South Korean media: China dominates global lithium production, South Korea still relies on imports!
On September 19, the South Korean media "Asia Economic" published an article stating that it is expected that within the next decade, China's lithium production will exceed Australia, Chile, and Argentina. China and Japan are expanding their mining rights and capacity in the key raw material lithium market for electric vehicle batteries, thus expanding their influence. However, due to institutional restrictions and the negative attitude of enterprises, South Korea faces challenges in accessing lithium resources.
According to Fastmarkets, a UK market research company, China's lithium production is expected to increase to 900,000 tons by 2035, far exceeding Australia's 680,000 tons, Chile's 430,000 tons, and Argentina's 380,000 tons.
Experts point out that in this trend, South Korea has fallen behind in the resource competition. Professor Kang Tae-sung, a visiting professor at the Graduate School of Manufacturing Innovation at Inha University, said: "Since the late 2000s, South Korea, China, and Japan have been competing for resources, but only South Korea's ecosystem collapsed, while China and Japan steadily gained shares or mining rights." He added: "As of 2023, China accounts for more than 70% of global production, and Japan also holds more than 40% of mining shares in Bolivia and Chile."
Currently, South Korea is still at the level where each enterprise independently imports the required lithium. The Korea Resources Corporation (KORES) has some lithium reserves to cope with supply chain disruptions in case of emergencies. This is because, previously, the Korean resource company that directly engaged in overseas resource development merged with KORES in 2021 due to deteriorating financial conditions, thereby losing the legal basis for direct investment in overseas resources. Ultimately, the lack of institutional support means that resource acquisition strategies are inevitably limited.
Although the South Korean government has introduced support measures for private enterprises, the scale is insufficient. Although there are overseas exploration assistance and low-interest loan programs, the maximum support amount last year was only 1.65 billion won. Starting from this year, the budget for domestic and foreign oil field development and overseas mineral resource development has been integrated into 3.9 billion won, but it is still insufficient compared to 20.06 billion won in 2014, which has led to criticism. A official from the Ministry of Industry, Trade, and Energy said: "We are determining the needs of enterprises to ensure that this year's budget is reasonably allocated."
With the budget reduction, South Korea's major battery companies are also unwilling to develop mines. LG Chem has signed long-term supply agreements with ExxonMobil and Piedmont Lithium, and SK On has also signed contracts with ExxonMobil. It seems that South Korean companies rely more on long-term purchase agreements rather than direct development.
Professor Jo Hong-jong, an economics professor at Dankook University, said: "Currently, South Korean enterprises lack a complete value chain related to the environment, making it difficult to compete with China in unit price." He suggested: "At present, the lithium resource supply is oversupplied, and few enterprises can make long-term investments. Therefore, the government should respond to supply chain risks from the perspective of economic security and provide minimum support to ensure that enterprises maintain competitiveness."
Original: www.toutiao.com/article/1843694872679435/
Statement: This article represents the views of the author.