Insight: South Korea hunts tungsten treasure in race for rare minerals

Almonty Industries

09/05/2022 24:00

* S.Korean tungsten mine gets $100 million makeover
    * Dozens of new mineral projects launched globally
    * Green, digital booms fuel demand for rare minerals
    * China is pre-eminent in critical minerals supply 
    * GRAPHIC-S.Korea's reliance on China: https://tmsnrt.rs/3kSb2qN

    By Ju-min Park and Joe Brock
    SANGDONG, South Korea, May 9 (Reuters) - Blue tungsten
winking from the walls of abandoned mine shafts, in a town
that's seen better days, could be a catalyst for South Korea's
bid to break China's dominance of critical minerals and stake
its claim to the raw materials of the future.
    The mine in Sangdong, 180 km southeast of Seoul, is being
brought back from the dead to extract the rare metal that's
found fresh value in the digital age in technologies ranging
from phones and chips 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.
    "Resources have become weapons and strategic assets."
    Sangdong is one of at least 30 critical mineral mines or
processing plants globally that have been launched or reopened
outside China over the last four years, according to a Reuters
review of projects announced by governments and companies. 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 across the world to secure supplies of critical
minerals regarded as essential for the green energy transition,
from lithium in EV batteries to magnesium in laptops and
neodymium found in wind turbines.
    Overall demand for such rare minerals is expected to
increase four-fold by 2040, the International Energy Agency said
last year. For those used in electric vehicles and battery
storage, demand is projected to grow 30-fold, it added. 
    Many countries view their minerals drive as a matter of
national security because China controls the mining, 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 study
by the China Geological Survey in 2019. 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, the study found. China is the largest
source of 21 key minerals for the European Union, such as
antimony used in batteries, it said.    
    "In the critical raw material 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 mining at consultancy Wood MacKenzie.
    
    'HAVE TO HAVE A PLAN B'
    The stakes are particularly high for South Korea, home of
major chipmakers like Samsung Electronics. The country is the
world's largest consumer of tungsten per capita and relies on
China for 95% of its imports of the metal, which is prized for
its unrivalled strength and its resistance to heat. 
    China controls over 80% of global tungsten supplies,
according to CRU Group, London-based commodity analysts.       
    The mine at Sangdong, a once bustling town of 30,000
residents that's now home to just 1,000, holds one of the
world's largest tungsten deposits and could produce 10% of
global supply when it opens next year, according to its owner.
    Lewis Black, CEO of Almonty Korea's Canadian-based parent
Almonty Industries, told Reuters that it planned to offer about
half of the operation's processed output to the domestic market
in South Korea as an alternative to Chinese supply.  
    "It's easy to buy from China and China is the largest
trading partner of South Korea but they know they're
over-dependent," Black said. "You have to have a plan B right
now."    
    Sangdong's tungsten, discovered in 1916 during the Japanese
colonial era, was once a backbone of the South Korean economy,
accounting for 70% of the country's export earnings in the 1960s
when it was largely used in metal-cutting tools. 
    The mine was closed in 1994 due to cheaper supply of the
mineral from China, which made it commercially unviable, but now
Almonty is betting that demand, and prices will continue to rise
driven by the digital and green revolutions as well as a growing
desire by countries to diversify their supply sources. 
    European prices of 88.5% minimum paratungstate - the key raw
material ingredient in tungsten products – are trading around
$346 per tonne, up more than 25% from a year ago and close to
their highest levels in five years, according to pricing agency
Asian Metal.
    The Sangdong mine is being modernised, with vast tunnels
being dug underground, while work has also started on a tungsten
crushing and grinding plant. 
    "We should keep running this kind of mine so that new
technologies can be handed over to the next generations," said
Kang Dong-hoon, a manager in Sangdong, where a "Pride of Korea"
sign is displayed on a wall of the mine office.
    "We have been lost in the mining industry for 30 years. If
we lose this chance, then 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 U.S. military, which variously uses the metal in
artillery shell tips, rockets and satellite antennae.
    Yet there are no guarantees of long-term success for the
mining group, which is investing about $100 million in the
Sangdong project. Such ventures may still struggle to compete
with China and there are concerns among some industry experts
that developed countries will not follow through on commitments
to diversify supply chains for critical minerals.
    
    SUPPLY-CHAIN DIPLOMACY
    Seoul set up an Economic Security Key Items Taskforce after
a supply crisis last November when Beijing tightened exports of
urea solution, which many South Korean diesel vehicles are
required by law to use to cut emissions. Nearly 97% of South
Korea's urea came from China at the time and shortages prompted
panic-buying at filling stations across the country.
    The Korean Mine Rehabilitation and Resources Corporation
(KOMIR), a government agency responsible for national resource
security, told Reuters it had committed to subsidise about 37%
of Sangdong's tunnelling costs and would consider further
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 stockpiling information 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
over the last two years, laying out broad plans to invest in
more diversified supply lines to reduce their reliance on China.
    Mineral supply chains have also become a feature of
diplomatic missions. 
    Last year, Canada and the European Union launched a
strategic partnership on raw materials to reduce dependence on
China, while South Korea recently signed collaboration deals
with Australia and Indonesia on mineral supply chains. 
    "Supply-chain diplomacy will be prioritised by many
governments in the coming years as accessing critical raw
materials for the green and digital transition has become a top
priority," said Henning Gloystein, director of energy and
climate resources at the Eurasia Group consultancy.
    In November, China's top economic planner said it would step
up exploration of strategic mineral resources including rare
earths, tungsten and copper. 

   ENVIRONMENTAL OPPOSITION
   Investment globally of $200 billion in additional mining and
smelter capacity is needed to meet critical mineral supply
demand by 2030, 10 times what is being committed currently,
Kettle said. 
    Yet projects have faced resistance from communities who
don't want a mine or smelter near their homes.
    In January, for example, pressure from environmentalists
prompted Serbia to revoke Rio Tinto's lithium exploration
licence while U.S. President Joe Biden's administration
cancelled two leases for Antofagasta's copper and nickel mines
in Minnesota.  urn:newsml:reuters.com:*:nL1N2U020W   urn:newsml:reuters.com:*:nL1N2U61Z2
    In Sangdong, some residents are doubtful 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 for decades lived
off the tungsten he panned from a stream flowing down from the
mine when it operated.
    "The mine doesn't need as many people as before, because
everything is done by machines."

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GRAPHIC-S.Korea's reliance on China for critical minerals (jpeg)
   https://tmsnrt.rs/3kSb2qN
 
GRAPHIC-S.Korea's reliance on China for critical minerals
(interactive)    https://tmsnrt.rs/3FuaNfm
 
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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)
 ((ju-min.park@thomsonreuters.com; Reuters Messaging:
ju-min.park.thomsonreuters.com@reuters.net))