Seoul Moves to Secure Rare Earth Supply Chains, Eyes Deeper Cooperation with Beijing
SEOUL, Feb. 5 — In a strategic push to fortify its industrial backbone, the South Korean government announced plans on Thursday to deepen cooperation with China on securing stable supplies of rare earth minerals, a move critical for its world-leading semiconductor, electric vehicle, and battery sectors. The initiative forms the core of a newly unveiled national strategy aimed at building resilient supply chains less vulnerable to geopolitical shocks.
The Ministry of Trade, Industry and Energy laid out a multi-pronged plan that includes establishing a direct government-to-government hotline and a joint consultative body with Beijing. The goal is to create institutional channels to preempt and manage potential supply disruptions. "Our advanced industries have outpaced our natural resource base," Industry Minister Kim Jung-kwan stated during a visit to a rare earth magnet plant in Daegu. "National competitiveness is now inextricably linked to resource security. We are mobilizing all policy tools to construct an industrial structure that can withstand external volatility."
The announcement underscores a delicate balancing act. China controls a dominant share of global rare earth processing—a group of 17 metals indispensable for permanent magnets, motors, and advanced electronics. This reliance leaves major manufacturing economies exposed. While seeking closer ties with Beijing, Seoul's plan also explicitly aims to reduce long-term dependency. All 17 rare earths will be classified as core strategic minerals, with new customs codes to enhance tracking and forecasting.
Parallel domestic measures include boosting local production and recycling through regulatory reforms and subsidies, alongside the creation of a dedicated R&D fund. For overseas diversification, the government is significantly ramping up support, increasing policy loans for resource development projects abroad to $46.2 million this year and raising state financing coverage. Partnerships with resource-rich nations like Vietnam and Laos are also being actively pursued.
The timing of Seoul's strategy is notable. It follows closely on South Korea's appointment to chair the U.S.-led Forum on Resource Geostrategic Engagement (FORGE), a coalition focused on building allied supply chains for critical minerals. Analysts see the dual-track approach—engaging China while aligning with Western-led initiatives—as a pragmatic reflection of South Korea's complex economic diplomacy.
Voices from the Industry:
"This is a necessary, if overdue, step," says Dr. Lee Min-woo, a supply chain analyst at the Korea Institute for Industrial Economics. "The pandemic and trade tensions were a wake-up call. Formalizing channels with China is smart risk management, but the real test is whether the diversification efforts gain tangible traction."
"Throwing money at overseas projects and hoping for the best isn't a strategy—it's desperation," counters Park Ji-hoon, a former executive at a major battery firm and now a vocal critic. "We're doubling down on the very dependency we claim to reduce. This 'hotline' will be silent the moment Beijing decides to turn off the tap. It's a band-aid on a structural fracture."
"From our workshop floor, consistency is key," shares Kim Soo-jin, a production manager at a mid-sized automotive parts supplier. "Price and supply volatility disrupt our entire production planning. If this brings more predictability, even incrementally, it will help us invest and hire with more confidence."