S. Korea, China vying for overseas resource mines

By Park Sang-soo
SEOUL, June 18 (Yonhap) -- South Korea is seeking to acquire overseas oil fields,
gas wells and mineral mines in a bid to boost its energy security, but its moves
are often thwarted by cash-rich China, industry sources said Thursday.

The latest case involves the race for acquisition of Addax Petroleum between
South Korea's state-run oil company and China's Sinopec Group.
Korea National Oil Corp. (KNOC) and Sinopec Group, the parent company of China's
Sinopec Corp. -- China's largest oil refiner -- are competing to take over the
Switzerland-based oil and gas explorer, with the winner likely to gain access to
Addax's resource development projects in Africa and Iraq.
Addax's oil and gas assets are based mainly in West Africa and the Middle East,
with core assets in Nigeria. The company's market value is estimated at 3.1
billion pounds (US$5.1 billion).
"As far as I know, KNOC has put in a bid for Addax ... but its bid may fail
because Sinopec, flooded with ample cash, may offer a more sweetened bid," a
source said.
KNOC is seeking to sell dollar-denominated debts, a move seen to fund its bid
for Addax. In late May, KNOC also raised $270 million for overseas oil
exploration by selling floating rate notes.
South Korea, which imports most of its raw materials and energy resources from
abroad, has been seeking 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.
But its bids are often thwarted by Chinese rivals that are flush with cash from
the country's economic boom and are buying mining and other assets abroad in
hopes of profiting from future commodities demand.
According to the sources, other South Korean companies -- SK Networks and Hyundai
Hysco Co. -- have been seeking to acquire a 25-percent stake in Canada's
Consolidated Thomson Iron Mines Ltd. and 5 million tons of iron ore from its
Bloom Lake open-pit mine in central Quebec.
But Wuhan Iron & Steel Group, China's third-largest steelmaker, agreed in March
to buy 19.9 percent of Toronto-based Consolidated Thomson for US$240 million.
In February, state-run Korea Resource Corp. reached a temporary agreement with
Autralia's OZ Minerals, though China's Minmetals Nonferrous Metals Co. ultimately
took over the mining company in April.
"Local companies cannot compete with Chinese rivals because cash-armed Chinese
companies are gobbling up overseas oil fields and coal mines to fuel the
country's economy," said another source.
sam@yna.co.kr
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