As the United States imposed a 10% tariff on Chinese products, China retaliated by controlling the export of rare metals. The government is closely monitoring how China's export control of rare metals will affect the domestic industry. However, since some rare metals are produced domestically by Korea Zinc, it is believed that there will be limited impact.
On the 4th, China's Ministry of Commerce designated five items—tungsten, molybdenum, indium, bismuth, and tellurium—as export control items. Instead of an outright ban, the ministry added export permit procedures (with a statutory deadline of 45 days) to control supply and demand.
As China controlled the export of rare metals, the Ministry of Trade, Industry and Energy held a supply chain inspection meeting to assess the potential impact of export controls on the domestic industry. Rare metals are mainly used in alloys and compounds for semiconductors and displays, so a supply disruption could significantly impact related industries.
The Ministry determined that among the five export-controlled items, indium, bismuth, and tellurium could be supplied through domestic production and alternative imports, concluding that the impact of export controls would be limited. Korea Zinc produces 11% (150 tons) of the global annual indium demand of about 1,400 tons at a purity of 99.999%. Indium is used for transparent electrodes and other electronic products due to its transparency and high electrical conductivity.
Korea Zinc produces 120 to 170 tons of tellurium annually. Approximately 1 kg of tellurium can be extracted from 1,000 tons of copper ore. Tellurium is used in the manufacturing of solar cells, thermoelectric materials, capacitors, automobile parts, and DVD RAMs. Korea Zinc also produces about 900 tons of bismuth each year, supplying it to the domestic defense industry and other strategic industries. Bismuth is the main raw material for lead-free brass.
When China controlled the export of the rare metal antimony last September, Korea Zinc, which produces antimony, met domestic demand. The annual domestic demand for antimony is about 4,000 tons, and Korea Zinc accounts for about half of this. Antimony is used as a raw material for antimony trioxide, the main component of flame retardants and catalysts, enhancing fire resistance in textiles, plastics, and electronic devices.
As China weaponized the rare metal and prices rose, the sales revenue of rare metals produced by Korea Zinc significantly increased last year. The antimony sales revenue was 170.5% more than the initial business plan, while the sales revenues for indium and bismuth were also 161.5% and 151.1% more than planned, respectively. Korea Zinc's revenue last year was 12.82 trillion won, and its operating profit was 736 billion won, marking increases of 24.5% and 11.5%, respectively, from the previous year.