Joe Brock and Ju-min Park

SANGDONG South Korea (Reuters). Blue tungsten can be seen peeking out of the walls of an abandoned mine shaft. In a place that has been through worse times, it could serve as a catalyst to help South Korea break China’s hold on critical minerals. It will also claim to have the rights to the world’s most important raw materials.

Sangdong’s mine is located 180km southwest of Seoul. It has been brought back to life to recover rare metal. This precious metal has a new value in digital technology, which includes phones, chips, electric vehicles, and missiles.

It’s been closed for 30 years. It means that the government has sovereignty over all natural resources,” Lee Dong-seob said, vice president and mine owner Almonty Korea Tungsten Corp.

“Resources are now weapons and strategic assets.”

A Reuters review found that Sangdong is among at least 30 important mineral mines and processing plants worldwide, which have been opened or reopened within China in the past four year. They include lithium projects in Australia, rare Earths in the United States, and tungsten for Britain.

This plan demonstrates the immense pressure that countries around the globe feel to ensure supplies of crucial minerals essential to the transition to green energy. These include lithium in EV batteries, magnesium in laptops, and neodymium in wind turbines.

The International Energy Agency stated last year that the global demand for these rare minerals would increase by four-fold by 2040. According to the International Energy Agency, there is a 30-fold increase in demand for those that are used in batteries and electric vehicles.

China’s control over the processing, mining and refining many minerals resources is a concern for many countries.

According to a China Geological Survey study in 2019, the Asian country is the biggest supplier of crucial minerals to Europe and the United States. According to the China Geological Survey’s 2019 study, 13 out of 35 minerals that the United States considered critical are being supplied by China. This includes rare earth elements which is essential for clean energy technologies. According to it, China has 21 important minerals that are essential for the European Union. These include antimony which is used in battery manufacturing.

Julian Kettle (senior vice president, metals, mining, consultancy Wood MacKenzie) stated that China sits in the crucial raw material restaurant and is eating its dessert while the rest of the globe is reading the menu.

“HAVE TO HAVE A PLANS B”

South Korea (OTC) is a key country for major chipmakers, including Samsung Electronics. China is China’s biggest importer of tungsten, with 95% of all its imports. The metal is highly valued for its strength and resistance to heat.

According to CRU Group (London-based commodity analyst), China holds more than 80% global tungsten supply.

According to the owner, Sangdong’s mine holds 10% of the global tungsten supply. It was once a bustling community of over 30,000 people, but it now has just 1000 residents.

Almonty Korea’s Canadian-based parent Almonty Industries told Reuters that Lewis Black was the CEO and will offer approximately half the processing output of the operation to South Korea’s domestic market. This is in addition to Chinese supplies.

Black stated that it’s simple to purchase from China, and China is South Korea’s largest trading partner. However, they are aware of their overdependence. You must have a plan B now.

The tungsten discovered by Sangdong in 1916 under the Japanese colonial period was once the backbone of South Korea’s economy. It was responsible for 70% of South Korean export earnings during the 1960s, when the majority of its use was in metal-cutting instruments.

Almonty speculates that China’s cheaper supplies of the mineral made the mine uneconomical in 1994. But, Almonty thinks there is still demand and prices will rise due to the growing interest by nations to diversify their sources of supply.

European prices of 88.5% minimum paratungstate – the key raw material ingredient in tungsten products – are trading around $346 per tonne, up more than 25% from a year ago and close to their highest levels in five years, according to pricing agency Asian Metal.

Modernization of the Sangdong mine has begun. Underground tunnels are being constructed, and work is also underway on a tungsten grinding plant.

Kang Donghoon (a Sangdong manager) stated that “we should continue running this type of mine so new technologies can be passed to the next generation.” A “Pride of Korea” sign hangs on the wall of the mine’s office.

We have lost the mining industry over 30 years. This chance is gone if we don’t take it.”

Almonty Industries has signed a 15-year deal to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a supplier to the U.S. military, which variously uses the metal in artillery shell tips, rockets and satellite antennae.

However, there is no guarantee of the group’s long-term success. It has already invested approximately $100 million in Sangdong. Even though such ventures might struggle with China, some industry professionals are concerned that the developed world will abandon their promises to diversify its supply chain for crucial minerals.

SUPPLYCHAIN DIPLOMACY

Seoul created an Economic Security Key Items Taskforce in response to a crisis that occurred last November, when Beijing restricted exports of the urea solution. This is what many South Korean diesel vehicle owners are obliged to use by law to lower their carbon emissions. China accounted for nearly 97% of South Korea’s urea at that time, and panic-buying was seen at filling stations all across the country.

Korean Mine Rehabilitation and Resources Corporation KOMIR, a government agency responsible to national resource security, said to Reuters it had pledged to subsist about 37% Sangdong tunnelling costs and that further assistance would be considered to minimize any possible environmental damage.

Yoon Seokyel, who is the next President, promised in January that he would reduce “a certain country’s mineral dependence” and announced last month a new resource strategy to allow the government to share stockpiling data with the private sector.

South Korea doesn’t have to be the only country.

Over the past two years, Japan, Europe, and America have launched or updated their national critical minerals supply strategies. They outline broad plans for investing in more diverse supply lines, to decrease China’s dependence.

Diplomatic missions have become increasingly dependent on mineral supply chains. 

Canada and the European Union established a partnership in raw materials last year to decrease China’s dependence. South Korea and Australia recently reached agreements on supply chain management. 

Henning Gloystein (director of energy resources and Eurasia Group consultancy) stated that supply-chain diplomacy would be a priority for many countries in the future as it allows access to critical raw materials needed for the digital and green transition.

China’s top economic planner stated that in November it would increase its exploration of strategic resources such as rare earths, precious metals, and tungsten. 

ENVIRONMENTAL OPPOSITION

Kettle explained that global investment of $200 billion to increase mining and smelter capability is necessary in order to meet the critical demand for minerals by 2030. That’s 10 times more than what has been committed.

Communities opposed to a mine and smelter in their neighborhood have been resisting the projects.

For example, in January Rio Tinto (NYSE 🙂 was under pressure from environmentalists and Serbia revoked its lithium exploration license. Meanwhile, the U.S. president Joe Biden cancelled two leases. Antofagasta Minnesota’s nickel and copper mines. 

Some residents in Sangdong are skeptical that the mine will bring them better living conditions.

“Many of us in this town didn’t believe the mine would really come back,” said Kim Kwang-gil, 75, who for decades lived off the tungsten he panned from a stream flowing down from the mine when it operated.

The machines do everything, so the mine isn’t as crowded as it was before.

GRAPHIC-S.Korea’s reliance on China for critical minerals (jpeg) https://tmsnrt.rs/3kSb2qN

GRAPHIC-S.Korea’s reliance on China for critical minerals (interactive) https://tmsnrt.rs/3FuaNfm

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