Korean MFA: KORES Greenland REE+Nb+Ta project to be ‘delayed’ by NunaMinerals bankruptcy

A terse news item on the website of South Korea’s ministry of foreign affairs states that the Qeqertaasaq rare earth, niobium and tantalum project near Maniitsoq in western Greenland is “expected to be delayed” now that Greenlandic state-owned firm NunaMinerals has filed for bankruptcy. NunaMinerals and Korean state-owned miner KORES (한국광물자원공사) agreed to jointly explore the site and started drilling last year.

South Korean SOEs invested heavily in natural resource projects abroad, sometimes as part of a ‘resource diplomacy’ policy during president Lee Myung-bak’s administration. These investments have become a source of controversy after a government audit that became public not a month ago questioned their profitability and suggested already scheduled investments could put these companies, that include KORES, in financial trouble. The agreement between Nuna and KORES was signed during Lee Myung-bak’s visit to Greenland in September 2012.

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Yakutia: cooperation with South Korean pharma, biotech

Officials from the Far Eastern Russian region of Yakutia (the Sakha Republic) were in Gangwon province in South Korea last month to discuss potential cooperation. The visit included meetings with local pharmaceutical companies, some of which seem to have an interest in Yakutian products such as (deer?) antlers and should refer to the Siberian musk deer (사향노루) or a similar animal (Sputnik 콜리아, ЯСИЯ). Among the Korean companies the visitors interacted with: Hamsoa Pharm (함소아제약), Regeron, Bifido.

Another topic of the talks was tourism. The Yakutians would like to attract South Korean visitors and there are plans to start offering charter flights between Chuncheon and Yakutsk.

Remarkably enough, an important component of tourist flow in the opposite direction, from Russia to Korea, is medical tourism. Around the time of the Russian visit to Gangwon, representatives from Heundae Paik Hospital (해운대백병원) in Kimhae and from a Korean medical tour operator were visiting Yakutia. No less than 13% of patients at that particular hospital come from Russia. Such a figure is of course not that common in the industry, but South Korea is an important medical tourism destination, most famously for plastic surgery. Most customers come from China, but the former Soviet Union also provides an interesting market, and sheer geography would suggest Korea might be attractive to patients in the Russian Far East, closer to South Korea than to their own country’s major population centres.

I’ve written recently about Yakutian efforts to attract investment from East Asia. The region, just like others in the Russian Far East, badly needs foreign investment that is unlikely to come from the West in the current geopolitical climate.

South Korean authorities are just as eager to increase cooperation with Russia in everything Arctic. For a recent sample of this: the Ministry of Oceans and Fisheries (해양수산부) Arctic action plan for this year, presented not two weeks ago, highlights cooperation with Russia, including Korean investment in developing and modernising ports in Russia’s Far East.

Danish, South Korean officials discuss Arctic navigation

Officials including Jeon Ki-Jeong 전기정, who leads the shipping and logistics bureau at South Korea’s ministry of oceans and fisheries (해양수산부), and Andreas Nordseth, director of the Danish Maritime Authority (Søfartsstyrelsen) and IMO sec-gen candidate, were scheduled to meet last Friday in Seoul to discuss cooperation between the two countries in Northern Sea Route navigation and talked about fostering the cruise industry. They also renewed a MOU on maritime shipping the two countries signed in 2012, making it valid for another three years.

Yakutia: enter China, Korea

After a well-deserved extended Spring Festival holiday, followed by a bout of the dreaded lurgy, I’m back to add a few snippets about non-Western investment in the Sakha Republic in far-eastern Russia, also known as Yakutia.

In an interview he gave last month to news portal yakutia.info, Aleksey Zagorenko Алексей Загоренко, head of Yakutia’s investment agency, addressed worries that Zhuoda 桌达 Group’s planned $500m investment to build and renovate homes and social infrastructure in the Republic’s capital might crush the local construction industry. Local home prices in Yakutsk are just as high as in Moscow, he retorts, and that can hardly be blamed on the trickier environment since other northern regions have more reasonable real estate prices. Zhuoda’s entry will likely harm some local actors, but the best will survive and as a result the market will be more “efficient”, and cheap. It’s a “change or die” question.

This echoes what we saw when I first wrote about Zhuoda’s Yakutsk project, where I quoted Aysen Nikolaev Айсен Николаев, the town’s mayor, who highlighted precisely such a desired effect on the local home prices: Zhuoda’s new homes might help certain local developers “sober up” and start selling a bit cheaper.

Chinese and other non-Western investment in Russia and specifically in regions like Yakutia is being increasedly sought for since the start of the Ukraine crisis, and Zhuoda is by no means the only big Chinese company with an interest in the area. I’ll hopefully find the time to refer to several others in future posts, but to stay within the topic of recent contacts with Sakha Republic authorities let’s mention state-owned conglomerate China Poly Group (保利集团), who met with Zagorenko in January to talk about potential investments in infrastructure.

Anyway it’s not just the Chinese who are increasingly attracted to the area. Contacts are also increasing with South Korean companies. Sakha Republic officials are scheduled to travel there in March, and further exchanges are planned during this year. Vladimir Vasilyev Владимир Васильев, the Republic’s minister responsible for foreign contacts, mentions Korean interest in biotechnology and health care.

According to Zagorenko, no less a company than Korean-Japanese conglomerate Lotte Group is considering taking part in local “medicine projects” and the construction of a hotel in Yakutia. I haven’t seen anything about this in Korean-language sources, but for one thing Lotte has been active in Russia for several years. They have built large malls in Moscow and are planning to acquire another one.

South Korea has produced some less-than-entirely-friendly statements towards Russia after the annexation of Crimea, and disagreements on political and military issues between the two countries do occasionally appear, but economic relations seem to have received a boost from Russia’s worsened relations with the West. Russian officials (specifically the Sakha Republic officials quoted above) talk of what I’d paraphrase as a need for non-Western industrial countries like China, Japan or Korea to fill the vacuum left by Western investors, given that foreign investment is absolutely necessary to develop Russia’s Far East.

A recent article by Hyun Seung-Soo 현승수 on Korean-Russian relations during the last year (“2014 한러 관계, 동북어 전력 환경 변화 속 지속 가능한 협력 모색”), in Russia-Eurasia Focus, published by Hankuk University’s Institute of Russian Studies, lists recent exchanges between the two countries, and points at Russia’s increased cooperation with North Korea as favouring the South’s “Eurasian Initiative” and creating business opportunities, especially trade in Russian natural resources through North Korea. Despite an increase in business exchanges, overall trade between Russia and the South remained stable during 2014, and Korean exports to Russia actually decreased.

My previous post on Yakutia has, to my great delight, attracted the attention of Mia Bennett’s Cryopolitics blog of which I’m a frequent reader.

[Updated on March 11 to add the link to Hyun Seung-Soo’s article.]

swap it

Posted on Tumblr on Oct 8.

The central banks of China and Iceland have renewed a 2010 $550m three-year currency swap agreement (PBOC, Seðlabanki). That’s two orders of magnitude below similar deals with Australia, Brazil, South Korea or the UK, and about the worth of last month’s swap with Albania, a similarly sized economy. Last year, Iceland imported $354m worth of goods (CIF) from China (Statistics Iceland).