S. Korean firms rushing for overseas resources development

SEOUL, May 19 (Yonhap) -- South Korean companies, including state-run corporations, are stepping up their efforts to tap overseas resources that they see as new revenue sources, industry sources said Thursday. Daewoo Shipbuilding & Marine Engineering Co. (DSME), South Korea's No. 2 shipbuilder, said earlier its unit, DSME Energy and Resources, has received approval for a liquefied natural gas (LNG) development project from Papua New Guinea. DSME E&R and Norway's Hoegh LNG jointly signed the deal with Papua New Guinea's national oil company Petromin to investigate prospects for offshore LNG production. If the project, estimated to produce up to 3 million tons per year, succeeds, DSME may have better chances of winning an order to build an LNG floating production, storage and offloading (FPSO) vessel for the gas shipment. DSME E&R is targeting sales of 4.2 trillion won (US$3.88 billion) by 2020, compared with last year's 182 billion won, it said. STX Group, a South Korean shipbuilding and shipping conglomerate, said recently that it aims to generate 30 trillion won from its energy-related business by 2020, which accounts for 25 percent of its total sales. Its sales from energy and resources-related business reached 2 trillion won last year, accounting for 7.5 percent of its total sales. Hyundai Heavy Industries Co., the country's leading shipbuilder, is also joining the race for global resources development. Hyundai Heavy recently set up a unit called "Hyundai Energy & Resources" as part of efforts to boost its energy-related business. "Rising prices of key commodities are pushing them to tap overseas resources development," said Park Ki-yong, an analyst at Korea Investment & Securities. "But they are now forced to search for new revenue sources, and they see resources development as their new growth engine." POSCO, South Korea's leading steelmaker, is also ramping up its drive to develop resources in the African, South American and East Asian regions in a bid to secure a stable supply of key raw materials for steelmaking. POSCO has agreed to jointly develop an iron ore mine in Cameroon. POSCO also said it will establish a mining venture in Zimbabwe with the local company Anchor, and seek to develop a coal mine in Mozambique with Vale SA, the world's second-largest mining company. POSCO, the world's third-largest steelmaker, has been trying to buy coal and iron ore mines in Australia, Canada, Brazil and other natural resources-rich countries in a bid to secure stable supplies of raw materials used to make steel products. Early this year, the country's energy ministry said local firms were expected to more than triple their investment in developing overseas minerals this year, as they intensify the search for rare metals in regions such as Central and South America and Africa. About 25 South Korean firms are expected to increase their 2011 investment more than three-fold to $7 billion in overseas mineral resources, compared with $2.2 billion estimated for the previous year, according to the ministry. Of the total, the private sector's spending worth $4.4 billion would exceed that of the public sector. The ministry said 39 percent of total investment would be spent on coal, as large-scale spending by the country's leading steelmaker POSCO and the state-run Korea Electric Power Corp. continues.