President Lee Jae-myung directed to reduce the budget for the coal industry citing the country's financial situation, but it is expected to be difficult to make cuts in the near future. A significant portion of the budget is used for restoring mining areas that have been damaged during the mining of various minerals, including coal. Instead, the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy decided to eliminate subsidies for coal as well as modify the voucher payment system that supports the purchase of briquettes.
According to the Ministry of Economy and Finance on the 26th, at the 'National Finance Savings Meeting' chaired by President Lee on the 13th, it was reported that the last public coal mine in the country, the Donggye Mines in Samcheok, Gangwon Province, has closed, and despite the criticism from the private sector about 130 billion won being spent on coal usage that contradicts carbon neutrality. In response, President Lee noted that '(The coal business is) dangerous and uncompetitive, and (supporting it with tax) is a waste of the budget,' adding that 'it seems appropriate to stop support quickly.'
Looking at the 130 billion won mentioned by the private sector, it includes 88 billion won for mining damage prevention and 30 billion won for mining damage restoration. Mining damage refers to the damage to nearby areas caused by the loss of waste rock or the discharge of wastewater during the process of mining or refining minerals.
Although the names of the budget for mining damage prevention and restoration are different, their use is almost similar. They are used to restore the water quality contaminated by the mine and improve the land. The mining damage 'restoration' budget is a concept that specifically allocates a budget for mining damage 'prevention' for three coal mines, including Hwaseong in Jeonnam and Taebaek and Samcheok in Gangwon, which have been prematurely closed.
The problem is that the mining damage prevention and restoration projects take several years and are not something from which the budget can be easily saved. In particular, voices have been raised that local governments are already carrying out mining damage restoration projects at minimal costs, making further reductions difficult.
Filling the underground empty spaces of closed mines is part of the mining damage restoration project, and water or filling materials are used in this process. If water is used, the immediate cost is low, but groundwater from below the closed mine could rise and overflow, potentially leading to the influx of lead, cadmium, and other substances contained in minerals into nearby rivers and streams.
A local official from the municipality near the closed mine stated, 'As we organize the closed mine, we are currently using water instead of filling materials to fill the empty spaces,' adding, 'Although filling materials are safer, (the central government) instructs us to fill the underground empty spaces with water due to cost reasons.' Currently, purification facilities are also being installed in preparation for nearby contamination.
Given this situation, the government also understands that there is not much budget that can be reduced from the 130 billion won. A Ministry of Economy and Finance official stated, '(The budget for mining damage prevention and restoration) will not decrease sharply next year,' noting that '(this budget includes) not only coal but also mines such as iron.'
However, as this is President Lee's directive, the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy are considering measures to abolish coal production subsidies. Furthermore, subsidies for the production of briquettes made from coal are set to be eliminated within two years. As of this year, the subsidy for coal production is 31.6 billion won, and the subsidy for briquette production is 19.8 billion won.
At the same time, the budget related to the energy voucher concept, which is used as a purchase subsidy for vulnerable groups when buying briquettes, will also be reduced. The types of energy vouchers include LPG, kerosene, and others, and the budget for this year's briquette energy vouchers, allocated last year, is 20 billion won.
The reduction of energy vouchers could result in low-income households being left out in heating, prompting the government to plan support for these households to use alternatives to briquettes. A Ministry of Economy and Finance official noted, 'We are considering the direction of changing support for briquette-using households to non-briquette supports such as boilers.'
Meanwhile, the Ministry of Trade, Industry and Energy is conducting alternative industry cultivation projects in response to concerns over groundwater leakage and the possibility of economic recession in the mining areas. The target areas include Hwaseong in Jeonnam, Taebaek, and Samcheok in Gangwon, with plans to sequentially establish bio-food clusters, future resource clusters, and medical industry clusters in these areas.