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South Korea is looking for tungsten treasures in the Reuters race for rare minerals

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© Reuters. Employee leads inside a tungsten mine in Gangwon Province, South Korea, March 31, 2022. Photo taken March 31, 2022. REUTERS / Heo Ran

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Written by Jo-Min Park and Joe Brock

SANDON, South Korea (Reuters) – Blue tungsten winking from the walls of abandoned mine shafts in a city that has seen better days could be a catalyst for South Korea’s attempt to break China’s dominance in key minerals and claim its raw materials.

The Sangdong mine, 180km southeast of Seoul, is being returned from the dead to extract rare metal, which has found new value in the digital age in technology ranging from phones and chips to electric vehicles and rockets.

“Why open it now in 30 years? Because it means sovereignty over natural resources,” said Lee Dong Sob, vice president of Almonty Korea Tungsten Corp.

“Resources have become weapons and strategic assets.”

Sangdong is one of at least 30 important mines or processing plants in the world 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 to develop lithium in Australia, rare earth elements in the US and tungsten in Britain.

The scale of the plans illustrates the pressures experienced by countries around the world to secure supplies of critical minerals considered necessary for the transition to green energy, from lithium in EV batteries to magnesium in laptops and neodymium contained in wind turbines.

Total demand for such rare minerals is expected to quadruple by 2040, the International Energy Agency said last year. Demand for electric vehicles and batteries is projected to grow 30-fold.

Many countries view their minerals as a matter of national security because China controls the extraction, processing, or reprocessing of many of these resources.

The Asian power plant is the largest supplier of important minerals to the United States and Europe, according to a 2019 Geological Survey of China. Of the 35 minerals that the United States has classified as critical, China is the largest supplier of 13, including a study that found rare earth elements needed for clean energy technologies. China is the largest source of 21 key minerals for the European Union, such as antimony used in batteries, the report said.

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

“YOU NEED TO HAVE A PLAN B”

Especially high rates for South Korea, where there are such large chip manufacturers as Samsung Electronics (OTC :). The country is the world’s largest consumer of tungsten per capita and relies on China for 95% of imports of the metal, which is valued for its unmatched strength and heat resistance.

China controls more than 80% of the world’s tungsten supplies, according to the CRU Group, a London commodity analyst.

The mine in Sangdong, once a bustling city with a population of 30,000 and now home to just 1,000 people, contains one of the world’s largest tungsten deposits and could produce 10% of the world’s supply if it opens next year, according to its owner.

Lewis Black, CEO of Canadian parent company Almonty Korea Almonty Industries, told Reuters it planned to offer about half of the processed products in South Korea’s domestic market 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’re overly dependent,” Black said. “You need to have Plan B right now.”

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

The mine was closed in 1994 due to cheaper supplies of mineral from China, which made it commercially unprofitable, but now Almanti is betting on this demand, and prices will continue to rise, driven by digital and green revolutions, and the country’s growing desire to diversify sources of supply.

According to Asian Metal Pricing Agency, European prices for 88.5% of the minimum para tungsten – a key raw material in tungsten products – are trading at around $ 346 per tonne, up 25% from a year ago and close to the highest level. five years.

The Sangdong mine is being modernized, huge tunnels are being dug underground, and work on tungsten crushing and grinding has begun.

“We must continue to work with such mines so that new technologies can be passed on to future generations,” said Kang Dong Hoon, a manager at Sangdong, where the “Pride of Korea” sign is posted on the mine wall. office.

“We have been lost in the mining industry for 30 years. If we lose this chance, it will not happen again. “

Almonty Industries has signed a 15-year agreement to sell tungsten to Global Tungsten & Powders of Pennsylvania, a supplier to the U.S. military that uses metal differently in artillery shell tips, missiles and satellite dishes.

However, there are no guarantees of long-term success for the mining group, which is investing about $ 100 million in the Sangdong project. Such enterprises may still have difficulty competing with China, and some industry experts are concerned that developed countries will not meet their commitments to diversify critical supply chains.

SUPPLY CHAIN ​​DIPLOMACY

Seoul set up a task force on key elements of economic security after the supply crisis last November, when Beijing stepped up exports of urea solution, which many South Korean diesel cars are required by law to use to reduce emissions. Nearly 97% of urea in South Korea came at the time from China, and the shortage has caused panic purchases at gas stations across the country.

The Korean Mine Rehabilitation Corporation (KOMIR), the state agency responsible for the security of national resources, told Reuters it had pledged to subsidize about 37% of Sangdong’s tunneling costs and consider further support to mitigate any potential environmental damage.

New President Yoon Sok Yol promised in January to reduce dependence on minerals from a “certain country”, and last month announced a new resource strategy that would allow the government to share information on reserves with the private sector.

South Korea is not alone.

The United States, the European Union, and Japan over the past two years have launched or updated national supply strategies for critical minerals, outlining broad plans to invest in more diversified supply lines to reduce dependence on China.

Mineral supply chains have also become a feature of diplomatic missions.

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

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

ENVIRONMENTAL OPPOSITION

To meet the critical demand for minerals by 2030, an investment of $ 200 billion is needed in additional mining and smelting capacity, which is 10 times more than now, Kettle said.

Yet the projects have faced resistance from communities who do not want a mine or smelter to be near their homes.

In January, for example, pressure from environmentalists forced Serbia to revoke Rio Tinto’s (NYSE 🙂 license for lithium exploration, and the administration of US President Joe Biden terminated two leases for Antafagasta (LON 🙂 Copper and Nickel Mines in Minnesota.

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

“Many of us in this city didn’t believe the mine would really come back,” said 75-year-old Kim Kwan Gill, who for decades lived off tungsten he knocked out of a stream that flowed from the mine when it operated.

“The mine doesn’t need as many people as before, because everything is done by machines.”

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

Dependence of GRAPHIC-S.Karea on China in matters of critical minerals (interactive) https://tmsnrt.rs/3FuaNfm

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