Rare Earths, Key Semiconductor Materials... Major Countries Including the US Build China-Free Supply Chains

Discussion at Next Month's G7+4 Summit
Moves to Exclude China Intensify... US Secures Long-Term Supply with Canadian Firms
South Korea Must Diversify Supply... Some Propose Exploring North Korea's Rare Earth Resources

[Asia Economy Reporter Joo Sang-don] As major advanced countries, centered on the United States, have decided to also examine the supply chain of "rare earth elements," global attention is focused on whether the world's dependence on China can be reduced. China is the world's largest producer of rare earth elements, and concerns are growing among advanced countries that the competition with the U.S. could escalate to the point where China weaponizes these resources at any time. The U.S. is already seeking alternative suppliers by signing long-term supply contracts with rare earth producers in Australia and Canada, while Germany is turning to recycling systems to reuse rare earth elements contained in products.

Lee Jun, head of the Materials Industry Division at the Korea Institute for Industrial Economics and Trade, said regarding the moves of advanced countries, "After the Biden administration announced an executive order to prioritize inspection of supply chains for four items, including rare earth elements, semiconductors, pharmaceuticals, and high-capacity batteries, over 100 days, China reduced its production," adding, "Although it was under the pretext of environmental inspections, from the U.S. perspective, it was an opportunity to realize the necessity of decoupling rare earth elements from China."

China ranks first in the world in both rare earth reserves and production. It holds 36.8% of the total rare earth reserves (119.46 million tons) and accounts for 57.1% of global production. It is known that 95% of processing volume takes place in China. Given that rare earth elements are key strategic materials used in manufacturing military equipment, semiconductors, electric vehicles, computers, mobile phones, and X-ray devices, the need to reduce dependence on China is increasing.

The U.S. has recently taken steps to secure alternatives, such as providing $30.4 million in funding through the Department of Defense to Lynas, an Australian rare earth producer. It also plans to restart the Mountain Pass processing facility in California. Lee said, "South Korea has no choice but to actively pursue rare earth mining development," adding, "It is also a method to develop mines in third countries where development is still insufficient or to actively participate in various projects led by the U.S."

The UK, which also relies heavily on China for rare earth supply, is supporting deep-sea rare earth mining operations in the Pacific conducted by "British Undersea Resources," a subsidiary of Lockheed Martin's UK business headquarters. Germany is focusing on rare earth recycling, and Japan is expanding domestic refining plants. Park Kyung-tae, head of the Rare Metals Industry Division at the Korea Institute of Industrial Technology, said, "After experiencing the 2010 rare earth supply disruption by China, Japan reduced its dependence on China to about 60% by expanding supply sources and is strengthening rare earth recycling," adding, "South Korea should also prepare measures to diversify supply sources and reduce the proportion of direct imports."

There are also voices calling for the utilization of North Korea's rare earth resources, which are known to have larger reserves than China, through strengthened inter-Korean cooperation. Although not recorded in the U.S. Geological Survey (USGS) statistics, according to data announced by North Korea in 2013 as per the Ministry of Trade, Industry and Energy, rare earth reserves amount to 48 million tons. However, to conduct inter-Korean exchange projects involving various mineral resources including rare earth elements, UN sanctions against North Korea must be lifted. There is also the possibility that projects could be suspended depending on political situations, as with the Kaesong Industrial Complex. Lee said, "It is possible to consider the long-term utilization of North Korea's rare earths through accurate evaluation of reserves and economic feasibility, but it is not easy at the moment," adding, "Moreover, due to political issues, there is a high possibility that projects could be aborted, reducing predictability and stability."

This content was produced with the assistance of AI translation services.