The Korea Economic Association (hereafter referred to as the Korea Economic Association) has argued that the import of key minerals for the 4th industrial revolution is heavily dependent on specific countries, which could pose a supply chain risk in the future.

In addition, the number of domestic and foreign core mineral mines in which Korean companies hold shares and their attributed production volume were found to be insufficient.

The Korea Economic Association (hereafter referred to as the Korea Economic Association) analyzed the Standard & Poor’s (S&P) global market intelligence data and reported that the number of core mineral mines owned by Korean companies is 36, which is low compared to major countries, the attributable production of core minerals is less than 1% of the global total, and the proportion of imports of core minerals from specific countries is excessively high.

As of 2022, the number of core mineral mines (copper, zinc, lead, iron ore, nickel, lithium, and cobalt) in which Korean companies hold shares was found to be 36.

This was a significantly smaller number than not only China (1,992) and the United States (1,976), which have abundant domestic resources, but also Japan (134), which has insufficient domestic resource reserves.

▲Number of core mineral mines in which major national companies hold shares (Image source: Press release from the Korea Economic Association)

Production attributed to Korean companies as of 2022 (total mine production)The proportion (volume × share) of all seven core minerals was less than 1% of the global total.

On the other hand, Japanese companies had a higher production share of △copper (4.1%), △zinc (3.0%), △lead (2.8%), △iron ore (3.0%), △nickel (1.7%), and △cobalt (2.0%) than Korean companies during the same period, at over 1%.

▲Production and proportion attributed to Korean and Japanese companies (Image source: Press release from the Korea Economic Association)

The proportion of imports of key minerals for Korea's 4th industrial revolution from specific countries is also excessively high at 68-88%.

According to the analysis of global production data by country by the Korea Economic Research Institute, global production of nickel, lithium, and cobalt, which are key minerals for the 4th industrial revolution, was found to be concentrated in certain countries.

In 2023, Indonesia ranked first in global production with a share of 53.1% for nickel, 46.9% for lithium, and 68.6% for cobalt.

▲4th Industrial Revolution Key Minerals Major Countries’ Global Production Share (Image Source: Korea Economic Association Press Release)

According to an analysis of the 2022 trade data from UN Comtrade by the Korea Economic Council, Korea's imports of key minerals for the 4th industrial revolution (imports in the form of compounds that are mainly traded, rather than raw materials) were found to be largely from specific countries.

Specifically this△Nickel sulfate used in batteries was imported from Finland at 68.2%, △lithium oxide and lithium hydroxide were imported from China at 87.9%, and △cobalt oxide and cobalt hydroxide were imported from China at 72.8%.

▲Proportion of imports of key minerals for the 4th industrial revolution by major countries (Image source: Press release from the Korea Economic Association)

The Korea Economic Research Institute suggested that, since key minerals are linked to economic security and stable supply is important, the country should increase its share of overseas mines and strengthen public-private cooperation from a strategic perspective.

Korean companies have been entering overseas resource development mainly through long-term supply contracts, but ‘securing key minerals through equity ownership’ can also be an attractive option in terms of strategic diversification as it has advantages in stability and sustainability.

In addition, the Korea Economic Research Institute emphasized that public-private cooperation should be strengthened to secure key minerals.

For example, Japan is securing mineral resources through public-private cooperation, such as by establishing an independent administrative corporation specializing in public resource development (JOGMEC) and actively investing and guaranteeing debt from the resource exploration program stage of companies.

JOGMEC has jointly invested in Sojitz Corporation's rare earth project in Australia (2011-2023) and provided a 148 million won debt guarantee for Toyota Tsusho's lithium project in Argentina (2019).

Lee Sang-ho, head of the Economic and Industrial Headquarters of the Korea Economic Cooperation Agency, said, “In reality, if a company wants to secure key minerals, it needs to make a huge initial investment even before actual production begins.” He added, “The private sector “It should be supported by a comprehensive government support package, including strengthening policy financing programs for overseas resource development investment, expanding international cooperation networks with governments of resource-exporting countries, and establishing a public-private consortium that can function as a control tower for securing resources,” he said.