[The Editors' Verdict] Rare Earth Elements and Rare Metals: The Role of Government

Published 23 Dec.2021 14:16(KST)

South Korea is an absolute resource- and energy-poor country that must import over 97% of its energy and more than 93% of its mineral resources from overseas, yet it ranks as the 7th largest consumer in the world. Last year, South Korea’s imports of mineral resources, including bituminous coal but excluding oil and gas, amounted to a total of $31.2 billion (36.7411 trillion KRW). Including oil and gas, the country spends more than 1 trillion KRW daily. In other words, key industries such as semiconductors, steel, and shipbuilding spend far more on importing raw materials than they earn from exports.

The stable and continuous supply of energy and mineral resources at reasonable prices is crucial for the survival and growth of the South Korean economy. However, the structure in which raw materials are imported domestically and then processed into final products has not changed significantly in the past half-century. The urgent raw material supply situation recently stems mainly from fierce competition among countries in representative 21st-century advanced industries such as semiconductors, batteries, and wind power. The so-called 4th Industrial Revolution is expanding almost infinitely beyond batteries and renewable energy into digital fields such as artificial intelligence (AI), drones, 3D printing, and telecommunications equipment. Therefore, the global economy will now be led by industries like advanced manufacturing, renewable energy, and digital IT, with rare earth elements and rare metals as their key raw materials.

There is a widespread opinion that South Korea’s position in the global battery market is an unstable number one. The critical weakness of Korean batteries lies in the supply of raw materials. To continuously drive 21st-century advanced industries and manufacturing such as electric vehicles, renewable energy, and digital technologies, new policies and measures must be established.

The new concept of resource security we pursue must recognize that due to environmental crises such as climate change, the focus of our raw materials is shifting from energy sources like oil and gas to key minerals.

Currently, our trading partners such as the United States, the EU, and Japan are putting their lives on the line to secure stable supplies of rare metals and rare earth elements such as nickel, lithium, cobalt, and manganese, as well as to develop related technologies. For South Korea, resource security policies are meaningless if they only involve raw material production and stockpiling through overseas resource development. Rather, our vulnerability lies in securing technologies to process the produced raw materials and transform them into high value-added products with diverse functions. Resource security must be approached from the perspective of building an integrated supply chain encompassing resource exploration, mining, development, processing and refining, establishing an ecosystem for materials and components, and recycling resources after use.

The government should establish a supply system through domestic production of essential raw materials and formulate more detailed policies for supply diversification. In other words, essential raw materials should not be overly dependent on China or a few other countries. Additionally, resource diplomacy should be pursued to engage in overseas resource development. Active resource diplomacy must be conducted wherever resources exist.

Companies must produce high-quality, inexpensive, and excellent products based on technological capabilities so that the global market cannot exclude us. The government’s role is also important. The government must not neglect the training of experts in establishing mid- to long-term resource security strategies.

In August 1983, Japan’s Sumitomo Metal and universities jointly developed the world’s first rare earth permanent magnet. Although Japan lacks resources, it holds the technology and thus makes a strong presence in the global market. In conclusion, the government, companies, and universities must join forces to grow and develop the industry, and actively engage in securing raw materials, technology development, and human resource training.