GANGWON-DO < invest Korea

According to Yonhap News,

Legendary investor Warren Buffett has decided to invest a total of 70 million Canadian dollars (80 billion won) in the development of tungsten in Yeongwol-gun, Gangwon Province, which is the biggest foreign investment in the domestic manufacturing industry.

The representative of the IMC Group, owned 80 percent by Warren Buffett, held a signing ceremony with Gangwon Governor Choi Mun-sun, Daegu Tech CEO Moshe Sharon and Yeongwol Governor Park Seon-gyu attending. They agreed to cooperate closely to revitalize the local economy through the development project.

The Israel-based IMC Group is the world's third largest metal processing company and owns 14 affiliates including Daegu Tech in Korea.

Daegu Tech, the largest metal-cutter manufacturing company in the Far East Asian region, was acquired by the IMC Group in 1998 and has about 1,300 employees.

Based on the agreement, the IMC Group has acquired some stakes of Sangdong Mining owned by Woulfe Mining, a global mining developer, and will manufacture tungsten powder and related products and make additional investment to develop high value-added products down the road.

Tungsten is widely used to manufacture various products, including metal cutters, filaments of light bulbs, automotive components, weapons, electronics and golf irons. In the past, its price dropped a lot due to China's mass production and exports. However, as China is trying to secure the mineral reserves, it is emerging as one of the strategic minerals along with rare earth resources.

At first, the IMC Group chose China and Mongol as a location to conduct its mineral development project in a bid to ensure stable supply of tungsten, essential materials for Daegu Tech. However, Gangwon and Yeongwol's aggressive efforts have made the company change its initial plan and conduct the project in Yeongwol.

The local governments also promised to provide all possible administrative supports for permission and approval, tax break and infrastructures, which was the deciding factor in enticing the company to invest in Yeongwol.

The IMC Group plans to maintain existing mining equipments, complete the construction of manufacturing facilities for tungsten powder and start the commercial production within the early next year.

Sangdong tungsten mines, built by Korea Tungsten in 1952, served as a key driving force of the regional and national economy, responsible for 60 percent of Korea's tungsten exports. However, it was abandoned due to weak price competitiveness as compared to that of Chinese products in January, 2004, and is to reopen in about 18 years.

The Sangdong mines are expected to have 130 million tons of tungsten reserves, which will last for about 100 - 200 years. Currently, the international price of tungsten has grown more than 12 times to $450 for every ten kilograms from $38 in 2004, which increases the profitability of the whole process of the project from mining to manufacturing finished products.

In addition, domestic companies including Daegu Tech are well-positioned to be engaged in the development of tungsten with their strong technological prowess, which creates favorable conditions for the establishment of the tungsten industrial complex.

Encouraged by the positive prospect, some raise the possibility that the number of Sangdong population will recover the previous level of 30,000 from current 1,200.

Molybdenum, which is extracted from the manufacturing process of tungsten, can also be used by POSCO M-Tech, which will establish its manufacturing facility in the Yeongwol Agricultural Industrial Complex No. 3.

Gangwon and Yeongwol will accelerate their efforts to support the IMC Group from the pre-investment to post-investment stages in order to ensure its return on investment as soon as possible.

Source Text

Source: Yonhap News (Apr. 24, 2012)

**This is an English translation of a Korean news article.