Will Korea be the loser in the resource war?

The government's stockpiles of 13 rare metals average just 42 days of supply. That's less than half the target of 100 days' supply. Adding to the matters, China, which dominates the global supply chain for rare earths, began controlling exports of minerals needed for producing semiconductors such as gallium and germanium earlier this month. A global resource war could erupt at any moment.

According to the Korea Mine Rehabilitation and Mineral Resources Corporation, which is in charge of securing mineral resources, the stockpile of lithium, a key material for secondary batteries, was 5.8 days of the domestic requirement among 13 rare metals. Cobalt is at 12.4 days, and magnesium is at 20.6 days. This means that domestic manufacturers have only six days to three weeks to rely on government stockpiles if imports are suddenly disrupted due to trade disputes or military conflicts.

In recent years, China has been increasingly vocal about its intention to retaliate against Western semiconductor sanctions by weaponizing raw materials crucial to high-tech industries. Notably, Chile, boasting the world's largest lithium reserves, announced the nationalization of its lithium industry in April of this year and is actively strengthening its position by forming a strategic "lithium triangle" partnership with Chile and Argentina. Additionally, Indonesia, known as the world's primary producer of nickel for secondary cells, has taken measures to restrict the export of nickel ore and now exclusively exports processed nickel.

In the developed world, governments are the ones responding to this situation at the forefront. The U.S. government plans to spend about 9.2 trillion won on mineral resources by 2026. The European Union has created a 22.9 trillion won worth of resource acquisition fund. Japan is securing overseas resources with its official development assistance (ODA) to emerging countries. On the other hand, South Korea's rare metal stockpile budget is 37.2 billion won this year, 24% less than last year. Worse, there are not enough bases to stockpile the resource as they are 99 percent full.

Korean Companies are rushing to secure their resources. LG Energy Solutions has signed a long-term purchase agreement with a Chilean company to secure lithium for secondary battery manufacturing. POSCO Group has also decided to build a nickel smelting plant in Indonesia.

It was only a year and eight months ago that the "urea solution crisis" occurred, when imports from China stopped, causing a shortage of urea solution used in pollution-reducing devices for freight cars and buses, and paralyzing logistics. At the time, the government said it would activate an early warning system for highly export-dependent items and increase stockpiles. However, the actual situation hasn't changed much. If this kind of poor response continues, South Korea will inevitably be on the losing side of a possible global resource war.