Monopolized Idling of Rare Metals... South Korea's Poor Management of Lithium Stockpile

Aerial view of Pilbara Minerals lithium mine, an Australian mining company

The dominant view behind the government's failure to actively secure lithium reserves so far is that it was difficult to reach consensus among related ministries involved with rare metals, such as the Public Procurement Service and the Korea Mining Promotion Corporation. Previously, the Ministry of Trade, Industry and Energy and the Corporation requested the Ministry of Economy and Finance to transfer nine types of rare metals held by the Public Procurement Service free of charge, but the request was rejected. The Public Procurement Service also opposed the free transfer of minerals worth between 70 billion and 120 billion won, citing a heavy financial burden.

The government's plan to unify rare metal stockpiling began with the 2017 audit report on the "Management Status of Major Raw Material Stockpiles" by the Board of Audit and Inspection. The Board pointed out the need to integrate the dual stockpiling projects managed separately by the Public Procurement Service and the Corporation to improve inefficiencies. Accordingly, in June 2019, the Ministry of Economy and Finance, Ministry of Trade, Industry and Energy, Public Procurement Service, and Korea Mining Corporation agreed on the "Improvement Plan for the Metal Resource Stockpiling System," deciding to transfer rare metals held by the Public Procurement Service. This came as securing raw materials became a major government task following Japan's export restrictions on hydrogen fluoride and the subsequent shortage of urea solution caused by China.

Accordingly, the Public Procurement Service decided to transfer nine types of rare metals, including lithium and cobalt, to the Korea Mining Promotion Corporation, retaining only six major non-ferrous metals such as aluminum. In June of the following year, the "Joint Management Standards for Rare Metal Transfer and Pre-Transfer Management" were established, finalizing that the Corporation would exercise management authority during the transfer process, which had previously been ambiguous. Through this, the Corporation could effectively manage a total of 19 types of rare metals, including the 10 types it already held and the nine types promised for transfer by the Public Procurement Service.

The key issue lies in securing the transfer costs for the Corporation. Until now, the Corporation has used capital contributions to fund stockpiling and purchasing budgets. However, at that time, the Korea Mining Corporation had exhausted its capital payment limit of 2 trillion won, making additional budget acquisition (government investment) impossible. Although the enactment of the Korea Mining Promotion Corporation Act in September last year increased the capital payment limit from 2 trillion won to 3 trillion won, paving the way forward, the Corporation has already failed to secure the transfer budget for this year. This explains why the government's plan to unify stockpiled minerals has stalled for three years since the rare metal transfer decision.

Securing a site to physically consolidate the rare metals is also a major challenge. Currently, the 10 types of minerals held by the Corporation are stored at the National Rare Metal Stockpile Base in Gunsan, Jeollabuk-do. The Gunsan stockpile base, the only rare metal-dedicated facility in Korea, boasts a total land area of 132,229 square meters with five warehouse buildings totaling 52,300 square meters. However, the problem is that the storage utilization rate is at 97%, indicating saturation. This is why the Public Procurement Service stores nine types of rare minerals dispersed across nine stockpile bases nationwide.

Professor Kang Cheon-gu of the Department of Energy Resources Engineering at Inha University said, "The prolonged stagnation of the rare metal transfer work, divided between the Public Procurement Service and the Korea Mining Promotion Corporation for three years, is mainly due to inter-ministerial tensions over related budgets." He advised, "As global resource hegemony competition intensifies, the government needs to accelerate efforts to secure raw materials."

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