Redeveloping historic mines in South Korea

Scarlett Evans 1 July 2019 (Last Updated July 1st, 2019 09:26)

Bluebird Merchant Ventures recently announced the progression of plans to develop the Kochang and Gubong mines in South Korea; two gold ore sites that last operated in the 1970s. Scarlett Evans spoke to Bluebird COO Charles Barclay about the process of reviving operations at these historic mines, and what the future of South Korean mining might look like.

Redeveloping historic mines in South Korea
The Kochang mine in South Korea, which has not produced gold since the 1970s. Credit: Bluebird Merchant Ventures

The Asian-focused resource development group, in a joint venture with Australian exploration firm Southern Gold, has submitted applications for permits to develop the sites. The start of operations is awaiting feasibility reports, and Bluebird has voiced its confidence that production will begin during the fourth quarter of 2019.

Scarlett Evans (SE): What attracted you to these sites?

Charles Barclay (CB): After the Philippines became a virtual no-go area for mining for quite a few months, we had the opportunity to look at projects elsewhere with a group of professionals who wanted to open old mines. Through information gathered from friends and industry members, we heard South Korea had some mines that would be worth looking at and, based on that, we did a deal with Southern Gold and made an agreement to develop some old mines and fund the projects. The whole synergy between us and Southern Gold is that they wanted us to do the exploration to help them hit targets in South Korea and we selected these two to start the process.

We operate on the basis that  our company, which has been heavily involved in reopening old mines all over the world in sites from South Africa to Fiji to Vietnam, work to improve mines. That’s the basis on which we looked at the projects in South Korea. We needed to look at why a project closed, when it closed, how much it produced at its time of operation – all of these are important factors in determining if we want to take on the mine looking forward.

When you look at the 1940s, 50s and 60s, when gold was valued at around $25 to $30 per ounce, the workers at the time would have only mined within a certain range and below that, they would have left it because it wouldn’t be profitable. Nowadays the equipment available to us, in addition to the degree of recovery we can get from the processing, all makes it far more economic. We can also determine from samples what grade of ore are down there and we can select the grades that will be profitable to us. In general, gold mines are very difficult to kill, so long as dewatering costs are minimal.

SE: Can existing infrastructure be utilised at these sites or will most of it have to be built anew?

CB: You won’t find much existing infrastructure at mines in Korea because they’ve been closed for so long. It in fact took us three weeks just to find Gubong with the plans we were given. There we have a mine that’s been out of operation for 45 years, so the infrastructure we have on the surface is absolutely zero. However, we do have the shafts, the main arteries underground, and all the ore development that was done over its 60 year operational life-span. These are extremely valuable if you’re reopening sites, because it’s far cheaper than if you had to completely redevelop something. In addition, comparative to exploration sites, we don’t have to discover the gold, we already know it’s there because we’ve been looking at what the mine did when it closed.

SE: Are these sites relatively underexplored?

CB: We know that around the Gubong mine, at various levels of altitude, there are four other major pieces of underground mining that are not attached to Gubong itself. So it’s really a goldfield more than a gold mine, and by our estimations there is plenty of potential for more exploration and development outside the mine parameter further down the line.

SE: What are the next steps to getting the mines up and running again?

CB: Thus far we have completed funding for the projects, we created the local companies, and we have applied for a permit to develop for each mine. We believe these are not far off being granted, and once those are through we can start the real process of getting to work. At the moment all we’ve been doing is investigating, sampling, making very minor repair works where necessary – once the permits are through then we can really get on with the job.

The problem with the South Korean mining industry is that very little information was ever kept about the histories of mines – we had to glean a lot of information from people and anecdotes, and we had to really dig for it. Our understanding of South Korea is that it was occupied by the Japanese from 1928 to around 1944/45, and most of the mining was apparently either run by the Japanese or by Korean sympathisers. During World War Two the Japanese gave compensation to gold mine owners to stop mining gold and start helping them to build more base metals such as copper or iron. Then, after the war, the Koreans weren’t interested in gold mining as it had too much stigma attached to it. Aside from Kubong and Gochang, most mines were discontinued after that point. Over recent years the government has been instrumental in upscaling the whole country – which they’ve done to the nth degree- but they now have a first world country without much of a mining industry.

SE: What has the response been like from the South Korean government?

CB: They’ve been very supportive. Almost more important is getting the local community and local authorities behind the projects. The Government of South Korea is trying to rejuvenate their whole mining industry – not just gold – so they are very supportive of our projects moving forwards. The ministry of trade and industry has also been very supportive of us, and the provinces and councils have done their work and are reviewing the applications. Our understanding is they’re good to go, so we wait. But we’re confident.

SE: Do you think South Korea has potential to become a major player in the overall mining industry?

CB: This is my opinion only, but I don’t think it’s ever going to challenge the major markets of China, Australia or even South Africa. However, it can certainly be a significant player in many mining configurations – not just gold.