Korea's Dependence on Top Importing Country for Key Minerals in Secondary Batteries Reaches Maximum

Vulnerable to Secondary Battery Supply Chain Crisis

[Asia Economy Reporter Oh Hyung-gil] South Korea's dependence on a single country for imports of key minerals for secondary batteries was found to be the highest among major competing countries in the secondary battery sector.

According to the "Supply Chain Analysis and Implications Report on 8 Key Minerals for Secondary Batteries" released by the Korea Chamber of Commerce and Industry on the 15th, South Korea ranked first in dependence on specific countries for five of the eight essential minerals for secondary battery manufacturing: ▲ cobalt oxide and cobalt hydroxide (83.3%) ▲ manganese sulfate and cobalt sulfate (77.6%) ▲ lithium oxide and lithium hydroxide (81.2%) ▲ lithium carbonate (89.3%) ▲ nickel sulfate (59%).

Japan showed the highest dependence on specific countries for two minerals: manganese dioxide (92%) and natural graphite (91.5%), while China had the highest dependence for nickel oxide and nickel hydroxide (79.1%) compared to competing countries.

The average share of the top import country for each key mineral in South Korea was calculated at 77.1%, which is higher than Japan (66.5%), China (60%), and Germany (51.1%), all of which compete in the battery market.

Among the eight key minerals, South Korea relies most heavily on China for six items, except for lithium carbonate (Chile) and nickel sulfate (Finland). Japan imports five items mostly from China, but its import dependence on China (import share) is generally lower than South Korea's. China and Germany showed significant differences in their main import countries by item.

Notably, South Korea depends on the top two import countries for over 90% of all eight key minerals. In contrast, Japan has five such items, China two, and Germany only one.

Furthermore, South Korea's total import volume for the eight key secondary battery minerals was $1.06 billion in 2020, ranking second after Japan's $1.13 billion. China and Germany recorded $480 million and $180 million, respectively.

Most major battery-producing countries were found to rely most heavily on China for imports. South Korea's import dependence on China was 58.7%, the highest among major countries, followed by Japan at 41% and Germany at 14.6%. In particular, South Korea's share of imports from China among total secondary battery key mineral imports rose by 23 percentage points over ten years, from 35.6% in 2010 to 58.7% in 2020.

The proportion of South Korea's imports of key minerals from the United States and U.S. FTA partner countries was found to average 15%. This figure falls far short of the 40% requirement for subsidies under the U.S. Inflation Reduction Act (IRA), which will take effect next year.

The report analyzed that although the share of imports from the U.S. or U.S. FTA partner countries among the total import value of the eight minerals is about 33.5%, this is largely due to the large import volume of lithium carbonate from Chile.

Woo Tae-hee, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, emphasized, "Stable management of the key mineral supply chain is directly linked to the competitiveness of the secondary battery industry. The government should consolidate diplomatic efforts to diversify supply chain risks so that excessive dependence on specific countries does not become a bottleneck. Meanwhile, companies should focus on developing technologies that fundamentally reduce reliance on scarce resources, such as cobalt-free batteries."

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