Building a Korea-style integrated rare earths complex

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Building a Korea-style integrated rare earths complex

Published: 26 Jan. 2026, 00:04

Audio report: written by reporters, read by AI

Lee Chang-min

The author is a professor at the Graduate School of International and Area Studies at Hankuk University of Foreign Studies and a member of the Japan-Korea Relations Division at Reset Korea.

China’s recent move to tighten export controls on dual-use items with both civilian and military applications, clearly targeting Japan, is a warning shot aimed at the global supply chain. The analysis that Beijing has begun to turn the “rare earths valve” in response to the rightward tilt of the Sanae Takaichi-led political camp and Japan’s involvement in the Taiwan issue is a source of deep anxiety for Korea’s industrial sector as well. Rare earth dependence on China is often attributed to environmental regulations, but behind that explanation lies a meticulously engineered supply chain design that the West cannot replicate in the short term.

A handout photo taken on November 14, 2024, and received on October 21, 2025 from Lynas Rare Earths Limited shows the company's rare earths processing facility located in Kalgoorlie, in Western Australia. The United States has inked a critical minerals deal with Australia, opening an alternative pipeline of highly sought-after metals as China tightens its grip on production. Government figures show Australia is among the world's top five producers of lithium, cobalt and manganese, which enable things like rechargeable batteries and aircraft jet engines. It is also home to substantial deposits of rare earth elements such as neodymium and praseodymium. [AFP/YONHAP]

The first barrier most often cited is environmental pollution. The refining and smelting of rare earths inevitably generates radioactive elements such as thorium and uranium. Processing them requires large quantities of highly acidic chemicals, and managing the resulting radioactive waste in line with legal standards entails astronomical costs. The environmental controversy surrounding the refining plant operated in Malaysia by the Australian company Lynas showed that, regardless of technical safety, social acceptance and regulatory risk can determine the fate of a project. In this context, building rare earth refining facilities in advanced economies is blocked by the high threshold of ESG standards. China has spent decades bearing these environmental burdens while positioning itself as the world’s outsourced rare earths factory, securing a monopolistic position that no competitor can challenge on price.

The Bayan Obo Mining District, the largest rare earth mine in China's Inner Mongolia region, is seen in this file photo. [JOONGANG ILBO]

More formidable than environmental issues, however, is China’s technological dominance. Rare earths consist of 17 elements with extremely similar chemical properties, making high-purity separation extraordinarily difficult. This is where the “serial extraction theory” developed by Professor Xu Guangxian, often called the father of China’s rare earth industry, comes into play. By modeling complex separation processes with mathematical precision, he laid the theoretical foundation for industrial-scale mass separation. While the United States and Europe can achieve high-purity extraction in laboratory settings, experts widely agree that there remains a substantial gap in the processing know-how required to realize low-cost, high-efficiency separation at industrial scale. Securing mines alone is not enough. The accumulated process recipes refined through tens of thousands of trials are effectively held in China’s hands.

The most decisive difference lies in vertically integrated manufacturing. Because all 17 rare earth elements are produced together, selecting only high-demand materials such as neodymium or dysprosium and discarding the rest drives overall production costs sharply higher. This is where China’s economies of scale come into their own. Refining facilities sit alongside magnet plants, battery factories and petrochemical complexes. Lower-value elements such as lanthanum and cerium are absorbed in large volumes as glass polishing agents or materials for fine dust reduction systems. Even thorium, a problematic radioactive by-product, is being tested for potential use through experiments related to next-generation thorium molten salt reactors. By creating a circular structure that turns waste into energy assets, China has achieved price competitiveness that no other country can match. That China accounts for 90 percent of global production of rare earth permanent magnets is no coincidence.

Chinese President Xi Jinping, right, and Japanese Prime Minister Sanae Takaichi shake hands during their summit on the sidelines of the APEC Economic Leaders' Meeting in Gyeongju on Oct. 31, 2025. [YONHAP]

Japan plans to begin exploratory drilling for rare earths this year in the seabed around Minami-Torishima, but economic feasibility remains questionable given the costs of dredging mud from depths of 6,000 meters. Even if Japan succeeds in securing raw materials, it would face a paradox. Without an ecosystem capable of converting them into components, it would ultimately have to return to Chinese refineries.

Korea’s industry stands at the center of this storm. From semiconductor polishing agents to electric vehicle motors and smartphones, advanced industries cannot function without rare earths. The moment China closes the valve on Japan, supply chains will collapse like dominoes. Korea must move beyond the narrow goal of sourcing non-Chinese mines. Even at the cost of paying a security premium, it must build a Korea-style integrated rare earths complex that encompasses refining and magnet manufacturing, or rapidly complete alternative ecosystems with key allies.

Rare earth dominance does not stem from the quantity of resources alone. It comes from a complete ecosystem that transforms those resources into value.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.