Posted July. 07, 2012 02:04,
"They reversed their decision. They said a joint company cannot have the legal status of an incorporated business. POSCO negotiators left the site."
Kim Sin-jong, president of the state-run Korea Resources Corp., got a call Tuesday from an employee while waiting to board a Bolivia-bound flight at Miami International Airport. He had been excited over the prospect of signing a lithium development deal with the Latin American country when he heard the news.
A Korean consortium led by the country`s biggest steel maker POSCO and the resource corporation was planning a joint venture with their Bolivia counterparts to produce cathode materials for lithium ion batteries. Kim was entrusted with the negotiating right after calling member companies of the consortium, including LG International.
POSCO President Kwon Oh-jun also got an urgent call from an employee when he was just about to head for the Bolivian capital of La Paz from Lima, Peru, after returning from a business trip to Germany. He arrived at the hotel at 2 a.m. the next day and immediately had a meeting with Kim.
"Let`s comply with their request. At the same time, we must make them accept our demands for separate bank accounts for venture company establishment funds for their safe management," Kwon said.
After a series of talks, representatives from the consortium spoke again early Thursday morning at the Bolivian Mining Ministry. They awaited the signing of the deal within 30 minutes that would enable production of cathode materials and obtain 5.4 million tons of lithium buried at the Uyuni Salt Lake.
Lithium is a rare resource used in secondary batteries for mobile phones and laptop computers. Rising demand for electric vehicles will inevitably push up their prices, with China, Japan and France thus keen on securing sources of the material.
The two Korean CEOs waited anxiously at the ministry only to hear a discouraging story. An employee said the Bolivian side demanded the exclusion of royalty payments for the use of POSCO technology.
Kwon`s face turned dark. "Using the technology and not paying royalties are unacceptable. I won`t sign," he said.
The negotiations continued. Only after they agreed to include a royalty payment clause in a separate document did they finally sign the deal. After 38 hours of marathon talks and faced with Bolivia`s extreme demands, the conclusion was at least favorable to Korea.
Kim was excited. Since taking over the resource corporation in July 2008, he had sought to obtain lithium for Korea. The country can now enjoy an advantage over rival countries in the Bolivian lithium project thanks to Korean corporate competitiveness, POSCO`s technology of fast extraction of carbon lithium melted in salt water, and corporate buyers of lithium including Samsung SDI and LG Chem.
Following the signing ceremony, Bolivian Mining Minister Mario Virreira said, "I was most of all impressed by the active and prompt drive of the Korean consortium led by Korea Resources Corp."
Under the deal, the consortium and Bolivia`s Comibol will each own half of the venture by investing 2.4 million U.S. dollars. For Korea, POSCO will own 26 percent and the remainder will taken by the resource corporation (9 percent), LG International (5 percent), Kyungdong (5 percent), Union Corp. (3 percent) and Aju Corp. (2 percent).
Comibol will supply lithium carbon to the joint venture, and the Korean side will manufacture cathode material trial products by the end of next year with technology of EMS, a POSCO subsidiary.
Lee Sung-won, director of POSCO`s lithium promotion team, said, "Following the manufacturing of test products, we will expand investment for commercialization."