Overseas resource projects need long-term government vision

The Ambatovy mine in Madagascar, one of the world’s three largest sources of nickel, a critical material for electric vehicles, is a flagship overseas resource development project led by South Korea. Launched in 2006, the project recorded its first profit only after 15 years. Over that period, rising construction costs and repeated delays tripled the total investment, at one point prompting the government to consider selling its stake. Recently, however, the mine’s value has been reassessed amid the global electric vehicle boom.

Overseas resource development typically requires 10 to 15 years from initial exploration to full-scale production. Throughout that process, investors must contend with shifts in the global economic environment, political instability in host countries, and changes in domestic politics. These are long-term undertakings that cannot realistically be completed within a single five-year presidential term. Efforts to deliver quick results often increase the risk of costly missteps.

The administration of former President Lee Myung-bak promoted overseas resource development as a response to global resource supply risks. The push was so aggressive that industry insiders likened it to forcing a child to sprint. Investment losses widened after the 2008 global financial crisis. Under the Park Geun-hye and Moon Jae-in administrations, many of these projects were reclassified as targets for reform and liquidation. Budgets were slashed, energy-related public enterprises were pushed into financial distress, and hard-won foundations for overseas resource development were rapidly dismantled.

South Korea launched overseas resource development in the 1970s in the aftermath of two oil shocks. Forty-eight years after the enactment of the Overseas Resource Development Promotion Act in 1978, a fundamental reality remains unchanged. Without stable access to raw materials, the country cannot sustain its core manufacturing sectors, including semiconductors, automobiles, secondary batteries and defense, nor heavy industries such as steel and petrochemicals. As competition between the United States and China over critical mineral supply chains intensifies, South Korea must recalibrate its resource security strategy to reflect the shifting global landscape.

The government has decided to allow the Korea Mine Reclamation and Mining Corporation to resume overseas resource exploration and investment. This marks the first time in a decade that a public corporation will directly invest in overseas resource projects. While such development offers the advantage of securing supply regardless of price fluctuations, an approach driven by ambition alone risks repeating past failures. During the so-called lost decade, Korea’s overseas resource ecosystem deteriorated, with erosion in data networks, capital, skilled personnel, and exploration and production capabilities. Korea would do well to study models such as Japan’s, in which the private sector leads projects while the government plays a supporting role to systematically spread investment risk.

Unverified projects, such as the Yoon Seok-yeol administration’s Giant Whale Project, should not be promoted through political framing. Overseas resource development is not a vehicle for accumulating political achievements. It must be treated as a long-term strategic endeavor aimed at securing core assets essential to national resource security, regardless of which administration is in power.