Thursday, September 19, 2019
Korea Resources Corp. Has to Withdraw from Highly Profitable Copper Mine in Panama
KORES Puts up Stake for Sale
Korea Resources Corp. Has to Withdraw from Highly Profitable Copper Mine in Panama
  • By Jung Suk-yee
  • February 21, 2019, 08:59
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The Cobre Panama mine in Panama

The Cobre Panama mine in Panama, which is 10 percent owned by Korea Resources Corp. (KORES), has started its test production. 

The test production started in the 10th year of the project and its commercial production is going to start within one year, yet the corporation cannot gain profits from the copper produced there. This is because the South Korean government’s policy for selling every overseas resources development asset of the corporation with regard to the previous Lee Myung-bak administration’s financial scandal.

The project, led by Canadian mining firm First Quantum, is the world’s tenth-largest copper mine development project. Once the commercial production starts, up to 350,000 tons of copper is expected to be produced a year for more than 35 years to come. At present, First Quantum owns 90 percent of the mine.

The South Korean corporation invested 767 billion won in the project until the end of last year. Also, the corporation recouped 200 billion won in March 2018 through its advance sale contract with Canadian company Franco-Nevada for gold and silver as the mine’s byproducts, which means the corporation’s net investment in the mine is approximately 560 billion won. The corporation’s share in the project is estimated at over one trillion won in value and the value of the mine is likely to continue to rise after the commencement of the commercial production. South Korea’s annual copper demand is close to one million tons and the mine is capable of supplying 35,000 tons of copper a year to South Korea.

Nonetheless, the corporation has to issue a preliminary notice for sale of its shares next month before final bidder selection scheduled for May.

In fact, the corporation already tried to sell its stake to a South Korean company, only to fail to find a purchaser. This is because South Korean companies were willing to buy only its sales rights. Under the circumstances, the shares are likely to end up in the hands of a foreign company.