Capital Impairment
The Korea Resources Corporation is likely to be in capital impairment in the first half of next year.
According to Democratic United Party lawmaker Hong Young-pyo, the corporation is expected to record operating losses of 159.5 billion won (US$143.3 million) this year, exceeding its internal reserves as of the end of 2013 by a margin of 10.3 billion won (US$9.23 million). A bigger problem is that it has to make an additional investment of more than 1.5 trillion won (US$1.3 billion) in order to maintain its overseas businesses with a negative outlook, examples of which include the copper mine development project in Mexico, nickel mine development project in Madagascar, and bituminous coal mine development project in Australia.
“The capital impairment is likely to result in a skyrocketing debt ratio and rapid increase in financial costs along with equity dilution due to a failure to make additional investment,” the lawmaker explained.
In the meantime, the corporation recently asked the National Assembly to pass a bill to increase its capital from 2 trillion won (US$1.8 billion) to 3 trillion won (US$2.7 billion). However, both ruling and opposition lawmakers turned down the request.