Could Low Prices Mean It’s Korea’s Time Again?

Had an interesting conversation in transit at the Seoul airport yesterday.

A local, describing how she grew up in the United States. But now sees more and more of her expat Korean compatriots returning home. The reason: job opportunities are increasingly rosier in Asia.

In fact, Korea has been encouraging this. Recently amending its laws to allow its citizens to hold both a local and foreign passport. Basically an olive branch to those who had chosen to work and live abroad, but now might be more comfortable coming home.

The Asian economy is indeed distinguishing itself from the rest of the world. Including in the mining sector.

This was apparent in the wake of the 2008 financial crisis. In 2009 to 2011, Asian companies went on an acquisition tear for mining projects.

Korean companies were very active. Steelmaker POSCO bought iron ore and coal assets in Australia and Canada. Copper smelter LS-Nikko chased production in Panama and Australia. Major refined zinc producer Korea Zinc bought stakes in a couple of juniors close to home and in North America. Korea Resources Corp went for copper in the Americas and uranium in Canada.

With commodity prices rising recently however, Korean-led M&A activity had tapered off. POSCO has still been looking at a few things: lithium in Chile and iron in Cameroon and Canada. But the enthusiasm has certainly not been as great as the post-bust days when tag line became, “The Asians are coming!”

But commodity prices are now starting to see some of their most notable weakness since 2008. With Asian economies still relatively strong, could we see a return to the “fire sale” buying spree on mining assets?

Korea Resources has been toeing the waters with lithium and rare earth deals. Let’s see if the trend ramps up.

Here’s to going where the money is,

Dave Forest

dforest@piercepoints.com

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