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South Korea hunts tungsten treasure in race for rare minerals By Reuters

by Reuters
May 9, 2022
in Stock Market
Reading Time: 6 mins read
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© Reuters. An worker guides inside a tungsten mine in Gangwon Province, South Korea, March 31, 2022. Image taken March 31, 2022. REUTERS/ Heo Ran

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By Ju-min Park and Joe Brock

SANGDONG, South Korea (Reuters) – Blue tungsten winking from the partitions of deserted mine shafts, in a city that is seen higher days, could possibly be a catalyst for South Korea’s bid to interrupt China’s dominance of essential minerals and stake its declare to the uncooked supplies of the long run.

The mine in Sangdong, 180 km southeast of Seoul, is being introduced again from the useless to extract the uncommon steel that is discovered recent worth within the digital age in applied sciences starting from telephones and chips to electrical autos and missiles.

“Why reopen it now after 30 years? As a result of it means sovereignty over pure sources,” mentioned Lee Dong-seob, vp of mine proprietor Almonty Korea Tungsten Corp.

“Sources have change into weapons and strategic property.”

Sangdong is one in every of at the very least 30 essential mineral mines or processing crops globally which were launched or reopened exterior China over the past 4 years, based on a Reuters evaluation of initiatives introduced by governments and corporations. These embody initiatives growing lithium in Australia, uncommon earths in america and tungsten in Britain.

The dimensions of the plans illustrates the strain felt by international locations internationally to safe provides of essential minerals thought to be important for the inexperienced power transition, from lithium in EV batteries to magnesium in laptops and neodymium present in wind generators.

Total demand for such uncommon minerals is anticipated to extend four-fold by 2040, the Worldwide Vitality Company mentioned final yr. For these utilized in electrical autos and battery storage, demand is projected to develop 30-fold, it added.

Many international locations view their minerals drive as a matter of nationwide safety as a result of China controls the mining, processing or refining of many of those sources.

The Asian powerhouse is the most important provider of essential minerals to america and Europe, based on a examine by the China Geological Survey in 2019. Of the 35 minerals america has categorised as essential, China is the most important provider of 13, together with uncommon earth parts important for clean-energy applied sciences, the examine discovered. China is the most important supply of 21 key minerals for the European Union, comparable to antimony utilized in batteries, it mentioned.

“Within the essential uncooked materials restaurant, China is sitting consuming its dessert, and the remainder of the world is within the taxi studying the menu,” mentioned Julian Kettle, senior vp for metals and mining at consultancy Wooden MacKenzie.

‘HAVE TO HAVE A PLAN B’

The stakes are significantly excessive for South Korea, residence of main chipmakers like Samsung Electronics (OTC:). The nation is the world’s largest shopper of tungsten per capita and depends on China for 95% of its imports of the steel, which is prized for its unrivalled power and its resistance to warmth.

China controls over 80% of worldwide tungsten provides, based on CRU Group, London-based commodity analysts.

The mine at Sangdong, a as soon as bustling city of 30,000 residents that is now residence to only 1,000, holds one of many world’s largest tungsten deposits and will produce 10% of worldwide provide when it opens subsequent yr, based on its proprietor.

Lewis Black, CEO of Almonty Korea’s Canadian-based father or mother Almonty Industries, informed Reuters that it deliberate to supply about half of the operation’s processed output to the home market in South Korea as an alternative choice to Chinese language provide.

“It is simple to purchase from China and China is the most important buying and selling companion of South Korea however they know they’re over-dependent,” Black mentioned. “You need to have a plan B proper now.”

Sangdong’s tungsten, found in 1916 in the course of the Japanese colonial period, was as soon as a spine of the South Korean economic system, accounting for 70% of the nation’s export earnings within the Sixties when it was largely utilized in metal-cutting instruments.

The mine was closed in 1994 as a result of cheaper provide of the mineral from China, which made it commercially unviable, however now Almonty is betting that demand, and costs will proceed to rise pushed by the digital and inexperienced revolutions in addition to a rising want by international locations to diversify their provide sources.

European costs of 88.5% minimal paratungstate – the important thing uncooked materials ingredient in tungsten merchandise – are buying and selling round $346 per tonne, up greater than 25% from a yr in the past and near their highest ranges in 5 years, based on pricing company Asian Metallic.

The Sangdong mine is being modernised, with huge tunnels being dug underground, whereas work has additionally began on a tungsten crushing and grinding plant.

“We must always preserve operating this sort of mine in order that new applied sciences may be handed over to the subsequent generations,” mentioned Kang Dong-hoon, a supervisor in Sangdong, the place a “Delight of Korea” signal is displayed on a wall of the mine workplace.

“We have now been misplaced within the mining trade for 30 years. If we lose this opportunity, then there shall be no extra.”

Almonty Industries has signed a 15-year deal to promote tungsten to Pennsylvania-based World Tungsten & Powders, a provider to the U.S. navy, which variously makes use of the steel in artillery shell suggestions, rockets and satellite tv for pc antennae.

But there are not any ensures of long-term success for the mining group, which is investing about $100 million within the Sangdong challenge. Such ventures should still battle to compete with China and there are issues amongst some trade consultants that developed international locations is not going to comply with by means of on commitments to diversify provide chains for essential minerals.

SUPPLY-CHAIN DIPLOMACY

Seoul arrange an Financial Safety Key Gadgets Taskforce after a provide disaster final November when Beijing tightened exports of urea answer, which many South Korean diesel autos are required by legislation to make use of to chop emissions. Practically 97% of South Korea’s urea got here from China on the time and shortages prompted panic-buying at filling stations throughout the nation.

The Korean Mine Rehabilitation and Sources Company (KOMIR), a authorities company liable for nationwide useful resource safety, informed Reuters it had dedicated to subsidise about 37% of Sangdong’s tunnelling prices and would contemplate additional help to mitigate any potential environmental injury.

Incoming President Yoon Seok-yeol pledged in January to scale back mineral dependence on “a sure nation”, and final month introduced a brand new useful resource technique that can permit the federal government to share stockpiling info with the non-public sector.

South Korea shouldn’t be alone.

The US, European Union and Japan have all launched or up to date nationwide essential mineral provide methods over the past two years, laying out broad plans to spend money on extra diversified provide traces to scale back their reliance on China.

Mineral provide chains have additionally change into a characteristic of diplomatic missions. 

Final yr, Canada and the European Union launched a strategic partnership on uncooked supplies to scale back dependence on China, whereas South Korea lately signed collaboration offers with Australia and Indonesia on mineral provide chains. 

“Provide-chain diplomacy shall be prioritised by many governments within the coming years as accessing essential uncooked supplies for the inexperienced and digital transition has change into a prime precedence,” mentioned Henning Gloystein, director of power and local weather sources on the Eurasia Group consultancy.

In November, China’s prime financial planner mentioned it could step up exploration of strategic mineral sources together with uncommon earths, tungsten and . 

ENVIRONMENTAL OPPOSITION

Funding globally of $200 billion in extra mining and smelter capability is required to fulfill essential mineral provide demand by 2030, 10 occasions what’s being dedicated at present, Kettle mentioned.

But initiatives have confronted resistance from communities who do not need a mine or smelter close to their properties.

In January, for instance, strain from environmentalists prompted Serbia to revoke Rio Tinto (NYSE:)’s lithium exploration licence whereas U.S. President Joe Biden’s administration cancelled two leases for Antofagasta (LON:)’s copper and nickel mines in Minnesota. 

In Sangdong, some residents are uncertain that the mine will enhance their lives.

“Many people on this city didn’t imagine the mine would actually come again,” mentioned Kim Kwang-gil, 75, who for many years lived off the tungsten he panned from a stream flowing down from the mine when it operated.

“The mine does not want as many individuals as earlier than, as a result of the whole lot is finished by machines.”

GRAPHIC-S.Korea’s reliance on China for essential minerals (jpeg) https://tmsnrt.rs/3kSb2qN

GRAPHIC-S.Korea’s reliance on China for essential minerals (interactive) https://tmsnrt.rs/3FuaNfm

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Tags: huntsKoreamineralsRacerareReutersSouthtreasuretungsten
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