U.S. President Donald Trump is demanding revenue from natural resource development, including minerals, in exchange for military and economic support to Ukraine against the Russian invasion. The domestic industrial sector has imported a significant amount of rare gases, essential raw materials for semiconductor production, from Ukraine. While domestic corporations have begun efforts to localize high-purity rare gases for supply chain stability and diversification, it seems it will take more time to achieve full self-reliance. However, the summit meeting held on the 28th of last month between President Trump and Ukrainian President Volodymyr Zelenskyy ended without any results after heated discussions, raising the possibility that talks of a ceasefire may be shelved.
According to reports from major foreign media outlets including the New York Times on the 4th, the U.S. and Ukraine had agreed to contribute 50% of the revenue generated from the mining of state-owned natural resources, including minerals, hydrocarbons, oil, natural gas, and other extractable resources, as well as from liquefied natural gas (LNG) and related infrastructure to a reconstruction investment fund.
Some media outlets reported that the scale of funds that Ukraine needs to pay is $500 billion (approximately 730 trillion won). The key point is that the U.S. will have control over Ukraine's natural resources and the fund based on them. President Zelenskyy was originally scheduled to visit the U.S. on the 28th of last month to sign an agreement for the reconstruction investment fund during a summit with President Trump.
Until the outbreak of the Ukraine war in 2022, South Korea imported about 20-30% of its neon (Ne), xenon (Xe), and krypton (Kr) gases, which are essential for semiconductor production, from Ukraine. In 2021, 23% of the neon gas imports were sourced from Ukraine, while krypton and xenon gas accounted for 30% and 18% of total imports, respectively. After imports of rare gases from Ukraine were halted, domestic semiconductor corporations replaced them with rare gases from China but faced supply instability.
There are projections that the Trump administration will also influence the development and export of rare gases from Ukraine, in addition to focusing on strategic key minerals such as rare earth metals. The U.S. has imported 90% of its high-purity neon gas for semiconductors from Ukraine. With the U.S. striving to secure semiconductor supremacy while countering China, there are observations that it may have significant leverage over the supply chains of semiconductor minerals and rare gases. Some speculate that the U.S. may put pressure on allied countries to avoid using Chinese minerals.
The domestic industrial sector and government are promoting the localization of high-purity rare gases, which are largely dependent on imports. The Ministry of Trade, Industry and Energy included semiconductor rare gases in the eight major supply chain leading projects in 2023. Given the high dependency on overseas sources and the vulnerability of the supply chain, the aim is to achieve supply chain stability through localization. For neon gas, the target for complete self-sufficiency is set for 2028.
POSCO Holdings, the holding company of the POSCO Group, has started construction of a high-purity (99.999%) rare gas production plant in Gwangyang, Jeollanam-do, in partnership with China's Jintaike Cryogenic Technology. The construction is currently underway, with a goal for completion by the end of this year.
Currently, POSCO, the steel business unit of the POSCO Group, is producing crude rare gases (neon, xenon, and krypton gases with a purity of 41% or lower) at the oxygen plant in Gwangyang Steelworks and supplying them to TEMC, a special gas material company for semiconductors and displays. Since rare gases exist in extremely small quantities in the air, large air separation equipment at the steelworks is required for production. TEMC is purifying the crude rare gas supplied by POSCO in self-developed production facilities to produce high-purity rare gases.
POSCO Group plans to sell high-purity rare gases directly refined from crude rare gases through POSCO Jintai Air Solutions to domestic and international semiconductor corporations such as Samsung Electronics and SK hynix. POSCO Group is expected to have production capacity equivalent to half of the domestic semiconductor market's demand for rare gases.