Chronically Unprofitable
It has been found that South Korean public and private enterprises invested a total of US$74.63 billion for overseas resources development until the end of last year and only 54.9% of the amount returned until that date in the form of profits, dividends, asset disposal, etc. As of the end of 2016, they were engaged in 476 projects in 62 countries.
State-run companies invested US$38.85 billion and recovered 36.7% of it. The figures are US$35.78 billion and 74.8% when it comes to private-sector companies.
The Korea National Oil Corporation invested US$20.863 billion and recovered 46.2%. At present, the corporation is engaged in 27 projects and the investment has yet to be recovered in 22. For example, the corporation invested US$4.957 billion in its Dana Project in Britain but only US$1.976 billion returned. In the Harvest Project in Canada, it invested US$4.08 billion from 2009 to last year but merely US$4 million or so was recuperated and the book value of the project dropped to US$254 million, close to one-sixteenth of the investment.
The Korea Gas Corporation, in the meantime, invested US$12.042 billion and recuperated 34.5%. It moved ahead with 22 projects abroad but only two of them were profitable. In its Gladstone LNG Project in Australia, the biggest one of the 22, it spent US$3.9679 billion after purchasing 15% of the shares in 2010 but production began as recently as two years ago. The corporation invested US$791.2 million at Kiwigana from 2010 to last year but no payback occurred until the end of 2016 due to a continuous decline in the price of gas and the book value of the project is currently less than one-fourth of the investment.
The Korea Resources Corporation spent US$4.35 billion in 32 projects, recuperating only 9.7%. The corporation acquired 27.5% shares in the Ambatovy nickel mine in Madagascar in 2006 by forming a consortium, invested US$1.5577 billion in the mine, and recovered only US$23.43 million. When it comes to the Boleo Copper Mine Project, which kicked off in 2008, the investment and payback are no less than US$1.3855 billion and no more than US$168.3 million, respectively.
The Korea Electric Power Corporation and its subsidiaries are currently engaged in 15 projects in six countries. Their investment in the projects totaled US$1.73 billion until last year and the recovered amount stood at US$95 million.