| Description |
Mining and the related industries play an important role in the Korean economy. The Korean mining industry is relatively small. There are several mines in Korea but they are very small, and production is low in comparison with other countries' mines. Thus Korea must take part in mineral projects all over the world to secure essential minerals such as coal, copper, uranium, iron ore, zinc, and nickel to support its manufacturing industries. For that reason, the Korean government established K Company1 as a government corporation to invest in mineral deposits throughout the world. However there are several major entities, including BHP Billiton, Rio Tinto, Anglo American, Xstrata, Freeport McMoRan, Chinese government-run companies, and Japanese trading companies that have large foreign holdings, controlling deposits in most of the world's established and productive mining districts. As a relative newcomer, K Company is having difficulty breaking into these markets. In general, the mining industry considers the United States, Canada, Australia, and European countries to have good mining investment environments, but because the major companies have already achieved market dominance in those countries large investments are required. Thus K Company is increasingly turning to new areas like South America (Peru and Bolivia) and Africa. The competition among businesses to secure a share of the new market is intense but there are still good investment opportunities. However, because most of the countries in these areas are not well developed, there are several additional risks associated with participation in mining projects there. Risk is a major factor in all mining activities, arising from many internal and external variables. In this thesis, those variables are identified, and their effects evaluated, based on a survey of 31 experts. A statistical model to analyze the effect of risk on the economic feasibility of mine development and operation at a given location is presented, and validated using analysis from projects at K Company. The guidelines and model, as presented here, will enable K Company and other investors to make better investment decisions in the future. |
