– The budget to support overseas resource development has fallen to a record low this year. The budget was reduced from 100 billion won in 2017 when the special loan system was reorganized to 34.9 billion won this year. It is 1.8 billion won less than the previous low of 36.7 billion won in 2019, and has been hovering in the mid-three of 30 billion won for the third year. This is a shabby number considering the amount of support that exceeded 400 billion won per year in the past. According to the ‘2021 Overseas Resource Development Special Loan Project Execution Plan’ by the Ministry of Trade, Industry and Energy on the 21st, the budget to support the development of overseas resources such as petroleum and minerals this year is 34.9 billion won. This is the lowest amount ever, except in 2016, when the support system was completely abolished due to the aftermath of corruption and business failure during the Lee Myung-bak administration.
The Ministry of Industry said that the budget for special financing is also inevitably reduced as private companies’ overseas resource development projects have shrunk significantly.
This is different from the days when a budget of more than 400 billion won per year was provided under the name of’success and failure loan’. The unsuccessful loan is a system in which the government provides loans with a certain amount of resource development business funds, and if the project is successful, some of the principal and interest and net profits are received as a special charge, and if the project fails, the loan is exempted. However, amid successive business failures and noise, the unsuccessful loan system was abolished at the end of 2015. The Ministry of Industry and Industry revived the support fund by setting a budget of 100 billion won under the name of the special loan system in 2017, but the results are on the decline. This is because the attractiveness disappeared as the loan ratio was lowered from 80% to 30% and the loan reduction ratio was reduced from 100% to 70% in case of failure.
Some point out that the government should implement more active policies for activation. The recent surge in the price of international raw materials such as crude oil and minerals and the fierce competition for securing global resources due to the Corona 19 sedation are foreshadowed.
Raw material prices, which plummeted after Corona 19, have recently started to rebound rapidly thanks to the spread of vaccines and economic stimulus measures from around the world. According to the Korea National Oil Corporation, the spot price of Dubai oil as of the 19th was $60.83 per barrel. Compared to the beginning of the year, it rose 15.89% (8.34 dollars), 4.5 times higher than 13.52 dollars on April 22 last year, which was the lowest level since Corona 19. As of the same day, the price of iron ore was $173.55 per ton. It more than doubled from $81.07 in March last year. In addition, as the energy conversion policy was promoted around the world, competition for securing strategic minerals such as nickel and cobalt began to heat up.
The Ministry of Industry and Industry announced in May last year that the 6th Basic Plan for Overseas Resource Development (2020-2029), which is a mid- to long-term roadmap, announced that it will move the clock for overseas resource development projects that have stopped, but the situation has not changed at all. Last year, Korea’s public sector’s overseas resource investment was also’zero’.
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