South Korea’s ambition to secure a fully independent critical minerals supply chain is facing significant structural constraints, according to a new report by the Korea Institute for Industrial Economics and Trade (KIET). As global competition intensifies for strategic raw materials powering advanced manufacturing and clean energy technologies, Seoul is reassessing how to reduce external dependency while remaining competitive in high-tech industries.
The report concludes that, unlike resource-rich economies, South Korea lacks meaningful domestic mineral reserves and upstream mining capacity. This reality complicates efforts to replicate vertically integrated supply chain models now being pursued by the United States, China, and the European Union.
Limited Domestic Resources, Global Industrial Dependence
South Korea is a global leader in battery production, semiconductors, and advanced industrial manufacturing. However, it depends heavily on imported raw materials such as lithium, nickel, cobalt, and rare earth elements—minerals essential for electric vehicles, energy storage systems, and next-generation electronics.
KIET’s analysis, titled “Key Mineral Policies of the U.S. and Europe and Korea’s Countermeasures,” highlights that while major powers are expanding domestic mining, refining, stockpiling, and recycling capabilities, South Korea lacks both substantial mineral inventories and extensive upstream development experience.
Rather than attempting to build a fully self-contained ecosystem from mining to refining at home, the report recommends a differentiated strategy tailored to each mineral’s supply dynamics and geopolitical risk profile.
Modular Supply Chains: Overseas Mining, Domestic Processing
One of the report’s core recommendations is the development of modular supply chain frameworks. This model would combine:
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Overseas mining and refining investments
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Domestic processing and high-value manufacturing
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Expanded recycling capacity
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Research into alternative materials
For battery minerals such as lithium and nickel, securing stakes in foreign refining facilities while strengthening domestic recycling systems could reduce overreliance on single-country supply sources.
As global electric vehicle adoption accelerates, demand for lithium and nickel continues to surge worldwide. Ensuring diversified access to these materials is increasingly viewed as essential to safeguarding South Korea’s export-driven technology sector.
Stockpiling and Long-Term Partnerships
For minerals prone to short-term supply disruptions, the report suggests expanding strategic stockpiling mechanisms to cushion against market volatility.
Meanwhile, for high-value materials such as platinum group metals—critical for hydrogen technologies and advanced industrial applications—KIET stresses that recycling alone will not meet projected demand. Instead, Seoul should pursue long-term joint development projects and overseas investment partnerships to secure stable supply.
This multi-layered strategy acknowledges that different minerals require different policy tools, balancing resilience with economic efficiency.
Innovation in Next-Generation Technologies
Beyond securing supply, the report underscores the importance of technological innovation. Global research is advancing rapidly in areas such as:
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Sodium-ion batteries
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All-solid-state batteries
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Low-rare-earth permanent magnets
Investing in these emerging technologies could reduce dependence on constrained minerals over time. However, KIET cautions that many breakthroughs remain technically complex and capital-intensive, requiring sustained government support alongside private-sector participation.
Strengthening research and development capacity is therefore viewed as a long-term hedge against supply chain vulnerability.
Diversifying International Partnerships
KIET advocates for a broad, diversified external engagement strategy. Instead of relying on a single dominant supplier, South Korea is encouraged to deepen ties with resource-rich nations across ASEAN, Latin America, and Africa.
The report also acknowledges geopolitical realities. Despite supply concentration concerns, China remains a dominant force in refining and processing many critical minerals. In the near term, maintaining trade dialogue and managing risk exposure is seen as more practical than abrupt disengagement.
Simultaneously, collaboration with Europe and the United States presents new opportunities. The European Union’s Critical Raw Materials Act and U.S. initiatives to expand domestic production and processing offer potential avenues for joint ventures and co-investment.
By participating in overseas projects, South Korean firms could secure access to segments of global supply chains without replicating entire ecosystems domestically.
Coordinated Government and Industry Action
The report emphasizes that successful implementation will require strong coordination between government and industry. Policymakers are tasked with:
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Designing coherent industrial policy frameworks
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Supporting regulatory and institutional reforms
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Financing long-term research and innovation
Meanwhile, companies must take operational responsibility for procurement strategies, overseas investments, processing capacity, and recycling initiatives.
As demand for critical minerals accelerates across the world, South Korea faces the challenge of balancing industrial ambition with structural limitations. Building a completely independent supply chain may be unrealistic given domestic resource constraints. However, a flexible, globally integrated model—anchored in overseas partnerships, domestic processing, recycling expansion, and technological innovation—could offer a pragmatic alternative.
In an era defined by supply chain security, geopolitical competition, and rapid technological change, South Korea’s strategy will likely evolve toward resilience through diversification rather than self-sufficiency.
