NARRABRI, Australia ― Daewoo International Corp., Korea’s leading trading company, is making rapid progress in resources development in Australia.
The trading firm shipped 75,000 tons of coal extracted from Narrabri, 600 kilometers northeast of Sydney, to Japan on Thursday. It was the first time Daewoo International had sold mineral products from a foreign mine it had invested in, according to the company. Daewoo International, in partnership with the state-run Korea Resources Corp., currently holds a 7.5 percent stake in Narrabri coal mine, operated by an Australian mining company, Whitehaven Ltd.
“Daewoo International has been trading mineral and energy resources so far. But this case shows that the company has started to generate new revenue from investments in resource development and exploration,” said Jeong Je-bong, chief representative of Daewoo International Sydney branch.
Under the contract, the two Korean companies are supplied with 1.5 million tons of thermal coal or 25 percent of the mine’s production per year.
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An aerial view of Narrabri mining field, 600 kilometers northwest of Sydney. (Daewoo International) |
The Korean consortium was one of four groups that participated in the bid for a 30 percent stake in the mine that has an estimated 475 million tons of coal. The other three groups include state firms from Japan, China and the EU. Whitehaven holds the remaining 70 percent stake in the mine, Daewoo said.
In order to maximize its production volume and increase speed, Whitehaven will use the “longwall” mining method starting February, officials said. The technology will allow four groups of investors including Daewoo to secure 6 million tons of coal annually, starting next year. Narrabri mine, however, produced only 300,000 tons of coal this year due to delay in installing the mining device, Jung said. The coal mined here, used at thermal plants, is currently priced about $120 per ton.
Not only has production increased, but also the market value of the mine field climbed up.
“Despite widespread market scare in 2008, Daewoo bravely jumped into the bid and is expected to reap profits larger than expected in the near future” Jeong said.
The trading firm’s Sydney office will expand its resource development business, he added. It currently is involved in three mining projects including Narrabri but will increase the number of development projects to 15 by 2020.
The Sydney office expects to increase revenue from $110 million in 2010 to $500 million by 2015.
Daewoo International is one of many companies around the world entering Australia’s mining industry.
The unprecedented commodity boom has pushed Australia’s trade surplus to a record high and led to a stampede of investment into the iron ore, coal and natural gas sectors.
While Europe and the U.S. face a grim economic outlook, mainly because of crippling debts and a high jobless rate, Australia is fully enjoying its ever-booming economy with 5 percent unemployment and the government budget expected to be turning to surplus in less than two years, according to reports.
It is obvious that resource developments in Australia could generate new revenue for Korean companies, but there are a number of concerns.
The planned mining tax in Australia next year is one thing. But the unbeatable China power in the mining market is serious.
“There is no rival to beat China on the bidding tables for resource development projects. Led by strong state-firm and overflowing cash, China has swept all over,” Kim Ki-ho, an executive from Daewoo International’s Seoul office, said.
Korean companies with small amount of funding has less chances to win underdeveloped mining projects even though they have better knowledge and technologies in resource developments.
“The government needs to step up for private companies by setting up consortium together and open doors for firms to do business easily in foreign territories by using diplomatic ties,” Kim said.
Daewoo International is a Seoul-based company specialized in the provision of trade services. The company operates its business mainly through three divisions: trade, manufacture and department store. The trade business division is involved in the international trading of steel products, metals, machinery, chemical products, automobile components, electronics, textiles, apparels, steel raw materials, non-ferrous metals and others.
POSCO recently acquired a controlling stake of Daewoo International Corp. for 3.37 trillion won, spurring its resources initiative as the Korean trading firm holds shares in seven foreign mineral development projects and eight oil and gas projects.
By Cho Chung-un, Korea Herald correspondent
(
christory@heraldcorp.com)
