Korea Electric Power Corp. (KEPCO) is expected to suffer huge losses owing to the failure of its ambitious Bylong coalmine development project in Australia.
KEPCO has invested $700 million (approximately 830 billion won) in the Bylong project as part of its overseas resource development project since 2010.
On Sept. 18, the New South Wales Independent Planning Commission (IPC) refused development approval for KEPCO’s proposal for an open-cut and underground coalmine in the Bylong valley.
In a statement of reasons, the commission said KEPCO had not done enough to minimize greenhouse gas emissions associated with the project.
It said the long-term environmental effects on groundwater, agriculture and heritage were also unacceptable.
Critics point out that the public corporation listed not only in Korea but also in New York, the U.S., will suffer huge losses again after jumping into overseas resource development projects.
KEPCO acquired 100 percent stake in the Bylong bituminous coal mine from Anglo-American in Australia for $400 million in 2010. Since then, the company has invested a total of $700 million, including acquisition costs for land purchases and exploration.
KEPCO originally planned to start developing mines this year and produce 3.5 million tons of coal annually for 40 years from 2021. However, development has become virtually impossible following the IPC's final decision on the day.
"We finished our due diligence at the time of the acquisition and took over the stake through international bidding," said a KEPCO official. "We will consider whether to apply for permission again, sell shares, or file administrative lawsuits by supplementing and re-establishing future development plans."
KEPCO, which posted an operating loss of 928.5 billion won in the first half of this year alone due to the government's nuclear phase-out policy and the expansion of renewable energy, is expected to suffer huge additional losses due to the failed Bylong coalmine development project.