SEOUL -- Samsung C&T, a key Samsung Group unit involved in trade, investment and construction, declared a moratorium on coal-related businesses, responding to foreign shareholders who have urged the company to manage the reputation of Samsung Electronics and other units in overseas markets.
Samsung C&T said that its board made a "sudden" decision to halt all new projects in coal-related investment, construction and trading and to withdraw existing projects sequentially following the completion or termination of contracts, including a coal-fired power plant project in Vietnam that has become the subject of debate in South Korea's parliament.
South Korean and Japanese companies are involved in the construction of a 1,200MW coal-fired power plant called Vung Ang 2 in Vietnam's Ha Tinh province. Samsung C&T and Doosan Heavy Industries & Construction will participate in design, procurement and construction operators. European institutional investors have called on Samsung C&T to withdraw, saying it could cause reputation and climate risks.
Samsung C&T said in a statement on October 27 that it would expand its eco-friendly business portfolio and contribute to the transition to a low-carbon society through the reduction of greenhouse gas emissions.
Specifically, Samsung C&T said its construction sector would not participate in new coal power projects while applying stricter environmental standards than international standards in the construction of a domestic thermal power plant in Gangneung and the Vung Ang 2 plant in Vietnam. The company's trading sector would suspend coal trading when existing contracts are terminated.
Originally, the Vung Ang 2 project worth $2.2 billion had involved Japan's Mitsubishi and CLP, an electric company based in Hong Kong. As CLP withdrew its participation, Korea Electric Power Corporation (KEPCO) decided to buy a 40 percent stake held by CLP. KEPCO's investment was approved by its board on October 5.
Environmental activists have expressed concern about pollution caused by the Vung Ang 1 thermal power plant with a designed capacity of 1,200MW that has been built to meet the power demand of an industrial zone. At a parliamentary inspection on October 7, Samsung C&T vice president Oh Se-chul said his company has no other choice but to go ahead with the Vung Ang 2 project, citing business trust.
Vietnam is actively attracting global energy companies into the buildup of energy infrastructure. In June 2019, a consortium led by Samsung C&T secured a contract to build Vietnam's first liquefied natural gas terminal at the southern port of Thi Vai. The total amount of construction is $179.5 million and Samsung C&T has a 61 percent stake. Vietnam plans to build more LNG terminals and Samsung C&T hopes to win orders for Vietnam's energy storage facilities.
The annual growth rate of electricity demand in Vietnam has been faster than in other Southeast Asian countries. Electricity from fossil fuels still plays a key role in Vietnam's total power capacity.
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