Korea will inject a record $11.8 billion in overseas resources development next year in a bid to slake its ever-growing thirst for energy and rare earth minerals, the government said Wednesday.

Of the total, $7.8 billion, or 66 percent, will come from state coffers and the remainder from the private sector, the Ministry of Knowledge Economy said. The sum also reflects a 34 percent jump from last year’s estimated $8.8 billion.

Under the plan, the government aims to nearly double its self-sufficiency rate for oil and gas to 20 percent next year. It also wants to boost the combined ratio for six strategic metals -- coal, uranium, iron ore, copper, zinc and nickel -- to 35 percent from 27 percent in 2010. The proportion for lithium and rare earths will be raised to 12 percent from 8.5 percent.

To that end, state-run developers including Korea Electric Power Corp. and Korea Resources Corp. will bid for foreign mines and scale up their exploration at home and in other countries including Australia, Mozambique and Bolivia.

The government also plans to ramp up Korea National Oil Corp.’s crude reserves to 2 billion barrels and daily output to 300,000 barrels by the end of next year.

To stimulate the participation of private companies, the ministry will provide 300 billion won ($262 million) in financing to help bankroll their overseas projects.

“The government will execute the goals by inducing corporate investment, expanding ongoing programs and tapping into non-traditional sources such as shale gas and oil sands,” Byun Jong-rip, head of the ministry’s climate change and energy policy, told a forum in Seoul.

The energy scheme, unveiled at the one-day event for policymakers and executives at local energy firms, comes as spiraling crude and metal prices are taking a heavy toll on Asia’s fourth-largest economy.

Korea, the world’s fifth-largest crude buyer, imports almost all its energy needs.

The roadmap is also in line with a recent report by Barclays Capital, which forecast that oil and gas investments will reach a record high of $598 billion worldwide next year, up 10 percent from 2011.

The government has been seeking to ensure stable mineral supplies as competition heats up among fast-growing economies for rare earths in particular, which often becomes a source of diplomatic spats.

Tensions linger over China’s near-monopoly in the world rare earths market following its 40 percent cut in exports quota last year from 2009 levels. Though China has yet to enforce another round of price hikes, many electronics and green energy powerhouses like Korea remain jittery.

“With a more intense global race for resources, there will be more uncertainties surrounding energy supplies next year,” Knowledge Economy Minister Hong Suk-woo said, citing such factors as the European fiscal crisis, a slowdown in advanced economies and a shift in energy mix in the aftermath of Japan’s nuclear meltdown.

“To tide over all hurdles, collaboration and communication between the government, public enterprises and private firms are pivotal.”


By Shin Hyon-hee
(heeshin@heraldcorp.com)