South Korea to Cut China Rare-Earth Dependency as Imports Drop

South Korea plans to reduce its dependency on Chinese supplies of rare earths after cutting overall imports of the materials used in hybrid cars and wind turbines by almost two-thirds since 2005.

The government expects China to maintain an export cap on rare earths and will increase stockpiles to meet higher demand, said Kim Sang Woo, a deputy director at the Mineral Resources Division of the Ministry of Knowledge Economy.

China cut its second-half export quota by 72 percent in July as the government shuts private mines to give larger state- owned companies more control over pricing. It accounts for 97 percent of global supplies of rare earths, which are also used in energy-saving devices and weapons systems.

“We expect China to maintain this kind of tight quota policy for a while,” Kim said in a telephone interview yesterday from Gwacheon, outside Seoul. “We plan to seek ways to cooperate with countries beside China, like Japan and the U.S., and see if we can jointly develop mines.”

South Korea bought 2,655 metric tons of rare earths and processed materials in 2009, down from 7,398 tons in 2005, according to data from the ministry. Imports fell as products that used the minerals, including cathode ray tube televisions, grew outmoded and because companies switched to substitutes such as steel and aluminum, Kim said.

About 65 percent of South Korea’s rare-earth imports come from China, and 28 percent from Japan, the ministry said. The shipments made up 0.1 percent of South Korea’s imports of six key “strategic minerals” including copper, coal and iron ore.

Import Reliance

South Korea, reliant on imports for almost all its energy and mineral needs, plans to increase rare-earth stockpiles 19- fold to 1,200 tons in 2016, Kim said.

Japan said China halted shipments of rare earths last month after a collision in disputed waters between a Chinese trawler and the Japanese Coast Guard led to the fishing-boat captain’s detention. Chief Cabinet Secretary Yoshito Sengoku said Oct. 20 that the import situation “hadn’t changed” weeks after the captain’s release.

“As in the case between China and Japan, we expect resources nationalism to continue,” Kim said. “Still, China won’t be able to maintain this policy forever, given its relatively low level of reprocessing technology.”