Kicking the China habit: South Korea hunts tungsten treasure

SANGDONG, South Korea, May 9 (Reuters) – Blue tungsten winking from the walls of abandoned mine shafts, in a town that’s seen better days, could be a catalyst for South Korea’s bid to break China’s dominance of critical minerals and stake its claim to the raw materials of the future.

The mine in Sangdong, 180 km southeast of Seoul, is being brought back from the dead to extract the rare metal that’s found fresh value in the digital age in technologies ranging from phones and chips to electric vehicles and missiles.

“Why reopen it now after 30 years? Because it means sovereignty over natural resources,” said Lee Dong-seob, vice president of mine owner Almonty Korea Tungsten Corp.

“Resources have become weapons and strategic assets.”

Sangdong is one of at least 30 critical mineral mines or processing plants globally that have been launched or reopened outside China over the last four years, according to a Reuters review of projects announced by governments and companies. These include projects developing lithium in Australia, rare earths in the United States and tungsten in Britain.

The scale of the plans illustrates the pressure felt by countries across the world to secure supplies of critical minerals regarded as essential for the green energy transition, from lithium in EV batteries to magnesium in laptops and neodymium found in wind turbines.

Overall demand for such rare minerals is expected to increase four-fold by 2040, the International Energy Agency said last year. For those used in electric vehicles and battery storage, demand is projected to grow 30-fold, it added.

Many countries view their minerals drive as a matter of national security because China controls the mining, processing or refining of many of these resources.

The Asian powerhouse is the largest supplier of critical minerals to the United States and Europe, according to a study by the China Geological Survey in 2019. Of the 35 minerals the United States has classified as critical, China is the largest supplier of 13, including rare earth elements essential for clean-energy technologies, the study found. China is the largest source of 21 key minerals for the European Union, such as antimony used in batteries, it said.

“In the critical raw material restaurant, China is sitting eating its dessert, and the rest of the world is in the taxi reading the menu,” said Julian Kettle, senior vice president for metals and mining at consultancy Wood MacKenzie.

The stakes are particularly high for South Korea, home of major chipmakers like Samsung Electronics. The country is the world’s largest consumer of tungsten per capita and relies on China for 95% of its imports of the metal, which is prized for its unrivalled strength and its resistance to heat.

China controls over 80% of global tungsten supplies, according to CRU Group, London-based commodity analysts.

The mine at Sangdong, a once bustling town of 30,000 residents that’s now home to just 1,000, holds one of the world’s largest tungsten deposits and could produce 10% of global supply when it opens next year, according to its owner.

Lewis Black, CEO of Almonty Korea’s Canadian-based parent Almonty Industries, told Reuters that it planned to offer about half of the operation’s processed output to the domestic market in South Korea as an alternative to Chinese supply.

“It’s easy to buy from China and China is the largest trading partner of South Korea but they know they’re over-dependent,” Black said. “You have to have a plan B right now.”

Sangdong’s tungsten, discovered in 1916 during the Japanese colonial era, was once a backbone of the South Korean economy, accounting for 70% of the country’s export earnings in the 1960s when it was largely used in metal-cutting tools.

The mine was closed in 1994 due to cheaper supply of the mineral from China, which made it commercially unviable, but now Almonty is betting that demand, and prices will continue to rise driven by the digital and green revolutions as well as a growing desire by countries to diversify their supply sources.

European prices of 88.5% minimum paratungstate – the key raw material ingredient in tungsten products – are trading around $346 per tonne, up more than 25% from a year ago and close to their highest levels in five years, according to pricing agency Asian Metal.

The Sangdong mine is being modernised, with vast tunnels being dug underground, while work has also started on a tungsten crushing and grinding plant.

“We should keep running this kind of mine so that new technologies can be handed over to the next generations,” said Kang Dong-hoon, a manager in Sangdong, where a “Pride of Korea” sign is displayed on a wall of the mine office.

“We have been…