Full-Scale Enforcement of the Resource Security Special Act... Mineral Resource Development Stocks 'Brighten'

Reference photo.

The entire world is fiercely competing to secure critical minerals essential for advanced industries. Concerns over supply chain crises are intensifying due to the resource weaponization strategies of various countries and the deepening US-China conflict. As the government is actively promoting policies at the national level, expectations for benefits to related companies are growing.

According to industry sources on the 6th, the "National Resource Security Special Act (Resource Security Act)" will be enforced starting on the 7th. The government must establish supply chains for key minerals such as nickel, lithium, tungsten, as well as major resources like oil and natural gas. In the future, energy and resource public institutions such as the Korea National Oil Corporation and Korea Gas Corporation will be designated as peacetime stockpiling obligated agencies, and in emergencies, they will be required to temporarily increase or newly stockpile resources.

Korea is in urgent need of responding to global resource weaponization. Although it ranks eighth worldwide in energy consumption, it is a resource-poor country importing over 90% of its energy resources. Another resource-poor country, Japan, is expanding its resource territories worldwide and investing in resources in various ways. The resource development rate of Japan is more than twice that of Korea. According to the Korea Mine Reclamation Corporation, as of 2023, the domestic resource development rate for six strategic minerals (thermal coal, uranium, iron, copper, zinc, nickel) was 34.4%, which is less than half of Japan’s 69.9% resource development rate.

The government is showing swift progress in resource security and securing critical minerals through the stockpiling obligations of public institutions, which is raising interest in companies related to mineral resource development.

STX is expanding investments in rare minerals such as copper, cobalt, manganese, tungsten, nickel, and lithium. Last year, it secured shares in a lithium mine located in the Puno region of southeastern Peru, as well as off-take rights for the transportation and sale of lithium concentrate (minerals refined to increase purity). The lithium reserves of this mine are estimated to exceed 1.5 million tons.

LX International acquired an Indonesian nickel mine (PT. Adhi Kartiko Pratama, hereafter AKP) and is expanding its resource development business. This acquisition is interpreted as a shift from coal to key secondary battery minerals such as nickel.

J-Sco Holdings is developing a nickel mine in the Philippines. It is on the verge of demonstrating concrete results from a nickel ore development project conducted over three years. Currently, final work is underway on constructing a port for transporting nickel ore by barge. Once completed, this large-scale port will be capable of transporting about 42,000 tons of nickel ore per day, and the first export is planned to commence.

At the same time, efforts to secure customers are accelerating. J-Sco Holdings is about to sign a main contract with China’s state-owned enterprise China Chengtong International for an annual supply of 1.2 million tons of nickel and is actively discussing nickel ore distribution with domestic and international raw material-related companies.

An industry insider said, “Recently, China has imposed not only retaliatory tariffs against the US’s additional 10% tariffs but also export control measures on resources such as tungsten. If the export routes of critical minerals like tungsten, essential for semiconductor production, are blocked, the tariff war between the US and China could lead to an international resource supply shortage, causing resource prices to rise. Therefore, Korea also needs countermeasures.”