Delays at Saemangeum Stockpiling Base Highlight Limits of Warehouse-Style Stockpiling... Flexible Supply Chain Response Needed

The government's decision to revise its core mineral stockpiling strategy is due to the overlap between delays in the core mineral stockpiling base project and the need to supplement the existing stockpiling system.

Currently, the domestic core mineral stockpiling system operates by dividing roles between the Public Procurement Service and the Korea Mine Rehabilitation and Mineral Resources Corporation. The Public Procurement Service manages nine stockpiling bases nationwide, including Incheon, Busan, and Gunsan, while the Korea Mine Rehabilitation and Mineral Resources Corporation uses these facilities to stockpile rare metals and some core minerals. Although the Gunsan stockpiling base is regarded as a key hub, overall, the system largely centers on non-ferrous metals, with core mineral functionality only partially incorporated.

Core minerals such as lithium, nickel, and rare earth elements are essential resources for the semiconductor, secondary battery, defense, and renewable energy industries, and South Korea relies almost entirely on imports for these materials. Since disruptions in the supply chain can have a significant impact across industries, establishing a stockpiling and crisis response system during normal times has been a policy priority. In particular, the Saemangeum stockpiling base was meaningful as the first step toward establishing a national-level core mineral management system, going beyond a simple storage facility.

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The government has been preparing to build a new dedicated core mineral stockpiling base to respond to potential global supply chain crises. A preliminary feasibility study was conducted starting in 2022 and was approved in December 2023. Subsequently, in March 2024, the Ministry of Trade, Industry and Energy accelerated the project by signing a land acquisition contract between the Korea Mine Rehabilitation and Mineral Resources Corporation and the Korea Rural Community Corporation.

Unlike other stockpiling bases that store both minerals and daily necessities, the Saemangeum base will be dedicated exclusively to core minerals. In addition to general warehouses, special warehouses will be constructed. These special warehouses will store rare earth elements, magnesium, and other materials that are sensitive to temperature and humidity under optimal conditions for long-term preservation. However, as the related budget was only secured through a supplementary budget last year, the schedule has been repeatedly delayed. A Ministry of Trade, Industry and Energy official explained, "At the time of the preliminary feasibility study, the design period was estimated at about one year, but in reality, it took nearly two years. Currently, we are in the final design phase." The official added, "Due to the nature of project cost management, the budget is being carried over and used by year, and the project is ongoing."

The Ministry of Trade, Industry and Energy plans to increase the stockpiling of 13 types of core minerals from the current 51 days' supply to more than 100 days' supply by 2031. The new dedicated core mineral stockpiling base will systematically stockpile and manage key minerals essential for high-tech industries, such as lithium, gallium, and rare earth elements, which are set to be added in the future. To this end, the capacity of the new dedicated core mineral stockpiling base will be expanded to three to four times that of the existing stockpiling bases. Despite the increasing stockpiling target each year, the main budget was 37.2 billion won in 2023, 233.1 billion won in 2024, and 88.6 billion won in 2025, with most of the funding secured through supplementary budgets except for 2024.

The average annual budget used exclusively for core mineral stockpiling over the past three years is 191.2 billion won. This year, the mineral sector budget is 134.1 billion won. Seok Jooheon, a research fellow at the Korea Energy Economics Institute, said, "It would be appropriate to allocate at least 200 billion won each year for the core mineral stockpiling main budget."

Recently, there has also been growing consideration of the stockpiling method itself. Since core minerals must undergo refining and processing before being used in industry, there is a growing recognition that simply securing quantities is not sufficient. Even if raw ores or intermediate materials are secured, actual utilization may be difficult if there are constraints in subsequent processing steps. On the other hand, stockpiling processed forms can significantly increase costs.

Storage conditions and cost issues are also cited as variables. Since each item requires different storage conditions and many require quality management during long-term storage, it is difficult to manage them uniformly like petroleum. Considering price volatility and management costs, there are realistic limitations to large-scale public stockpiling.

Demand uncertainty is another factor complicating stockpiling strategies. Demand for certain minerals can surge depending on developments in industries such as electric vehicles, semiconductors, and renewable energy, while technological advances may introduce substitute materials and rapidly change the market environment. As a result, experts argue that a flexible approach, capable of adjustment according to conditions, is needed rather than a fixed stockpiling strategy centered on specific items.

Recent instability in the Middle East and the global trend of supply chain restructuring have further reinforced this perception. A government official said, "As major producing countries increasingly prioritize domestic demand or restrict exports, simply securing quantities is no longer sufficient to ensure supply stability. Therefore, there is a growing need to supplement the stockpiling system by considering the entire process, from securing to utilization."

Jeong Kyunggu, head of division at the Korea Institute of Geoscience and Mineral Resources, stated at the "Core Minerals: Building a Leading Supply Chain" forum held at the National Assembly Members' Office Building in February, "Unlike the past, when the industry was centered on petroleum, we are now in the midst of an electricity-based energy transition, and core minerals are the determining factor. In the context of global supply chain restructuring, securing the value chain will translate into national competitiveness."

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