[The Editors' Verdict] The Government Must Engage in Resource Diplomacy

President Moon Jae-in announced that during the Korea-US summit with President Biden on the 21st of last month, they agreed for Korea and the United States to jointly participate in the overseas nuclear power plant export market. For the first time in a while, President Moon personally engaged in business diplomacy. Nuclear power plant exports have enormous added value. In 2009, President Lee Myung-bak achieved results through business resource diplomacy to secure the Barakah nuclear power plant in the United Arab Emirates (UAE). This project was estimated at the time to bring economic benefits exceeding 70 trillion won to Korea over the next 60 years.

Recently, the entry barriers to overseas resource development have been increasing. To overcome these barriers, resource diplomacy is necessary. To secure resources, it is crucial to first open the way with high-level resource diplomacy, followed by ministerial consultations, resource cooperation committees, and utilizing overseas diplomatic missions to build trust as strategic partners. Resource diplomacy aims to create an environment where our companies can quickly advance projects under more favorable conditions. Especially in developing countries like Latin America and Africa, which are rich in mineral resources and still have many undeveloped areas, the governments or public institutions of the counterpart countries are very negative about opening dialogue or negotiation channels with private companies. In other words, the resource-holding country’s government trusts and allows access only when public enterprises or counterpart public institutions lead the projects. Above all, since private companies do not invest alone or voluntarily, public enterprises need to play a leading role on behalf of the government.

Once public enterprises take the lead, they can secure data held by the counterpart country so that private companies interested in the projects can consider participation. Therefore, when public enterprises join, the progress of the projects accelerates.

Korea is the world’s fourth-largest energy importer, relying on overseas imports for about 96% of the energy consumed domestically. Also, 98.5% of the metals needed for industry are procured from abroad. Therefore, due to the overseas-dependent energy and mineral resource supply structure, Korea is inevitably directly affected by changes in the resource situation. However, over the past few years, the government has consistently pursued a backward strategy regarding overall mineral supply. Even the few overseas mining rights we have are being sold off. According to the Ministry of Trade, Industry and Energy, Korea’s overseas mineral resource development rate was 32.1% in 2010 but dropped to 28% last year. The mineral resource development rate refers to the proportion of mineral resources secured through overseas resource development out of the total mineral resource imports. The reason for the decline over the past decade is that Korea Mineral Resources Corporation has only been selling its overseas mining rights without acquiring additional ones.

The fundamental reason for the recent rise in raw material prices is not only economic recovery but also the intensifying new Cold War between the US and China, which has turned the securing of strategic materials such as nickel, cobalt, lithium, and rare earths used in electric vehicle batteries into a resource war between countries. Resource security is both the rice of industry and the sword of security. In a situation where raw material prices are rising daily, to avoid missing out on resource acquisition, it is necessary to listen to resource experts. If you plant a tree, you will see results at least ten years later. Resource development also requires a long-term perspective to achieve results. The government is urged to engage in resource diplomacy now to secure resources.

Kang Cheon-gu, Invited Professor, Department of Energy Resources Engineering, Inha University

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