Korea to cut dependence on China for key minerals

Minister Lee Chang-yang of Trade, Industry and Energy speaks during a conference with industry stakeholders on critical mineral supply held in central Seoul, Monday. [YONHAP]

The government hopes to cut dependency on China in critical minerals, from the current 80 percent level to 50 percent by 2030.

The Ministry of Trade, Industry and Energy on Monday announced a strategy to secure a stable supply of critical minerals, such as lithium, nickel and rare earth materials, amid rising geopolitical uncertainty and U.S.-China rivalry reshaping the global supply chain.

The latest plan was announced after President Yoon Suk Yeol called for “measures to stabilize the supply of critical minerals” in October last year during the 11th emergency economic meeting.

The ministry selected 33 critical minerals and named 10 of those as strategically critical minerals, which are crucial in manufacturing semiconductors and electric vehicle (EV) batteries.

The 10 critical minerals include lithium, nickel, cobalt, manganese, graphite and five types of rare earth materials.

Boosted by growing demand for chips, EVs and renewables, the global lithium demand is expected to jump 42-fold by 2040 compared to 2020, according to International Energy Agency.

Cobalt demand will grow 21-fold during the same period, nickel 19 fold and rare earth materials 7-fold.

The Industry Ministry plans to develop a digital map and a supply management system to monitor any risks of supply disruptions.

Tax benefits and other financial support will be provided for overseas resource development projects.

Moreover, the government hopes to expand and strengthen bilateral and multinational cooperation with resource-rich countries.

“Competition to secure critical mineral supply is growing intense in the global manufacturing and energy industries, as critical mineral reserves and production are concentrated in certain countries,” said Lee Chang-yang, Minister of Trade, Industry and Energy.

“As Korea imports 95 percent of its mineral demand from overseas, the stable supply of critical minerals is vital for Korea to secure a lasting competitiveness in the market,” said Lee.

Korea is highly dependent on China for critical mineral supplies.

In 2021, 84 percent of Korea’s lithium hydroxide imports came from China, cobalt sulfate 97 percent, cobalt hydroxide 69 percent, natural graphite 87 percent, synthetic graphite 72 percent and manganese sulfate for EV batteries 97 percent.

Aside from China, Chile (lithium carbonate), Finland (nickel sulfate) and Belgium (nickel sulfate and cobalt hydroxide) are some of the major mineral suppliers for Korea.

The government plans to lower the high level of dependency on certain countries — China in particular — to 50 percent by 2030 from the current level of over 80 percent.

The ministry aims to ramp up the recycling rate of critical minerals from the current 2 percent to 20 percent by 2030.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]