TL/DR –
Korean companies are investing in strategic minerals to secure future growth drivers despite a global economic slowdown and declining profitability. POSCO Holdings signed an investment agreement worth approximately $765 million with Mineral Resources, an Australian mining and services company, while Korea Zinc is increasing its presence in the competition for strategic minerals through subsidiaries KEMCO and Korea Precious Metals Corporation. LG Energy Solution, Samsung SDI, and SK On are also prioritizing the stabilization of their mineral supply chains by expanding long-term supply contracts for key raw materials such as lithium, nickel, and cobalt.
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Domestic Industries in South Korea Amplify Investments in Strategic Minerals
Despite global economic uncertainties and declining profitability, South Korean industries are boosting their investments in strategic minerals. The ongoing supply chain rivalry between the United States and China has heightened the significance of these minerals for future business competitiveness.
Investment in Minerals Despite Market Conditions
On May 30, industry sources reported that companies involved in secondary battery materials and manufacturing continue to put money into minerals. This is seen as a preparation for future growth drivers, despite facing increased investment costs due to unideal market conditions.
Leading the charge is the POSCO Group. Last month, POSCO Holdings inked an investment deal worth roughly $765 million with Mineral Resources, a local mining and services company based in Perth, Australia. This massive investment was made less than a month after the firm secured a large-scale lithium brine resource in Argentina. Despite a slump in electric vehicle demand and falling lithium prices, analysts interpret this as a preemptive investment banking on long-term growth potential.
Increased Presence in Strategic Mineral Competition
Korea Zinc is another company that is significantly expanding its role in the strategic minerals race. Through its subsidiaries KEMCO and Korea Precious Metals Corporation (KPC), Korea Zinc has built a supply chain ranging from nickel sulfate to precursors. Moreover, it is pushing for a project named Crucible, which aims to construct an integrated smelter in Tennessee, USA. Recent news suggests that the Australian government has proposed the creation of an integrated smelting system covering not just zinc but also lead and copper, based on Korea Zinc’s local subsidiary SMC.
The three major domestic battery manufacturers—LG Energy Solution, Samsung SDI, and SK On—are emphasizing the stabilization of their mineral supply chains. They are increasing long-term supply contracts for essential raw materials such as lithium, nickel, and cobalt. They are also boosting their ability to secure raw materials through equity investments in mines and joint ventures. In the wake of the U.S. Inflation Reduction Act (IRA), they are hastening the creation of supply chains centered on allied countries like North America and Australia.
Strengthening Supply Chain Competitiveness in Europe
EcoPro, a materials specialist, is enhancing its supply chain competitiveness in the European market. The company established a cathode material factory in Debrecen, Hungary last November and is set to commence mass production in the first half of this year. This makes EcoPro the first domestic battery materials company to set up a local production base in Europe.
These initiatives by companies to invest in strategic minerals are crucial for capturing future growth opportunities. The demand for key minerals such as lithium, nickel, and copper is predicted to rise steadily due to the growth of new industries like AI data centers, power grids, and energy storage systems (ESS).
A person in the industry pointed out, “Mineral projects typically take years from investment to production, making it difficult to approach them based solely on short-term market conditions. The mines and smelting capabilities secured now will directly impact future supply chain competitiveness, so companies are focusing more on long-term growth than short-term market conditions.”
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