Video by Lee Min-young, Kim Kang-min, Yun Da-been, Kim Bo-kyung
This is the first episode of our new series in collaboration with the American Chamber of Commerce in Korea, where we will be taking an inside look into the world of business by exploring a wide range of critical decisions and business strategies faced by chief executives around the world.
The Korea Times interviewed Lewis Black, CEO of global mining company Almonty Industries Inc. that owns the Sangdong mine in Gangwon Province, Korea, which was historically one of the largest tungsten mines in the world.
Alfonse D'Amato who is a former U.S. senator from New York, and the founder of Park Strategies LLC, a public policy and business development firm also joined the interview. His son Daniel D'Amato is the co-founder of Almonty Industries Inc.
Almontry Industries Inc. is a global mining company specializing in tungsten mining and exploration. Its primary operations are in Spain, Portugal, and South Korea. Almonty is set to reopen the world's largest tungsten mine in Sangdong, Gangwon Province, Korea.
Below is the full transcript of the interview with Lewis Black and senator Al D'Amato.
Q. Lewis can you give us an overview of what Almonty Industries does?
[Lewis]
A. Almonty Industries is, we specialize specifically on the strategic metal of tungsten. We have five generations of expertise in its extraction and we own the longest running mine in the world in Portugal which has been running for 126 years and we account for roughly seven percent currently of outputs outside of China. This will increase to closer to 30 percent when South Korea opens but the most important thing is tungsten's a very difficult metal to produce and we have a depth of knowledge that is unmatched and the industry accepts we are considered to be the best operators outside of China and one of the best operators in the world.
Q. We all know that tungsten is a strategic medal but could you tell us how this resource is exactly being used and explain to us its importance in production and manufacturing?
[Lewis]
A. Well, I mean for instance in South Korea, it's the largest consumer of tungsten per capita in the world because it's extensively used in the semiconductor business but it also is included in aerospace, in the car manufacturing, in medical and in defense and there's a little bit of it in just about everything that's in your life, from the vibrator in your telephone to a guidance system on a satellite. You need very small amounts of it but without that little piece of tungsten the product is completely useless.
[Senator]
It is the strongest metal in the world. It's an alloy which is absolutely essential particularly in drilling for example. Drilling equipment you've got to have tungsten. In the defense of your nation, in the manufacturing of equipment where a high intensity heat is there. It is an alloy which is essential and unfortunately over the years, China has come to, in some cases, represent well over 80 percent of the world's production of of tungsten and it used this to its advantage in driving out competition so that if there was a tungsten mine in the Western Hemisphere, the Chinese would dump their product, lower the price and drive the mines out of business so there's never been any real competition. Lewis and my son have worked together over 10 years to bring Almonty to this position. Many people scoffed at it and now many people are looking and saying 'my gosh' because Almonty is on the verge of starting the reopening of this critical asset, critical to the world.
Q. How big of an impact will this mine have on the global opportunity?
[Lewis]
A. This mine is very well respected through the entire industry because it is seen as the greatest. I think it's the best way to put it. It is seen as the ultimate mine in tungsten. It has the highest grade, it has 70 plus years of reserves. The Chinese are in many ways not terribly comfortable that this mine is going to reopen because it does have the ability to really take some of the strength of the Chinese dominance of this market away.
[Senator]
There is a very wonderful opportunity to turn to this mine which strategically is so important for South Korea because it can give it all of the tungsten that South Korea needs and it can supply the Western Hemisphere and indeed the mine is so rich. We have contracts ready with some of the largest companies in the world which will guarantee that they're not going to be shut down with the Chinese dumping and lowering the price because they've entered into agreements that go into the future over the next 15 years and so what we can do is break that stranglehold that China has over the rest of the world.
Q. Summarize for us what you see are the real benefits for the Korean economy, the Korean citizens and most importantly that region which is not that close to the metropolitan Seoul area.
[Senator]
A. The reopening of the Almonty Korea tungsten mine and Sangdong is a major infrastructure project for the community. We're going to be investing well over a hundred million dollars in this project, 80 million comprising direct capital expenditures related to the reopening.
[Lewis]
And initially there will be more than 200 people working for the sites as the mine expands and we also developed the molybdenum mine which is the other mine at the site as well. That'll double up the numbers. You're looking at generating tax revenues somewhere in the region of 150 million dollars over 10 years and in mining they say for every direct job there are six indirect jobs so you run into essentially full outputs into thousands of indirect jobs that will revitalize a town that in its day had 40,000 residents and now has just over 700 so you can see that this will have a profound effect on the town of Sangdong.
Q. Speaking of tungsten supply, can you tell us about the challenges that come from the limited supply of tungsten metal as the world is heavily relying on China for these materials?
[Lewis]
A. To 85 percent of the world's output of tungsten comes from China and this really culminates in the 80s, the middle to late 80s where a lot of Chinese material hit the market. Prices collapsed and pretty much everyone went out of business. One or two survivors, but that was it. Those survivors are still with us. One we own in Portugal, the other one is in Austria which is owned by Sandvik but that's pretty much it that survived that blood bath in the late 80s and then of course we've seen subsequently very difficult to then open up minds because that knowledge all disappeared. It all vanished and it's a very difficult as I said before it's a very difficult metal to process.
[Senator]
And unfortunately the Sangdong mine located in South Korea, one of the greatest mines in the world became victim to the Chinese dumping because they couldn't sell their product, they couldn't compete so I guess it goes back to about 1992 when the government closed the Sangdong mine, a mine that had the greatest concentration of high quality tungsten. There's none that was better and it was closed down, it was closed down because they could not make sales because the Chinese, by dumping at prices that no one could compete with put them out of business. Now the world cannot afford to be held hostage by the Chinese government. Just cannot do it.
Q. The U.S. is currently having a trade war with China and if most of the metal supply comes from China, the current U.S.-China trade war must be putting a huge strain on U.S. manufacturers so Senator, how do you see this ongoing trade war between the two countries and how do you assess the damages?
[Senator]
A. This is a strategic alloy which is necessary in so many areas, the medical area, the defense area, the manufacturing area, as we find more technological ways to go forward. We should be working in this cooperative way. What a great opportunity for South Korea to reinvigorate its economy to keep it growing, to keep it moving and not be held under the fear and dominance of the Chinese.
Q. So you said that we shouldn't be held captive. So do you think U.S. manufacturing companies should find ways to reduce dependency on China?
[Senator]
A. Not only U.S. companies but companies throughout the Western Hemisphere as well. So much in terms of manufacturing and other areas, health etc., the United States passed legislation which made it possible for the Chinese state enterprises to take political interference, media censorship, bifurcated internet situations and I think the pandemic has got certainly the American public waking up to the danger of creating monopolies that China will use to its advantage at the disadvantage of other countries. We can't afford to be held hostage whether it's tungsten or whether it's the creation of medical supplies and strategic areas. We just can't do it and this project will absolutely put South Korea on the map in terms of dealing with this problem of tungsten. It's a small problem but let me tell you, it touches many people's lives.
Q. So more on the operation in Korea, Almonty is making a big move investing millions of dollars in developing the Sangdong mine so were there any challenges in funding this multi-million dollar project or have you faced other difficulties when communicating the project with local residents?
[Lewis]
A. You know, it obviously took time to attract the type of lender we were looking for. We ended up with a lender who is considered to be one of the most conservative and maybe do one every 18 months, maybe. Most of the projects they do are essentially vast projects for major mining companies. They also build nuclear power stations, hydroelectric dams, car factories so KfW (Kreditanstalt fur Wiederaufbau) and currently KfW is bailing out the German economy so it's a very significant lender but they have a 100 track record of not having one default or one bankruptcy of any mine that they've supported so they're extremely cautious about who they choose to support and they were, like we were, very impressed with not just the project itself but the environment that it sits in the community and the availability of of good highly skilled people and the political support, both local, regional and central.
Q. Korea has become a highly environmentally conscious country that is strongly dedicated to green growth. So how can an industry like mining which is traditionally known to be environmentally risky fit into Korea's green growth paradigm?
[Lewis]
A. Well, to be honest, Korea is not alone. We operate in Europe and Europe has, for many years, taken a very green view of how to operate and our lenders which is the German state bank KfW IPEX-Bank and obviously the Austrian government export credit bank OeKB, they have required this project be designed to what's called 'Equator Principles.' Equator principles are international standards that are far superior to current international standards for social and environmental activity and so we all generate no waste on surface. We'll generate no tailings on surface. Everything is essentially to be as little as low impact as possible and in fact our long-term goal because currently the energy from the platform to the mines is nuclear. It's from the local nuclear power station. There is no reason why we will not become carbon neutral. Ultimately all the equipment underground will be electric so in this day and age you have to learn to operate in an environmentally sensible and responsible way.
Q. Can you walk us through what Almonty is ensuring with the workers so that they can ultimately be safe, happy and obviously well compensated?
[Lewis]
A. So in all of our projects we have an intrinsic link with the community. After all the community ultimately operates the mine and so we've always had a very long-standing relationship whether it be from sports centers to working with education, whether we're working on scholarships. Every community has different needs and we have to work with it.
Q. Production, manufacturing industries have been hit hard by COVID-19 and of course mining operations must also have been experiencing disruptions and shutdowns so how is your company coping with the situation?
[Lewis]
A. The mines are relatively in rural areas so they're not in high density area so we have our isolation which has certainly served us well at this time. Our biggest issue has been actually shipping. Shipping has been significantly hit so our production has remained consistent and at normal levels but shipping times have increased by almost threefold so that's been more problematic for our customers but there's nothing we can do about this.
Q. For U.S. citizens in the U.S., how do they view this project for America?
[Senator]
A. I think that the relationship that we have is in a good place. The development of this strategic material and make no mistake about, tungsten is a rare earth and it has become known now as critical throughout the world so this is our mutual interest. It is economically advantageous for the entire world to have a supply of critical materials that is not going to be used in a way to hurt other nations but rather to give other nations greater opportunity. So I see this mind as a critical element in strengthening that bond.
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