Global Economic Times

South Korean Public Finance Faces Crisis Over Investment in Mozambique Gas Field…Civil Society Files Injunction Application, Calling it "Ecological Genocide Promoting Climate Crisis": Global Economic Times Reporter / Updated : 2025-06-02 09:04:15

Plans for investment by the Export-Import Bank of Korea and the Korea Trade Insurance Corporation in an offshore gas field development project in Mozambique, Africa, are facing a halt. Local Mozambican environmental groups and South Korean youth activists have filed an injunction with the Seoul Central District Court, seeking to prohibit public financial support. This has escalated controversy, with arguments that the project violates climate crisis response efforts as well as domestic and international legal and environmental standards.

Core of the Controversy: The 'Coral North FLNG' Project and the Responsibility of Public Finance

The injunction targets the 'Coral North FLNG' project, which is set to produce 3.5 million tons of liquefied natural gas (LNG) annually off the coast of northern Mozambique. This project is reportedly valued at $7.2 billion, and the Export-Import Bank of Korea and the Korea Trade Insurance Corporation are said to be considering loans and guarantees totaling approximately $1.9 billion (about 2.6 trillion KRW). Korea Gas Corporation also holds a partial stake in the project, bringing public institutions' overseas fossil fuel development investments under scrutiny.

The organizations that filed the lawsuit are the Mozambican environmental group Justiça Ambiental! (JA!) and three activists from South Korea's "Youth Climate Emergency Action." They state that this injunction application is part of an international civil society solidarity lawsuit to address the climate crisis. They argue that South Korean public financial institutions' investments in overseas fossil fuels directly violate the South Korean Constitution, the Carbon Neutrality Act, and the Paris Agreement.

Legal, Economic, and Environmental Issues

Civil society groups point out that the project disregards the Intergovernmental Panel on Climate Change (IPCC)'s Sixth Assessment Report and recommendations from the International Energy Agency (IEA). These organizations have consistently emphasized the cessation of new fossil fuel development, warning that even existing infrastructure will exceed the carbon budget. If South Korean public finance invests in this project, concerns are also raised about the economic risk of it becoming a stranded asset, thereby undermining international carbon neutrality goals.

Furthermore, they have raised concerns about non-compliance with international environmental and social due diligence standards, such as the OECD Guidelines for Multinational Enterprises and the International Finance Corporation (IFC) Performance Standards. These standards require prior assessment of environmental and social risks and impacts, and disclosure of information to stakeholders. Critics argue that the 'Coral North FLNG' project has not adequately followed these procedures.

The activists who filed the lawsuit emphasized that Article 35 of the Constitution guarantees citizens' environmental rights, and Article 5 of the Carbon Neutrality Act stipulates public institutions' obligation to cooperate on carbon neutrality. They strongly stated, "Supporting fossil fuel development that emits greenhouse gases not only violates relevant laws but also conflicts with the obligations of the Paris Agreement." Kim Chae-won, an activist with Youth Climate Emergency Action, warned, "The Mozambique gas field is not just environmental destruction; it amounts to ecological genocide." She cited the past controversy surrounding Samcheok Maengbang Beach, which faced severe coastal erosion due to coal-fired power plant construction, and cautioned against similar tragedies recurring. (Samcheok Maengbang Beach was formerly known as a photoshoot location for a BTS album jacket but has since faced environmental degradation issues due to coastal erosion following the construction of a coal-fired power plant.)

Future Prospects and International Solidarity

This lawsuit, alongside domestic climate environmental organizations like "Solutions for Our Climate," is seen as a minimum measure to protect the livelihoods of local Mozambican residents and demand adherence to international environmental standards by South Korean public financial institutions. The Export-Import Bank of Korea and the Korea Trade Insurance Corporation have already supported the 'Coral South' project in Mozambique with approximately $1.8 billion (about 2.48 trillion KRW) and had planned to finalize financial agreements for the 'Coral North' project in the first half of this year.

This injunction application places South Korea's public financial investments in overseas fossil fuels under significant scrutiny. The court's decision could lead to major changes in the overseas investment policies of South Korean public financial institutions, which is expected to impact South Korea's efforts to address the climate crisis on an international level. Civil society anticipates that this lawsuit will serve as an important turning point, urging responsible climate action from public financial institutions.