South Korea hunts tungsten treasure in the race for rare minerals

  • South Korea’s tungsten mine gets a $ 100 million refurbishment
  • Dozens of new mineral projects launched globally
  • Green, digital booms are boosting demand for rare minerals
  • China is eminent in its supply of critical minerals
  • GRAPHIC-S. Korea’s reliance on China:

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

The Sangdong mine, 180km southeast of Seoul, is returning from the dead to extract a rare metal that has found fresh 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 Almonty Korea’s Tungsten Corp.

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“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 published by governments and companies. These include projects to develop lithium in Australia, rare earths in the United States and tungsten in Britain.

The range of plans illustrates the pressure felt by countries around the world to secure supplies of critical minerals considered key to the transition to green energy, from lithium in electric vehicle batteries to magnesium in laptops and neodymium found in wind turbines.

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 projected to increase 30-fold, he added.

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

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

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

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

China controls more than 80% of global tungsten supplies, according to the CRU Group, London commodity analysts.

The mine in Sangdong, once a bustling city of 30,000 with only 1,000 inhabitants, has one of the world’s largest tungsten deposits and could produce 10% of the global supply when it opens next year, its owner says.

Lewis Black, executive director of Canadian parent company Almonty Korea, Almonty Industries, told Reuters it plans to offer about half of the processed production in 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 biggest trading partner, but they know they’re too dependent,” Black said. “You must have a plan B immediately.”

Sangdong 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 widely used in metal cutting tools.

The mine closed in 1994 due to cheaper supplies of minerals from China, making it commercially unsustainable, but now Almonty is betting on that demand, and prices will continue to rise due to the digital and green revolution and the country’s growing desire to diversify its sources of supply. .

European prices for tungsten with a minimum share of 88.5% – a key raw material in tungsten products – are around $ 346 per tonne, up 25% from a year earlier and close to the highest level in five years, according to the agency. for Asian Metal prices.

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

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

“We’ve been lost in the mining industry for 30 years. If we lose this opportunity, then it won’t be.”

Almonty Industries has signed a 15-year contract to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a U.S. military supplier that uses metal in various ways in grenade launchers, rockets and satellite dishes.

However, there are no guarantees of the long-term success of the mining group, which is investing about $ 100 million in the Sangdong project. Such ventures may still be struggling to compete with China, and there are concerns among some industry experts that developed countries will not meet their obligations to diversify critical mineral supply chains.

Seoul set up a working group on key economic security items following a supply crisis last November when Beijing tightened exports of urea solution, which many South Korean diesel vehicles must use under the law to reduce emissions. Nearly 97% of urea in South Korea at the time came from China, and the shortage sparked panic buying at gas stations across the country.

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

New President Yoon Seok-yeol promised in January to reduce dependence on minerals on a “country-specific” basis, and last month announced a new resource strategy that would allow the government to share inventory information with the private sector.

South Korea is not alone.

The United States, the European Union, and Japan have launched or updated national critical mineral supply strategies over the past two years, setting out comprehensive plans to invest in more diversified supply lines to reduce their reliance 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 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 green and digital transition has become a top priority,” said Henning Gloystein, Director of Energy and Climate Resources at Eurasia Group Consulting.

In November, China’s chief economic planner said he would step up research into strategic mineral resources, including rare earths, tungsten and copper.

A $ 200 billion global investment in additional mining and smelting capacity is needed to meet critical demand for mineral supplies by 2030, 10 times more than currently projected, Kettle said.

Still, the projects have faced resistance from communities that do not want a mine or smelter near their homes.

In January, for example, environmental pressure prompted Serbia to revoke Rio Tinto’s lithium exploration permit, while the administration of US President Joe Biden canceled two leases for Antofagaste’s copper and nickel mines in Minnesota. Read more

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

“Many of us in this city didn’t believe the mine would really come back,” said Kim Kwang-gil, 75, who has lived for decades from tungsten extracted from a stream that flowed from the mine while working.

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

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

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