lower than the sea level were flooded, Korea could not get the imported coals.

Back then, if one of coal-fired plants accounting for 40 percent of power generation in Korea, had stopped, it might have led to a blackout. Power generators shared leftover coals among each other and managed to survive by raking out coal crumbs stuck on the warehouse floor.

Mr. A, a team head who still works for a domestic power generator, breaks out a cold sweat when he recalls the moment. He felt seriously that Korea was an energy-poor country as it imported 95 percent of energy sources like coals and oil from other countries.

The Lee Myung-bak administration had put priority on resource diplomacy and did its best to secure overseas resources. However, the side effects of excessive investments in projects compounded by the decline in commodity prices, the hard-earned resources turned into debts. The Korea National Oil Company and the Korea Resources Corporation, the two main pillars of overseas resource exploration, recorded a net loss of 4.5 trillion won (3.81 billion U.S. dollars) and 2.6 trillion won (2.2 billion dollars), respectively.

All overseas resource exploration projects stopped due to lax investments and snowballing debts. According to the Ministry of Trade, Industry and Energy on Sunday, the number of new overseas resource exploration projects of both state-owned companies and private companies shrank from 71 in 2011 to 10 in 2015. As of the end of May, there is no new project. In the meantime, however, China and Japan are offensively trying to secure resources as the prices are good due to low oil prices.

“Although the debts of state-run energy companies should be removed, it should be made from a long term perspective given resource security as well as development,” said Heo Eun-nyeong, an energy resources engineering professor at Seoul National University.