With strong support from its government, the Republic of Korea (South Korea) has set itself a target to be a world’s leading lithium-ion battery (LiB) and electric vehicle manufacturer. In an aggressive push to develop a world-class battery industry, President Moon Jae-in recently released a new battery strategy that will see the government invest over US$35B by 2030.
To achieve its aims, South Korea is looking to not only overcome China’s dominance of LiBs, rare earths, and critical minerals production, it is also actively hunting in one of the world’s leading homes for the key ingredients it requires – Australia. Australia, currently the world’s leading Lithium producer, has willingly joined with South Korea in pursuing a close partnership.
The nation already supplies approximately 40% of South Korea’s critical mineral imports, including lithium, cobalt, and graphite. According to S&P Global Market Intelligence, more than A$500M in investments have been pledged by South Korean corporates to Australian mining projects in the past two years alone.
That is set to grow significantly after the two governments came together in Australia in late December to sign a Memorandum of Understanding (MoU) on “Cooperation in Critical Mineral Supply Chains”. Australia’s minister for resources and water, Keith Pitt, signed the agreement with South Korea’s minister for trade, industry and energy, Moon Sung-wook.
“The MOU will deliver on a shared ambition between our two countries to develop robust and commercially viable critical minerals supply chains,” Minister Pitt said.
“The Republic of Korea is one of our nation’s top trade and investment partners for resources and energy and this agreement will build on our existing links.
“It will foster Korean investment in Australian critical minerals projects and boost our exports, while the Republic of Korea will secure a reliable supply.
“Australia has rich deposits in critical minerals including rare earths, lithium, graphite, cobalt, and nickel, and we are developing our capability in downstream processing.
“We share the Republic of Korea’s ambitions to develop a fully integrated supply chain in critical minerals and look forward to increasing Korean involvement in the local sector,” he said.
The MOU builds on previous commitments outlined in a 2019 MoU between Australia and South Korea on Energy and Mineral Resources Cooperation.
Australian Prime Minister Scott Morrison also made an initial commitment of A$50M to the low and zero-emissions technology partnership In October 2021 in an agreement signed with President Moon during bilateral talks at the G20 summit in Rome. Together, the two governments aim to invest up to A$100M towards initiatives under the partnership.
Business deals
The coming together with the Australian government was not the only meeting South Korean representatives took while in Sydney in December. President Moon and his trade minister sat down with representatives of Cobalt Blue Holdings Ltd, Australian Strategic Materials (ASX: ASM), Queensland Pacific Metals Ltd, and several others. Multiple significant strategic deals have already been signed by South Korean companies and Australian critical minerals developers.
At the same time as South Korean representatives were in town in December, Australian Strategic Materials (ASM) signed a joint statement of cooperation with the Korean Mine Rehabilitation and Resource Corporation (KOMIR), the renamed Korean Resources Corporation (KORES), to enable the supply of critical minerals and metals into South Korea.
ASM managing director, David Woodall, said under the joint statement of Cooperation, ASM and KOMIR have agreed to work together to expand the use of rare earths and critical metals in South Korea and develop import opportunities that will secure the supply of these metals for South Korean industry.
“This builds on the cooperative and collaborative relationship between Korea and ASM, creating further opportunities to engage on the strategic issue of critical minerals and metal supply,” he said.
“This joint statement of cooperation is another firm sign of Korea’s commitment to securing its supply of critical metals and to working with ASM to deliver an outcome that is beneficial to the Korean supply chain.
“ASM welcomes this opportunity to work with KOMIR to provide an alternative, secure and sustainable supply of critical metals. ASM will commence production of critical metals at ASM’s Korean Metals Plant in 2022.”
KOMIR, CEO, Kyu-yearn Hwang, said that to improve the supply and demand of rare earths in South Korea, the South Korean government supports the operation of South Korean critical metals plants.
“Partnering with ASM will enable us to deliver on our strategy to ensure a stable, secure supply of critical minerals and metals for the South Korean industry.”
The key areas contemplated for cooperation under the joint statement of cooperation include:
- Importation of rare-earth products into South Korea, including for strategic stockpiling
- Supplying ASM with rare-earth products to enable South Korean domestic production of rare-earth magnet feed metal at ASM’s Korean Metals Plant
The latest deal with KOMIR follows similar agreements ASM reached last year. In August 2021, ASM signed a framework agreement with a consortium of South Korean investors. These include Cerritos Holdings Co., Ltd, Kamur Partners LLC and ACE Equity Partners LLC. The entities will invest US$250M for a 20% equity interest in ASM, subject to due diligence.
Mr Woodall said the investment is a sign of support for ASM’s “mine to metal” strategy for its Dubbo Project. ASM has also received a conditional letter of support from Export Finance Australia for A$200M in debt finance.
ASM plans to develop the Dubbo Project to become a global supplier of processed critical minerals. These include zirconium, niobium, tantalum, and yttrium. Minerals sourced at the Dubbo Project will feed into the metals plant ASM is building in Ochang, South Korea. The plant will produce neodymium-iron-boron alloy.
The investors will also form a separate fund to set up MagnetCo Fund, a magnet manufacturing business. MagnetCo will buy up to 2,800 tonnes per annum of the alloy under a ten year offtake agreement.
Lithium agreement
The latest South Korea-Australia deal came in late January 2022, when Vulcan Energy Resources Limited (ASX: VUL) signed a binding lithium hydroxide offtake agreement with South Korea’s LG Energy Solution (LGES) for the supply of battery grade lithium chemicals.
LGES is the second largest battery maker in the world with over 20% market share and supplies its products to leading global Original Equipment Manufacturers (OEMs). LGES is currently manufacturing lithium-ion batteries in Poland, US, China, and South Korea, and is looking at expanding its production capacity and is a leading battery supplier to European OEMs.
The agreement is for an initial five-year term, which can be extended by further five years, with a start of commercial delivery set for 2025. LGES will purchase between 41,000 to 50,000 metric tonnes of battery grade lithium chemicals over the duration of the agreement.
“Our initial partnership with LGES, the second largest battery producer in the world, was a significant first step in our strategy to engage with tier one battery, cathode, and automakers in the European market,” Vulcan’s managing director, Dr Francis Wedin, said.
“The completion of the binding lithium offtake agreement with LGES, in addition to our binding lithium offtake agreements with Volkswagen Group (ETR: VOW3), Stellantis (BIT: STLA), Renault Group (EPA: RNO), and Umicore (EBR: UMI), represents a globally unique achievement by the Vulcan Zero Carbon Lithium team.”
Dong Soo Kim, senior vice president of procurement department at LGES, said that by joining forces with Vulcan Energy, LGES aims to diversify supply chain and strengthen its competitiveness in the ESG sector.
“LGES promises to solidify and broaden its steady supply of raw materials in case of potential supply disruptions.”
