South Korea's KORES Interested in African Mine Acquisitions

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Researched by Industrial Info Resources (Sugar Land, Texas)--South Korea's state-owned mineral resource developer Korea Resources Corporation (KORES) (Seoul, South Korea) recently showed interest in several African mines, with potential opportunities to explore various minerals, particularly coal, manganese, uranium and copper. The company is looking to invest in various mines this year, as it expects prices of minerals to increase worldwide in 2011, in line with an overall pickup in the global economy.

In a recent interview with local media, Kim Shin-jong, the president of KORES, said that the company plans to use a part of its recent $300 million bond sale to finance the investments.

"Although the timing is not as good as last year, this year is still good for investment," Kim said. "Next year, we may not have the opportunity to acquire new mines, as minerals prices are projected to recover along with the economy."

He added that KORES, a company with major investments in 30 projects pertaining to the exploration, development and production of mineral resources spanning 12 countries worldwide, was eyeing fresh investments in African countries such as South Africa, Mozambique, Namibia, Congo, Niger and Zambia.

"We are interested in several mines in Africa, but we cannot yet confirm any acquisitions," Kim said.

As per reports, KORES sold a bond worth $300 million in May this year. The bond was due in five years, and the issue raised $2.6 billion in orders. Investors from Asia took the majority of the issue.

Kim said that part of the proceeds from the bond sale is likely to be directed to the Ambatovy mining project in Madagascar -- a well known large tonnage and long-life nickel and cobalt mining project, set to emerge as the world's largest lateritic nickel mine in the next four years.

The project is jointly owned by diversified natural resources firm Sheritt International Corporation (TSX:S) (Toronto, Ontario); KORES; diversified marketing company Sumitomo Corporation (OTC:SSUMY) (Tokyo, Japan); and the engineering and construction company in charge of the project's engineering contract, SNC-Lavalin Group Incorporated (TSX:SNC) (Montreal, Quebec).

According to the project design, the Ambatovy mine is capable of producing 60,000 tons per year of nickel, 5,600 tons per year of cobalt, and 190,000 tons per year of effluent ammonium sulfate, which is a commonly used fertilizer.

The mine boasts estimated reserves of 125 million tons of mineral resources and, as per current estimates, has a reserve life of 27 years, with the potential for more in the future.

An estimated equivalent of $4.5 billion has been invested in the project. Construction commenced in 2007, and while mechanical completion is expected to commence in late 2010, the mine is scheduled to reach full capacity by 2013.

Meanwhile, KORES is planning to sell a small portion of its stake in the Ambatovy project as part of the company's efforts to raise money by selling its assets. In fact, Kim mentioned that "KORES would continue to bid in consortiums with local private companies to hedge against risks."

KORES mainly focuses on securing mineral resource supplies for South Korea from sources worldwide. Its area of emphasis is securing supplies of bituminous coal, uranium, iron, copper, zinc and nickel, which the South Korean government reportedly has identified as the six most strategic minerals for the country.

In April, the government of South Korea said that investments in these six strategic minerals, from both private and public sources, including that by KORES, is expected to touch $1.3 billion in 2010, which is 22% higher than last year.

According to data collected by the South Korean government, the country consumes nearly 3 million tons per year of non-ferrous metals, effectively making it the world's sixth-largest consumer. Considering this kind of heavy dependence on imported energy and mineral resources, KORES gains more importance in South Korea's overall resource security and development plan.

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