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14/12/2024
Mining News

South Korea revives Sangdong tungsten mine with U.S. support for supply chain security

The Sangdong tungsten mine in South Korea, known for holding one of the largest tungsten reserves in the world, is set to resume operations next year after closing in the early 1990s due to increased competition from cheaper Chinese tungsten. This revival follows the acquisition of mining rights by Canadian company Almonty Industries in 2015, which established a subsidiary, Almonty Korea Tungsten Corporation, to manage the operation. Local residents view this revival as a potential boost for a community facing economic decline.

In recent months, U.S. government researchers have visited the site, indicating that Sangdong is poised to become a reliable source of tungsten for international markets, especially for the United States. This shift comes amid rising global concerns about dependence on China for critical materials used in semiconductor manufacturing, electric vehicles, and military applications.

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Sangdong mine’s historical context and U.S.-South Korea relations

Located in Yeongwol County, Gangwon Province, the Sangdong mine contains an estimated 7.9 million tonnes of proven tungsten reserves. Once a major contributor to South Korea’s exports, the mine has been dormant since 1994 due to a surge in cheaper tungsten from China after its economic reforms. The mine was originally state-owned but was privatized in 1994 during a push to divest state enterprises. After changing hands multiple times, Almonty Industries took over in 2015 and has since invested approximately $94 million in redeveloping the site.

Historically, tungsten has been a strategic mineral for the U.S., particularly during the Korean War when the U.S. sought stable sources for weapon production. A bilateral tungsten agreement ensured steady supply from South Korea during the war, but it ended after the production target was met and global prices fell.

Addressing dependency on Chinese minerals

With China producing over 80% of the world’s tungsten in 2023, South Korea’s reliance on Chinese imports has become a pressing issue. In response, the U.S. Department of the Interior designated tungsten as a critical mineral, prompting legislative efforts to reduce dependence on foreign sources, particularly from China. The Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022 aims to establish a strategic reserve of critical minerals, including tungsten.

South Korea is also actively pursuing a strategy to diversify its mineral supply chains. This includes diplomatic initiatives such as the Korea-Africa Critical Minerals Dialogue and an agreement with Canada to strengthen cooperation in critical minerals.

Concerns over foreign ownership and autonomy

As Almonty prepares to allocate a significant portion of its output to the U.S. market while also supplying South Korea, concerns remain regarding foreign ownership of the mine. With South Korea being a leading consumer of tungsten, the potential limitations on its control over this vital resource raise questions about economic sovereignty and national security.

The geopolitical landscape, including China’s control over critical minerals, underscores the need for long-term investment in domestic mineral resources. This includes building processing facilities and ensuring that South Korea can maintain a stable and independent supply chain for tungsten.

As the global competition for critical minerals intensifies, the ability of South Korea to manage its tungsten resources effectively will be crucial for its technological and security initiatives. The revival of the Sangdong mine represents both an opportunity and a challenge as the country seeks to enhance its autonomy in an increasingly competitive landscape.

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