[Viewpoint] Resource Security Requires Public-Private Cooperation

South Korea is the world's fourth-largest net importer of crude oil, with a very high dependence on imports. The import dependence on mineral resources is also 95%. It can be said that most energy and mineral resources are imported and used. Therefore, it is essential to develop autonomous capabilities to secure resources stably.

Over the past decade, South Korea's resource development has come to a halt. The results have been disastrous, and the ecosystem related to resource development has collapsed. The downsizing or abolition of resource public enterprises, which played a leading role in resource development, led to a simultaneous stagnation of private companies. Overseas resource development projects, including minerals, oil, and gas, require a long time from exploration to development and production, and involve significant commercial risks, so private companies are reluctant to enter alone. The few existing projects have been sold off, and organizations have been downsized or eliminated.

In the case of mineral resources, as in the past, they determine much of the present and future. If raw material supply is not secured immediately, public sentiment is shaken by changes in living costs. The soaring price of thermal coal, the main raw material for cement, is greatly affecting various construction markets such as apartments. South Korea does not have a single mineral resource that is self-sufficient. Only 20 years ago, resources like coal and limestone were sufficiently utilized and even exported. This is why South Korea must actively engage in resource development both overseas and domestically to secure the necessary resources.

The important point is that public enterprises and the private sector must pool capital and technological capabilities and proceed with focus. While private-sector-led resource development is partly correct in a broad sense, it is not accurate when approached in more detail. Considering the special nature of resource development, public and private sectors must share roles and work together to minimize risks. The government should act as a central point, and public and private sectors should cooperate to pursue continuous resource acquisition for a stable structure.

We must also clearly understand that resources must be secured unconditionally regardless of price. In other words, rather than selling resources for profit, they should be used in industries to make better products. This is evident from the battery industry, which South Korea once proudly claimed to have the world's best technology and order-winning capabilities but is struggling due to fierce challenges from China. China's increase in battery market share is because it has secured the market for key battery materials such as lithium, nickel, and cobalt. As raw material prices rise, China inevitably gains an advantage in price competitiveness. Currently, the world's largest lithium producer is the Chinese company Ganfeng Lithium. Until last year, the absolute leaders were the U.S. company Albemarle and Chile's SQM, which has abundant lithium reserves, but Ganfeng Lithium, backed by government support, acquired lithium companies and mines indiscriminately and has now risen to become the world's top lithium producer. It is said that the country dominating the electric vehicle and battery market will dominate the world.

Now, South Korea's biggest challenge is securing raw materials. Like during the Lee Myung-bak administration, joint efforts by the private sector and public enterprises can yield results. At that time, Korea Resources Corporation and Samsung C&T secured 30% stakes in Chile, the largest lithium deposit; Korea Resources Corporation and LG International in Argentina; and Korea Resources Corporation and POSCO in Bolivia. If the mines had been retained until now, it would have been a so-called 'jackpot.' The new government must not forget that public-private cooperation in resource security can create future growth industries.

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