Prices for key minerals such as lithium and copper are rising, yet investment in new mines and processing facilities is declining. Increased price volatility and geopolitical uncertainties have made private companies hesitant to engage in long-term capital-intensive projects.
South Korea, which heavily relies on imports for key minerals, is urged to use policy finance to effectively lower investment risks for the private sector and support the establishment of alternative supply chains.
According to the International Energy Agency's (IEA) 'Global Key Minerals Outlook 2026' released on July 28, key mineral prices have begun to rise since last year due to tightening supply conditions. Export restrictions from major producing countries have further exacerbated price increases.
Specifically, prices for non-ferrous metals like aluminum, copper, and tin have surged approximately 33% from January 2022 to April 2023. Prices for battery materials, which had been weak in 2023-2024, have also rebounded. Lithium prices have more than doubled due to increased demand for energy storage systems (ESS) and supply constraints, while cobalt prices have risen by about 130% due to export restrictions from the Democratic Republic of the Congo.
In contrast, global investment in key minerals fell by 9% last year, breaking a multi-year trend of growth. The IEA attributes this decline to the burdens of price volatility and geopolitical tensions on investment.
Key mineral projects require extensive time and significant capital from exploration to production. If mineral prices plummet during the project timeline, economic viability diminishes, and if resource-rich countries control exports or production, recovering investments becomes challenging. Private companies often find it difficult to bear such risks alone, leading to delays or cancellations of new projects.
Meanwhile, the refining supply of key minerals is increasingly concentrated in a few countries. The IEA reports that over 75% of the expected increase in refining supply for major energy minerals from 2023 to 2025 will come from Indonesia and China, with Indonesia leading in nickel and China dominating most other key minerals.
The issue is that South Korea's heavy reliance on imports for key minerals makes it more vulnerable to this concentration of supply. According to the Korea Energy Economics Institute, as of 2024, 30 out of 33 key minerals designated by the government will have a 100% import dependency. Additionally, 17 of these minerals are sourced from countries that account for over 50% of imports. If global investment continues to shrink, the development of new mines and alternative supply sources will be delayed, making it difficult to address the concentration of supply from specific countries.
In response, the government plans to leverage policy finance to attract private investment. The Ministry of Trade, Industry and Energy and the Financial Services Commission held a meeting on July 23 to discuss support measures using the National Growth Fund. The support will cover the entire supply chain, from securing overseas resources to domestic refining, material processing, and recycling.
However, the key challenge is whether companies can secure the necessary funds in a timely manner when they need to invest. Given the significant price volatility and political risks associated with overseas mining development and equity acquisitions, relying solely on conventional loans and guarantees may not be sufficient to encourage private participation. There are calls for a clearer delineation of risk-sharing mechanisms between the government and the private sector, as well as a focus on the types and scale of investments.
Professor Kang Cheon-gu from Inha University’s Graduate School of Manufacturing Innovation stated, "While the government has established support measures and a roadmap, it is not easy for companies to utilize these when investing in overseas mines or refining facilities. Priority should be given to policy finance and resource diplomacy necessary for securing resources over research and development, and proactive support should be provided at the time companies need it most."
* This article has been translated by AI.
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