Korea starts feeling vulnerability over minerals

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Korea starts feeling vulnerability over minerals

Demand for critical minerals such as lithium, cobalt and rare earth elements is expected to rise six-fold in the next few years, and Korea is being warned to be more proactive about sourcing them.  
Some minerals are essential to the transition to renewable energy such as the lithium, nickel, cobalt, magnesium and graphite used in batteries, according to a report released by the Permanent Delegation of the Republic of Korea to the Organization for Economic Cooperation and Development (OECD) on July 14.
Rare earth elements including neodymium and samarium are essential materials for permanent magnets used in electric vehicle (EV) motors and wind turbines.
A great amount of critical metals, such as copper and aluminum, is also needed to transmit and distribute electricity from generators. 
By 2040, countries will need four times more critical minerals than they did in 2020 to reach carbon-emission goals, and six times more by 2050. EVs require six times more mineral sources than internal combustion vehicles and wind farms need nine times more compared to a natural gas power plant.  
These minerals are found in a few, far-off countries. For lithium and cobalt, over 75 percent is produced by only three countries each. In the case of cobalt, it's Congo, Russia and Australia, and for lithium it's Australia, Chile and China. South Africa produces over 70 percent of the world's supply of platinum while China produces over 60 percent of rare earth elements.  
It will be hard to break these countries’ oligopolies as mining and refining processes are strictly regulated in many countries due to environmental concerns. It also takes about 16.5 years on average to mine minerals from the exploration to the production stage.
Rising prices is another factor. The price of lithium carbonate jumped from 48.5 yuan ($7.20) per kilogram early last year to 455.5 yuan per kilogram this month, or by over 800 percent. Cobalt surged by 81.7 percent and magnesium by 78.2 percent in the same period.
Another concern is that some countries have unilaterally decided to limit exports of these resources. In April, Mexico decided to nationalize lithium mining, allowing only state-owned entities to extract, process and sell lithium. Indonesia banned nickel exports in 2020 and is considering implementing a ban on copper and bauxite exports.  
In response, the International Energy Agency (IEA) recommended countries “promote technology innovation at all points along the value chain,” “scale up recycling” and “strengthen international collaboration between producers and consumers.”  
Analysts say Korea should try to secure these resources to protect its EV and battery industries. The National Assembly Research Service said securing metal resources will be a key to energy security, and stressed the importance of plans to stockpile metal resources and diversify suppliers. 
Last month, the Korean government joined a Mineral Security Partnership (MSP) led by the United States and is planning to draw up related measures such as measures to stockpile more mineral resources.
Korea is being urged to make more investments in overseas resource development projects, which have been neglected for the past decade. New projects in overseas resource development fell to two in 2020 from 2012’s 33. Public entities’ investments in resource development dropped to $700 million in 2020 from 2011’s $7 billion. Private entities' budgets for resource development shrunk from 309.3 billion won in 2010 to 34.9 billion won in 2022.  
“Korea was able to secure resources like Japan and China about 10 years ago from its active overseas resource development, but it lost its competitiveness after the Lee Myung-bak administration,” said Kang Cheon-gu, a visiting energy resources engineering professor at Inha University.
“Public entities with enough funds should work with private companies to expand resource development, and the government also needs to support them as a part of resource diplomacy.”

BY SOHN HAE-YONG, CHO JUNG-WOO [cho.jungwoo1@joongang.co.kr]
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