SEOUL– South Korea decided to designate 10 minerals, including lithium and nickel, as “strategic” key minerals for intense management of their supply chains and to significantly reduce their dependence on specific nations as part of efforts to better secure national economic security, the industry ministry said Monday.
They are part of the government’s comprehensive measures to ensure stable supplies of key minerals by reducing its heavy reliance on China and diversifying supply channels, particularly as the U.S. Inflation Reduction Act (IRA) requires electric vehicles’ batteries to be made with higher portions of minerals processed or mined in the U.S or elsewhere that have free trade pacts with the country.
South Korea imports nearly 95 percent of its major minerals, and their demand has surged recently from such advanced industry sectors as semiconductors and secondary batteries.
According to the measures, the government designated 33 key minerals and selected 10 of them as strategic key items that will come under beefed-up monitoring and supply management to minimize economic impacts of their possible supply risks. The 10 items are lithium, nickel, cobalt, manganese, graphite and five kinds of rare earths, according to the ministry.
The government will also develop a global supply map of those minerals and establish an early warning system to figure out related risks in advance.
To better respond to a possible supply crisis, the government will boost the stockpile of key materials to 100 days from the current 54 days and will introduce a “swift release scheme” to support companies in need of key materials within eight days.
By 2040, demand for lithium is expected to spike 42 times compared with 2020, and that for cobalt and nickel is predicted to surge 21 times and 19 times, respectively, according to government data.
South Korea will seek to deepen cooperation with resource-rich nations through senior-level diplomatic channels to ensure stable supplies. It also vowed to maximize the United States-led Minerals Security Partnership (MSP) framework to help domestic firms advance into foreign nations for key mineral development projects.
The MSP initiative was launched last year and involves 12 nations, including Australia, Canada, France and resource-rich African countries.
The Seoul government also vowed to take the lead in pushing for high-risk overseas resource development projects, while enhancing tax incentives and other financial supports for private firms in their overseas exploration work.
The government will enhance cooperation with private firms to recycle waste resources with a goal of raising the proportion of reused minerals to 20 percent from the current 2 percent, the ministry said.
The measures were announced during a meeting attended by Industry Minister Lee Chang-yang and chiefs of major companies in battery, auto and other related fields, including LG Energy Solution Ltd., Samsung SDI Co., SK On Co., Hyundai Motor Co., and POSCO Holdings Inc. in Seoul on Monday.
“Securing supplies of key minerals in a stable manner is one of the key tasks for us to boost industry competitiveness amid a heated global competition,” Lee said.
“By implementing the strategies, the country will be able to reduce our dependence on key minerals from specific nations from the current 80 percent to around 50 percent by 2030.”
Source: Yonhap News Agency