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Korea announces measures for securing critical minerals supply 2023-02-28

Trade, Industry and Energy Minister Lee Chang-yang presided a conference on February 27 at the Lotte Hotel Seoul to discuss strategies for securing critical minerals and measures to stabilize the supply chain.

The conference was held in the attendance of representatives from various like EVs and secondary batteries that require critical minerals for business, as well as domestic and overseas firms in resources development, including Samsung SDI, Hyundai Motor, LG Energy Solution, SK On and POSCO Holdings.

The strategy for securing reliable critical minerals supply is a follow-up measure to President Yoon Suk-yeol’s order to establish a critical minerals supply chain centering around the Ministry of Trade, Industry and Energy (MOTIE). It is anticipated that the plan will help mitigate Korea’s reliance on imports from a select few countries and maximize utilization of domestic mineral resources, contributing to supply chain stabilization.

The Yoon administration’s strategy for securing reliable supply of critical minerals is as follows.

1)Thirty-three critical minerals will be selected for management with regard to economic security, among which 10 strategic critical minerals needed for stabilizing the supply chain of high-tech industries like semiconductors and secondary batteries will be prioritized for intensive management.

2)A global minerals supply map indicating mines of critical minerals and early warning system will be developed to notify supply chain risks in advance. The stockpile of critical minerals will be reinforced to suffice for 100 days from the current 54, and prefeasibility studies will be launched for critical mineral bases. In times of emergency, companies that need certain resources will be supplied within an 8-day window through a swift distribution system to counter supply and demand shock.

3)High-level diplomacy with resource-rich nations and memorandums of understanding (MOUs) will function as channels for bilateral cooperation in critical minerals, while Minerals Security Partnership (MSP) and other multilateral forms of collaboration can serve as opportunities for domestic companies to stably enter overseas projects.

4)To invigorate private-led projects in overseas mining, public institutions are to conduct preemptive investigations on high-risk projects demanding high level of expertise, while for global projects and multiparty bid projects, public institutions first conduct a project feasibility analysis, then reach out to private company investments once a project is deemed promising.

5) The loan and guarantee system of public institutions will be utilized to reinforce financial assistance like loans and insurance for the opening of local mining subsidiaries in order to support firms’ critical minerals investment. If mining project fails, the burden of tax on dividends is to be mitigated by extending the scope of deductible expenses.

6)Considering that mineral resources can be recycled into reusable materials, relevant ministries will work together to create a cycle system for waste resources generated from using EVs and secondary batteries. Demonstration centers and clusters will be established to support the SMEs and middle-market companies that operate these kinds of recycling businesses.

7)For the purpose of building an effective critical minerals infrastructure, the Government will strive to establish legal grounds, train up professional manpower in recycling, and strengthen the development of sustainable smelting technology in consideration of ESG (Environmental, Social, Governance).

The strategy envisions Korea growing into a high-tech industrial powerhouse through securing a stable critical minerals supply chain, as well as lowering dependency on import from a select few countries for lithium, cobalt, graphite and other critical minerals from the current 80 percent to 50 percent by 2030.

Another goal is to expand the critical minerals recycling percentage from the current two percent to 20 percent.

Minister Lee stated that “critical mineral reserves and production are concentrated in only a few countries and finding alternative resources is difficult, which intensifies the competition for critical minerals supply chain in the global energy market.”

He remarked that “as it is important to establish a stable supply chain in timely manner, MOTIE will implement the above measures to assist Korean companies in their efforts to secure critical minerals.”