Korea Resources Corp is set to exit from its loss-making nickel mining Ambatovy mine joint venture in Africa. The mine can produce 33,000-47,000mt refined nickel and 3,000mt of cobalt, annually. The company holds 33pc stake in Ambatovy along with Posco International (5.87pc) and STX Corp (1.46pc) stakes. The other stakeholders in the Ambatovy mine are Japan’s Sumitomo (47.67pc) and Canada’s Sherritt (12pc).
Ambatovy’s raw ore are estimated to reach approximately 146.20mn mt. Around 10,000mt of nickel is annually shipped to South Korea which caters to 7 to 8pc of the country’s demand which is enough to produce batteries for 30,000 EVs.
In June, Korean ruling government had apparently motioned to ban the company’s direct investments in overseas projects as the company is near bankrupt. If the bill is passed, then Korea Resources would have to sell its stake in the project, this would result in South Korea’s exit from one of the world’s largest nickel mines. The bill was re-submitted recently, and Korean Resources has started the process to sell its stake in the overseas project. This not only includes Africa’s nickel JV but also copper mines in Mexico and Panama.
There is a restructuring plan laid out for Korea Resources which is to merge with Mine Reclamation Corp. However, this plan was rejected in 2018 as residents and politicians opposed it and also as it could deteriorate the financial conditions of Mine Reclamation.
Nickel demand is on the rise on the back of demand from electric vehicle (EV) production, nickel which is a core raw material for EV batteries and at such times the company is likely to sell its stake. Loss-making overseas projects had increased Korea Resources’ debts to KRW6.4trillion ($5.4bn) in the end of 2019 which exceeded its equity capital.
($1=KRW1,183)