Trading firms bask in resource development

Korean general trading companies' efforts to tap overseas natural resources are paying off with their earnings spiking last year amid the global economic slump, industry sources said Thursday.

Local trading firms have been rushing to develop overseas natural resources as part of efforts to diversify their business portfolios and seek new growth engines.

SK Networks Co., South Korea's biggest trading company, is estimated to have racked up some 300 billion won in operating income last year on sales of 27.1 trillion won, up 25 percent and 15.8 percent, respectively, from a year earlier.

In 2010, SK Networks invested US$700 million in MMX Mineracao & Metalicos SA, a Brazilian iron ore miner, which allows SK Networks to secure more than 9 million tons of iron ore a year from the investment. The figure is equivalent to 16 percent of South Korea's annual consumption.

In the same year, SK Networks also clinched a deal with Canada's Consolidated Thompson Iron Mines Ltd. to buy up to 10 million tons over the next 10 years.

Daewoo International Corp., the nation's second-largest trading firm, is estimated to have posted sales of 19 trillion won last year, compared with 15.6 trillion won a year earlier. Its operating income for 2011 is also expected to have topped the previous year's 172 billion won, according to the sources.

Daewoo International is developing gas fields off the west coast of Myanmar. A total of 4.5 trillion cubic meters of gas are explorable from the three gas blocks off the coast of the Southeast Asian country, the company said earlier.

The nation's No. 3 trading firm Samsung C&T Corp. is also benefiting from its investment in resource development. The company is projected to have chalked up 10.2 trillion won in sales in the first three quarters of last year, surpassing the previous year's sales of 6.4 trillion won in total.

Samsung C&T has been producing 16,000 barrels a day at an offshore oil field in the Gulf of Mexico from a partnership with the state-run Korea National Oil Corp.

LG International Corp., the country's leading coal trader, is expected to have posted sales of 14.35 trillion won and 217 billion won in operating income last year, similar to the previous year's figures.

LG International started commercial production last year at a coal mine in Inner Mongolia where it owns a 30 percent stake.

In 2008, LG International acquired the stake in the Wantugou mine, 60 kilometers south of the city of Erdos, from China's energy group Boyuan.

The mine, which has an estimated reserve of 180 million tons of bituminous coal, is expected to yield 10 million tons of coal annually after an initial production of 5 million tons.

LG International currently produces 3 million tons of coal from its MPP mines in Indonesia and also has stakes in mines in Australia. (Yonhap)