US-led rare earths pact satisfies South Korea’s ‘definite need’ to cut China dependency

South Korea joined the US-led Minerals Security Partnership earlier this month alongside the likes of Germany, France, Britain, Australia and Japan

Australian Strategic Metals has also invested in South Korea to set up a joint venture to produce rare earth metals which will be turned into magnets for use by Hyundai

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Rare earths are a group of 17 chemically similar elements composed of scandium, yttrium, and the lanthanides that are abundant in nature, but difficult and dirty to extract. Photo: Reuters

Published: 4:30am, 28 Jun 2022Updated: 5:40am, 28 Jun 2022

South Korea’s decision to join a US-led pact on mineral supply helps satisfy a “definite need” to cut dependency on China for key resources, including rare earths, analysts said.

Securing key resources has become a core task for major economies around the world, as minerals are a crucial element incorporated into cutting-edge technologies, green energy and national defence industries.

Countries have traditionally relied on China as it not only holds the largest amount of rare earth reserves, but it also is the world’s biggest producer.

But China’s recent moves to regulate the mining and exports of rare earths has had economies scrambling to secure alternative supplies, with the US-led Minerals Security Partnership launched earlier this month.

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“Korea is more dependent on China [for supply of rare earths] because of proximity and because of the structure of trade between the countries where intermediate goods account for large part,” Kim Kyoung-hoon, senior researcher at the Korea International Trade Association’s (KITA) Global Value Chain Research Task Force, said.

South Korea has its own rare earth reserves, but does not possess the relevant production capabilities – although in recent years it has moved to produce rare earth magnets.