S. Korea to set up 1 tln won resources development fund

SEOUL, May 10 (Yonhap) -- South Korea plans to set up a 1 trillion won (US$802.5
million) resource development fund that can be used to secure overseas mineral
mines, oil fields and gas wells, the government said Sunday.
The Ministry of Knowledge Economy said Korea National Oil Corp. (KNOC) and Korea
Resources Corp. (KORES) will invest 110 billion won as start-up money that could
help attract up to 890 billion won worth of private funds.
Of the total, state-run KNOC will inject 100 billion won with KORES to come up
with 10 billion won.
The fund will be used for direct investment in resource development projects,
purchasing of stakes, securing profit rights of existing operations, and mergers
and acquisition arrangements.
"The total will be collected in a five year period, with the investment fund to
be maintained for 10 years, although this can technically be extended to 20 years
if there is agreement among investors," an official said.
He said investments can be made in lump sums, installments or when the need arises.
The ministry in charge of the country's industrial and energy policies,
meanwhile, said it will select two companies or consortiums that will be charged
with managing the funds by early September at the latest, with the applications
to be received by June 12.
Both local and foreign companies can apply, although the latter will be required
to set up a local branch, with the successful bidders obliged to invest a
mandatory 3 billion won into the fund.
The two companies selected will be charged with attracting private investment,
determining what business ventures promise the best returns and being responsible
for overall operations.
The government said that due to the nature of the fund, consortiums made up of
energy and financial firms may look to secure the management positions.
South Korea, which imports most of its raw materials and energy resources from
abroad, has been moving to better insulate itself from sudden fluctuations in the
global market by buying up exploration-development rights, taking over foreign
energy companies and purchasing stakes in mineral and fossil fuel development
schemes.
Experts have said that the current worldwide economic slump could be used to
secure more overseas resources since mineral and energy prices have fallen off,
affecting the value of operational mines and fields.
yonngong@yna.co.kr
(END)