[The Editors' Verdict]A Resource Crisis Is Looming... But the Real Threat Comes First

Following last year, the prices of major mineral resources such as lithium, nickel, and cobalt continue to surge from the beginning of the new year. According to Shanghai Metals Market, a Chinese market research firm, the price of lithium carbonate was 60,000 yuan per ton at the beginning of last year. The annual increase rate reached 426.7%. Even after hitting 200,000 yuan per ton at the end of November last year, the upward trend has continued. On the 13th, the price recorded 316,000 yuan per ton, which is 100,000 yuan higher than a month ago. The rise in lithium prices is a result of increased electric vehicle sales.

The prices of other mineral resources are also continuing their sharp rise. According to the major mineral price trends for the first week of January announced by the Korea Mine Reclamation Corporation, the price of copper rose 50.3% year-on-year to $9,655 per ton, while nickel (33.0%), zinc (30.9%), thermal coal (based on fuel coal, 106.5%), and rare earth elements (based on neodymium oxide, 101.8%) all saw significant price increases. As countries around the world accelerate the energy transition in line with carbon neutrality, demand for minerals is expected to grow at an even faster pace.

The issue lies in diversifying supply chains and import sources to prepare for a raw material crisis. A crucial area in supply chain construction is the stockpiling of key minerals. The government initially planned to establish a stockpiling plan for rare metals, which are key minerals, by the end of last year. However, the deadline has passed, and there are forecasts that it may be delayed by up to six months. The government’s decision to formulate a comprehensive stockpiling plan for critical metal resources is aimed at managing resources with high dependency on specific countries more stably. Additionally, to operate the management system efficiently, the government plans to unify the stockpiling system. This involves integrating and transferring rare metals, which were separately managed by the Public Procurement Service and the Korea Mine Reclamation Corporation, to the Mining Corporation. However, due to budget shortages and other reasons, the government has yet to transfer nine types of rare metals held by the Public Procurement Service. When the government clearly distinguishes what should and should not be done while monitoring supply and demand and paying attention to the market’s role, the right policy alternatives will emerge. Since the current government cannot be relied upon, I offer a few recommendations for the new government’s resource policy formulation.

First, a strategic and sustainable resource policy scenario must be created. Last year’s China-origin urea solution crisis revealed the vulnerabilities of our industry. Knowing that supply chain variables originating from China directly affect domestic industries, detailed countermeasures must be prepared. From selecting strategic materials to preparing scenario-based response strategies according to supply conditions is necessary.

Second, overseas resource development must be reinitiated. Although private companies are told to handle overseas resource development on their own, long-term investments by companies inevitably face risks and are often avoided. Therefore, supply chain and import source issues at the national level are unavoidable. The government, public enterprises, and the private sector must cooperate to review ways to revitalize the contracted overseas resource development to solve the problem.

Third, a control tower is needed to comprehensively manage essential industrial items. There must be a national-level control tower for key strategic items such as rare earths, semiconductors, and batteries. This means an organization capable of establishing and managing comprehensive strategies not only for short-term responses but also for mid- to long-term research and development, talent cultivation, prevention of technology leakage, and investment attraction. The government’s response during the previous urea solution crisis has already been confirmed. Countries possessing resources are promoting resource nationalism and resource weaponization, but the government’s raw material measures remain frustrating. Preparations must be made before a greater crisis arrives.

Kang Cheon-gu, Invited Professor, Department of Energy Resources Engineering, Inha University