185 Supply Chain Stability Items Including Lithium Selected... Dependence to Be Reduced to 50% by 2030

Minister Bang Moon-gyu Visits POSCO Future M Anode Material Plant
Announces 'Industrial Supply Chain 3050 Strategy'

The government has selected 185 items, including rare gases used in semiconductors, key minerals such as lithium, graphite, and nickel used in secondary batteries, and rare earth permanent magnets used in automobiles, to reduce dependence on specific countries to below half.

[Image source=Yonhap News]

On the afternoon of the 13th, Moon Beom-gyu, Minister of Trade, Industry and Energy, held an 'Industrial Supply Chain Strategy Meeting' at POSCO Future M Sejong Plant 2, the only domestic natural graphite anode material production plant, and announced the 'Industrial Supply Chain 3050 Strategy' with this content. This event was organized to reduce import dependence on specific countries for supply chain stabilization items, coinciding with the enforcement of the 'Special Act on Materials, Parts, Equipment Industry (SoBuJang) and Supply Chain Stabilization' starting on the 14th.

The government plans to select 185 supply chain stabilization items, including semiconductor rare gases, graphite, rare earth permanent magnets, and urea, considering import dependence and industrial impact, and reduce the dependence on specific countries from an average of 70% in 2022 to below 50% by 2030.

Since early this year, the government has formed expert committees of about 100 specialists by sector to select supply chain stabilization items. By industry, there are 19 items for secondary batteries, 17 for semiconductors, 12 for displays, and 11 for automobiles. Included are semiconductor rare gases such as neon, krypton, and xenon; silicon wafers; hydrogen fluoride; lithium hydroxide; artificial and natural graphite; electrolytes, separators, and pouches for secondary batteries; rare earth permanent magnets; wiring harnesses; autonomous driving chips; magnesium ingots; nickel ingots; aluminum; titanium; palladium; cobalt oxide; and urea. Many of these high-dependence items are not only from China but also from Japan, the United States, and others.

The Ministry of Trade, Industry and Energy plans to implement the 'Top 10 Supply Chain Implementation Tasks' and '8 Leading Industrial Supply Chain Projects' to reduce dependence on these 185 items.

The top 10 implementation tasks include ▲strengthening the whole-of-government supply chain promotion system and ▲enhancing crisis response capabilities by establishing item-specific crisis response scenarios and conducting joint crisis response drills with related ministries. For self-reliance, ▲support measures for items with low domestic production economics will be reviewed, and regulatory and licensing difficulties for 14 'domestic production investment projects' will be intensively supported. ▲Research and development for supply chain stabilization items will be significantly expanded by 2030, and ▲strategic foreign investment and return investment attraction in advanced industries and supply chain sectors will also be supported.

To diversify supply chains, the ministry plans to establish various incentive systems to promote alternative procurement, support the entire introduction process including alternative source discovery and performance verification, and provide preferential import insurance. Support will also be provided for overseas M&A and relocating concentrated production facilities in specific countries to third countries (P-turn). The ministry plans to gradually increase stockpiles of 35 items in 20 core minerals to an average of 100 days' worth and expand support such as special loans and tax credits for overseas core mineral projects.

Development of substitute materials such as silicon anode materials and lithium metal to replace graphite, battery recycling technologies for used batteries, and recycling technologies for waste rare earth permanent magnets will also be actively supported.

The ministry plans to promote the '8 Leading Industrial Supply Chain Projects' by combining the three pillars of supply chain?self-reliance, diversification, and resource securing?focusing on items essential to advanced industries such as semiconductors and secondary batteries with high supply chain uncertainty. The items included in the 8 leading projects are anode materials (artificial and natural graphite), cathode materials (nickel sulfate, NCM precursors, lithium hydroxide), semiconductor materials (fluorspar, anhydrous hydrofluoric acid), semiconductor rare gases (neon, krypton, xenon), rare earth permanent magnets (rare earth metals, rare earth compounds, rare earth permanent magnets), urea, magnesium, and molybdenum.

Except for nickel sulfate (Finland 69.3%, based on January to October 2023), most have the highest dependence on China. This year, the import share of artificial graphite and natural graphite from China reached 94.5% and 97.7%, respectively. The import share of NCM precursors from China was 97%, and lithium hydroxide was 78.8%. Fluorspar accounts for 49.4%, and anhydrous hydrofluoric acid 96.1% of imports from China.

81.3% of neon, 43.2% of krypton, and 64% of xenon imported into Korea are also from China. 86.1% of rare earth metals, 79.3% of rare earth compounds, and 86.4% of rare earth permanent magnets are Chinese products. For automotive urea, the import share from China is 90.3%, and for magnesium and molybdenum, the Chinese import shares are 99.4% and 80.5%, respectively.

Among 4,458 imported SoBuJang items, 1,719 items had import values exceeding one million dollars and import dependence on specific countries over 50% as of 2022. This is the highest level of intermediate goods and specific country import dependence compared to major countries (G7), revealing the vulnerability of the Korean economy whenever global supply chains are shaken. The number of items with over 50% dependence by country is highest for China at 930, followed by Japan with 270, the United States with 146, Germany with 66, and Vietnam with 45.

Minister Moon Beom-gyu of the Ministry of Trade, Industry and Energy said, "The 3050 strategy is a plan to build a robust industrial supply chain by focusing on managing 185 supply chain stabilization items," adding, "We will implement this without fail to support innovation and growth in our industries."

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