Debt-ridden KEPCO urged to offset losses from Australia coal mine project

Debt-ridden KEPCO urged to offset losses from Australia coal mine project. [Sources : Lee Chung-woo, Gettyimagesbank]

State-run Korea Electric Power Corp. (KEPCO) is under growing pressure to come up with measures to make up for the mounting losses from the Bylong coal mine project in Australia that has been disapproved due to environmental issues.

According to a study by Maeil Business Newspaper on Monday, KEPCO has decided to build a solar power plant on the coal mine project site in Bylong, Australia, and plans to complete preliminary feasibility study by March.

“We will decide internally whether or not to carry out the solar power project in Bylong after reviewing feasibility study results,” said an unnamed KEPCO official.

KEPCO had initially pushed for a hydrogen production industrial complex on the site but switched to solar power generation instead.

The Bylong coal mine project involves excavating and collecting bituminous coal for power use by developing an underground mine in Bylong Valley in New South Wales in Australia.

KEPCO acquired the mine from global mining company Anglo American in 2010 for 460 billion won ($371.6 million) under judgement that it will be able to produce 6.5 million tons of coal annually. KEPCO and five of its power generation subsidiaries invested more than 840 billion won in the project.

The signing on Bylong Project took place on July 28, 2010. [Source : KEPCO]

The Bylong coal mine project, however, faced opposition from local environmental groups. Australia’s Independent Planning Commission (IPC) in 2019 disapproved the development project, citing climate change such as carbon emissions from bituminous coal.

KEPCO raised an administrative lawsuit with the NSW Land and Environment Court in December 2019, claiming that there was an error in interpreting some parts of the law in the process of IPC’s final evaluation. But even the High Court of Australia (HCA) dismissed the case in February last year, which eventually called off the project.

KEPCO faced snowballing losses from the project, reaching 505.7 billion won in 2021, as it delayed coming up with measures to make up for the losses.

The National Assembly called for KEPCO to come up with project reform measures to prevent further losses from the Bylong coal mine project. KEPCO formed a consortium in Australia and launched efforts to switch the project to one that involves renewable energy business but progress has been slow.

Experts noted that the losses are blamed at KEPCO’s aggressive resource development that disregards environmental, social, and governance (ESG) risk.

They also call for KEPCO to review all of its overseas projects that focus largely on coal thermal power generation.

KEPCO is currently engaged in 46 overseas projects in 24 countries. The coal power generation project in Shaanxi, China, is the largest and accounts for one third of its entire overseas projects, followed by the Barakah nuclear energy plant in the United Arab Emirates, and Java coal-fired power plant in Indonesia.