South Korea hunts for tungsten treasure in race for rare minerals

South Korea hunts for tungsten treasure in race for rare minerals

  • South Korean tungsten mine gets $100 million makeover
  • Dozens of new mining projects launched around the world
  • Green and digital booms are fueling demand for rare minerals
  • China is preeminent in the supply of critical minerals
  • GRAPHIC-South Korea’s dependence on China:

SANGDONG, South Korea, May 9 (Reuters) – Glistening blue tungsten from the walls of abandoned mine shafts in a city that has seen better days could be a catalyst for South Korea’s bid to break dominance of China on critical minerals and to claim its raw materials of tomorrow.

The Sangdong mine, 180km southeast of Seoul, is being brought back from the dead to mine the rare metal that has found new value in the digital age in technologies ranging from phones and microchips to electric vehicles and missiles.

“Why reopen it now after 30 years? Because it means sovereignty over natural resources,” said Lee Dong-seob, vice president of mine owner Almonty Korea Tungsten Corp.

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“Resources have become weapons and strategic assets.”

Sangdong is one of at least 30 mines or critical mineral processing plants around the world that have been launched or reopened outside China in the past four years, according to a Reuters review of projects announced by governments and businesses. These include projects developing lithium in Australia, rare earths in the United States and tungsten in Britain.

The scale of the plans illustrates the pressure felt by countries around the world to secure supplies of critical minerals considered essential for the green energy transition, from lithium in electric vehicle batteries to magnesium in laptops and present neodymium. in wind turbines.

Global demand for these rare minerals is expected to quadruple by 2040, the International Energy Agency said last year. For those used in electric vehicles and battery storage, demand is expected to increase 30 times, he added.

Many countries view their mining as a matter of national security, as China controls the extraction, processing or refining of many of these resources.

The Asian powerhouse is the largest supplier of critical minerals to the United States and Europe, according to a 2019 China Geological Survey study. Of the 35 minerals the United States has classified as critical, China is the largest supplier of 13, including rare earth elements essential for clean energy technologies, according to the study. China is the biggest source of 21 key minerals for the European Union, such as antimony used in batteries, he said.

“In the critical commodity restaurant, China is sitting eating its dessert, and the rest of the world is in the taxi reading the menu,” said Julian Kettle, senior vice president for metals and the mines of the consulting firm Wood MacKenzie.

The stakes are especially high for South Korea, home to big chipmakers like Samsung Electronics. The country is the world’s largest consumer of tungsten per capita and depends on China for 95% of its imports of the metal, which is prized for its unparalleled strength and heat resistance.

China controls more than 80% of the world’s tungsten supply, according to London-based commodity analysts CRU Group.

The Sangdong mine, a once bustling town of 30,000 now home to just 1,000, holds one of the largest deposits of tungsten in the world and could produce 10% of the world’s supply when it opens l next year, according to its owner.

Lewis Black, CEO of Almonty Korea’s Canadian parent company, Almonty Industries, told Reuters it plans to offer about half of the operation’s processed output to the South Korean domestic market as an alternative to Chinese supply.

“It’s easy to buy from China and China is South Korea’s biggest trading partner, but they know they’re too dependent,” Black said. “You must have a plan B right now.”

Sangdong tungsten, discovered in 1916 during Japanese colonial times, was once the backbone of South Korea’s economy, accounting for 70% of the country’s export earnings in the 1960s when it was widely used in metal cutting tools.

The mine was closed in 1994 due to a cheaper supply of ore from China, which made it commercially unviable, but now Almonty is betting demand, and prices will continue to rise due to digital and green revolutions as well as a growing desire of countries to diversify their sources of supply.

European prices for 88.5% minimum paratungstate – the main raw material for tungsten products – are trading around $346 per ton, up more than 25% from a year ago and close to their highest high levels in five years, according to pricing agency Asian Metal.

The Sangdong mine is being upgraded, with extensive tunnels being dug underground, while work has also started on a tungsten crushing and grinding plant.

“We need to continue to operate this type of mine so that new technologies can be passed on to future generations,” said Kang Dong-hoon, an official in Sangdong, where a “Pride of Korea” sign is displayed on a wall in the city hall. mine. Office.

“We have been lost in the mining industry for 30 years. If we lose this chance, there will be no more.”

Almonty Industries has signed a 15-year deal to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a supplier to the US military, which uses the metal in artillery shell tips, fuzes and antennae satellites.

Still, there are no guarantees of long-term success for the mining group, which is investing around $100 million in the Sangdong project. Such companies may still struggle to compete with China and some industry experts worry that developed countries are following through on commitments to diversify supply chains for critical minerals.

Seoul set up a task force on key elements of economic security after a supply crisis last November when Beijing tightened exports of urea solution, which many South Korean diesel vehicles are required by the law to use to reduce emissions. Nearly 97% of South Korea’s urea came from China at the time and the shortages prompted panic buying at gas stations across the country.

The Korean Mine Rehabilitation and Resources Corporation (KOMIR), a government agency responsible for national resource security, told Reuters it had pledged to subsidize about 37% of the Sangdong tunnel costs and would consider a additional support to mitigate any potential environmental damage.

Incoming President Yoon Seok-yeol pledged in January to reduce mineral dependence on “a certain country” and last month announced a new resource strategy that will allow the government to share information on stocks with the private sector.

South Korea is not alone.

The United States, European Union and Japan have all launched or updated national critical mineral supply strategies in the past two years, laying out broad plans to invest in more diversified supply lines to to reduce their dependence on China.

Mineral supply chains have also become a feature of diplomatic missions.

Last year, Canada and the European Union launched a strategic commodity partnership to reduce dependence on China, while South Korea recently signed collaboration agreements with Australia and Indonesia on mineral supply chains.

“Supply chain diplomacy will be a priority for many governments in the years to come, as access to critical raw materials for the green and digital transition has become a top priority,” said Henning Gloystein, Director of energy and climate resources from the consulting firm Eurasia Group.

In November, China’s top economic planner said it would step up exploration for strategic mineral resources, including rare earths, tungsten and copper.

A global investment of $200 billion in additional mining and smelting capacity is needed to meet critical mineral supply demand by 2030, 10 times what is currently committed, Kettle said.

Yet the projects have met with resistance from communities who do not want a mine or smelter near their homes.

In January, for example, pressure from environmentalists prompted Serbia to revoke Rio Tinto’s lithium exploration license while the administration of US President Joe Biden canceled two leases for the copper and nickel mines of Antofagasta, Minnesota. Read more

In Sangdong, some residents doubt that the mine will improve their lives.

“Many of us in this town didn’t believe the mine would really come back,” said Kim Kwang-gil, 75, who lived for decades on tungsten he mined from a stream that flowed from the mine when it was working.

“The mine doesn’t need as many people as it used to because everything is done by machines.”

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Reporting by Ju-min Park and Joe Brock; Additional reporting by Beijing Newsroom and Gavin Maguire; Editing by Kevin Krolicki and Pravin Char

Our standards: The Thomson Reuters Trust Principles.

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