Korea to ease export reliance of key materials from China

Korea has selected 185 materials, including graphite and urea, to stabilize its supply chain by reducing reliance on specific countries such as China.

Industry Minister Bang Moon-kyu, second from left, speaks during a meeting on Korea's supply chain stabilization at Posco Future M's graphite production facility in Sejong on Wednesday. [NEWS1]

Korea has selected 185 materials, including graphite and urea, to stabilize its supply chain by reducing reliance on specific countries such as China.

The Ministry of Industry, Trade and Energy announced on Wednesday that it has identified 185 materials requiring stabilization in the supply chain through the diversification of import sources. The ministry aims to decrease dependence on particular countries, notably China, to less than 50 percent by 2030, down from last year's 70 percent. The initiative is dubbed the "3050 strategy."

Materials that fall under eight categories including anodes and cathodes, as well as permanent magnets which are crucial in manufacturing secondary batteries but rely heavily on China, will be "specially treated" by diversifying their supply sources.

For example, NCM (nickel cobalt manganese) precursor relied on 97 percent of its supply from China between January and October this year, according to the ministry.

In the case of urea for automobiles, which China abruptly halted exports on this year, Korea depends on 90.3 percent of its supply from China as well.

"The 3050 strategy signifies Korea's attempt to focus on 185 items to build a stabilized industrial supply chain," said Industry Minister Bang Moon-kyu on Wednesday during a meeting at Posco Future M's Sejong Plant. The Sejong Plant is Korea's only production facility for natural graphite for anodes. "The plan will be rolled out as scheduled so it can support innovation and growth across Korean industries."

Under the strategy, Korea will push to build material production facilities of its own. For example, it was considered more economical to import urea before the supply chain was recently disrupted. A research team will be formed to check on the viability of urea production in Korea.

The government will also back companies that have already started to secure a supply source of its own for materials like graphite and lithium hydroxide due to being affected by the U.S. implementation of the IRA (Inflation Reduction Act).

LG Chem, for example, is building an NCM precursor production facility in the Saemangeum Industrial Complex with an investment of 1.2 trillion won ($909 million). Korea will be able to produce some 332,000 tons of NCM precursor by 2028.

The Korean government plans to offer incentives and other financial support to companies that source certain materials from a third country. Accumulating core materials for any possible supply chain disruption in the future is another strategy set out by the government.

Materials across 35 categories will expand their inventory level to cover 100 days of supply.

Lithium, for example, is a crucial material in the secondary battery industry, but its stockpile was worth only six days of supply. The government will invest 200 billion won to expand its stockpile to reach 30 days of supply.

"An efficient supply chain is a top priority. It is time to establish a new strategy where we view risk as a constant variable," said an official from the Industry Ministry.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]