South Korea is hunting for tungsten treasures in the race for rare minerals

SANGDONG, South Korea, May 9 (Reuters) – Blue tungsten flashing from the walls of abandoned mine shafts, in a city that has seen better days, could be a catalyst for South Korea’s attempts to break China’s dominance of critical minerals and claim the raw materials of the future.

The Sangdong mine, 180 km southeast of Seoul, is being brought back from the dead to extract the rare metal that has found new value in the digital age in technologies ranging from telephones and chips to electric vehicles and missiles.

“Why reopen it now after 30 years? Because it means sovereignty over natural resources,” said Lee Dong-seob, vice president of mining owner Almonty Korea Tungsten Corp.

“Resources have become weapons and strategic assets.”

Sangdong is one of at least 30 critical mineral mines or processing plants globally that have been launched or reopened outside China over the past four years, according to a Reuters review of projects announced by governments and companies. These include projects developing lithium in Australia, rare earths in the United States and tungsten in the United Kingdom.

The scope of the plans illustrates the pressure from countries around the world to secure supplies of critical minerals that are considered crucial to the green energy transition, from lithium in EV batteries to magnesium in laptops and neodymium found in wind turbines.

The total demand for such rare minerals is expected to quadruple by 2040, the International Energy Agency said last year. For those used in electric vehicles and battery storage, demand is expected to grow 30 times, it added.

Many countries view their mineral operations as a matter of national security because China controls the mining, processing or refining of many of these resources.

The Asian Power Center is the largest supplier of critical minerals to the United States and Europe, according to a study from the China Geological Survey in 2019. Of the 35 minerals the United States has classified as critical, China is the largest supplier of 13, including rare earth elements that are essential for clean energy technology, the study found. China is the largest source of 21 key minerals for the EU, such as antimony used in batteries, it says.

“In the critical ingredient restaurant, China sits and eats its dessert, and the rest of the world is in the taxi reading the menu,” said Julian Kettle, senior vice president of metals and mining at consulting firm Wood MacKenzie.

The stakes are particularly high for South Korea, the home of major chip manufacturers such as Samsung Electronics. The country is the world’s largest consumer of tungsten per capita and is dependent on China for 95% of the imports of the metal, which is valued for its unsurpassed strength and resistance to heat.

China controls over 80% of global tungsten supplies, according to CRU Group, London-based commodity analysts.

The mine in Sangdong, a once bustling city of 30,000 people that is now home to just 1,000, has one of the world’s largest tungsten deposits and can produce 10% of the global supply when it opens next year, according to the owner.

Lewis Black, CEO of Almonty Korea’s Canadian-based mother Almonty Industries, told Reuters that they planned to offer about half of the operation’s processed production to the domestic market in South Korea as an alternative to Chinese supplies.

“It’s easy to buy from China and China is South Korea’s largest trading partner, but they know they are overdependent,” Black said. “You need to have a Plan B right now.”

Sangdong’s tungsten, discovered in 1916 during the Japanese colonial era, was once the backbone of the South Korean economy, accounting for 70% of the country’s export earnings in the 1960s, when it was largely used in metal-cutting tools.

The mine was closed in 1994 due to cheaper supply of the mineral from China, which made it commercially unsustainable, but now Almonty is betting that demand and prices will continue to rise driven by the digital and green revolutions as well as a growing desire from land to diversify their sources of supply.

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

The Sangdong mine is being modernized, with large tunnels being dug underground, while work has begun on a tungsten crushing and grinding plant.

“We should continue to operate this type of mine so that new technology can be passed on to the next generations,” said Kang Dong-hoon, a leader in Sangdong, where a “Pride of Korea” sign is displayed on a wall in the mine. office.

“We’ve been in the mining industry for 30 years. If we lose this chance, there will be no more.”

Almonty Industries has signed a 15-year agreement to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a supplier to the US military that uses the metal in various ways in artillery shells, rockets and satellite dishes.

Nevertheless, there are no guarantees of long-term success for the mining group, which is investing around $ 100 million in the Sangdong project. Such initiatives may still struggle to compete with China, and there are concerns among some industry experts that developed countries will not follow up on commitments to diversify supply chains for critical minerals.

Seoul set up a Taskforce for economic security keys following a supply crisis in November last year when Beijing tightened exports of urea solution, which many South Korean diesel cars are required by law to use to cut emissions. Nearly 97% of South Korea’s urea came from China at the time, and shortages led to panic purchases at gas stations across the country.

The Korean Mine Rehabilitation and Resources Corporation (KOMIR), a government agency responsible for national resource security, told Reuters that it had committed to subsidizing around 37% of Sangdong’s tunnel costs and would consider further support to reduce potential environmental damage.

In January, incoming President Yoon Seok-yeol promised to reduce mineral dependence on “a particular country”, and last month announced a new resource strategy that will allow the government to share stock information with the private sector.

South Korea is not alone.

The US, EU and Japan have all launched or updated national critical mineral supply strategies over the past two years, and are making broad plans to invest in more diversified supply lines to reduce their dependence on China.

Mineral supply chains have also become part of diplomatic missions.

Last year, Canada and the EU launched a strategic partnership on raw materials to reduce dependence on China, while South Korea recently signed cooperation agreements with Australia and Indonesia on mineral supply chains.

“Supply chain diplomacy will be a priority for many governments in the coming years as access to critical raw materials for the green and digital transition has become a top priority,” said Henning Gloystein, director of energy and climate resources at Eurasia Group’s consulting firm.

In November, China’s top economic planner said it would step up its exploration of strategic mineral resources, including rare earths, tungsten and copper.

Global investments of $ 200 billion in additional mining and smelting capacity are needed to meet critical demand for mineral supply by 2030, 10 times what is committed now, Kettle said.

Nevertheless, projects have met with opposition from local communities who do not want a mine or smelter near their homes.

In January, for example, pressure from environmentalists prompted Serbia to revoke Rio Tinto’s lithium exploration license while US President Joe Biden’s administration canceled two leases for Antofagasta’s copper and nickel mines in Minnesota. read more

In Sangdong, some residents are in doubt that the mine will improve their lives.

“Many of us in this city did not think the mine would really return,” said Kim Kwang-gil, 75, who for decades lived off the tungsten he panned from a stream that flowed down from the mine when it was in operation.

– The mine does not need as many people as before, because everything is done with machines.

Reporting by Ju-min Park and Joe Brock; Additional reporting from Beijing Newsroom and Gavin Maguire; Edited by Kevin Krolicki and Pravin Char

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