Korea Electric Power Corporation is set to sell its entire in an Australian coal mine to its subsidiaries, losing hundreds of billions won, local media reported on Jan. 11.
According to reports, the deal to transfer stake in Bylong Coal Mine from KEPCO to its five power generation subsidiaries over the course of three years was signed at the end of last year.
KEPCO purchased the mine for about 419 billion won (US$351.30 million) in 2010. Including the initial price, KEPCO’s investment in the project to date is estimated to be about 700 billion won.
Under the deal, 10 percent of the mine was sold to the KEPCO subsidiaries at the time of signing for 30.6 billion won. Of the remainder, 39 percent will be transferred within three months of the mine obtaining production license, and 51 percent will be transferred once output is stabilized.
Although the price of the second- and third-stage sale will be decided based on future book value of the mine, which is expected to increase once production begins, industry watchers say that a loss ranging in hundreds of billions of is likely.
By Choi He-suk (email@example.com