South Korea is taking proactive measures to secure supplies of lithium, a critical mineral for its battery and auto manufacturing industries. The nation has already purchased lithium carbonate from Chile this year through Korea Mine Rehabilitation and Mineral Resources Corp. (KOMIR), a state-controlled entity. In addition, the South Korean government has allocated 233.1 billion won ($171 million) to secure critical minerals for the development of cutting-edge technologies.
The majority of the budget will be used to build up South Korea’s lithium reserves for electric car batteries, as the nation aims to counter potential shortages amid heightened geopolitical tensions. This move is in line with President Joe Biden’s efforts to reduce reliance on China, which currently dominates the processing of crucial battery materials like lithium.
The decision to stockpile lithium comes at a time when prices have struggled to recover from a sharp decline last year. The global push towards electric vehicles drove up consumption and put pressure on supplies, leading to record high prices in 2022. However, demand growth for EVs has been slower than expected, causing battery manufacturers like LG Energy Solution and Samsung SDI to report smaller profits. Additionally, a wave of new lithium supplies entering the market has further weighed down prices, which plummeted over 80% in 2023 and have yet to see a significant recovery this year.
To support its stockpiling strategy, South Korea’s trade ministry announced a plan in March to invest 241.7 billion won over the next three years in building warehouses for storage of critical minerals, including lithium, gallium, and rare earths. This infrastructure investment will not only ensure a stable supply of lithium but also bolster South Korea’s competitiveness in the US by meeting the requirements of the Inflation Reduction Act.
By actively securing its lithium inventories, South Korea is taking proactive steps to safeguard its battery and auto manufacturing industries. This strategic move will help reduce dependence on China and mitigate potential disruptions in the global supply chain. As the nation invests in the development of cutting-edge technologies, it is positioning itself as a key player in the electric vehicle market and reinforcing its commitment to a sustainable future.
