Korea Zinc will begin producing gallium, a Chinese export-controlled item. Gallium is a key raw material for semiconductors, and China completely dominates the global market. The investment decision is expected to help strengthen Korea's resource security and stabilize global supply chains.
On the 19th, Korea Zinc said it decided to invest about 55.7 billion won over a little more than two years through Dec. 2027 to add a gallium recovery process at its Onsan smelter in Ulsan. After pilot operations in the first half of 2028, the company aims to begin full commercial operation and produce about 15.5 tons (t) of gallium annually.
Korea Zinc expects to generate about 11 billion won in annual revenue through this. The company said, "Recently, with our in-house research institute and core engineers at the center, we succeeded in commercializing and optimizing advanced gallium recovery technology, allowing us to reduce plant construction expense and secure sufficient profitability."
Gallium is used as a raw material for advanced industries, including semiconductors, solar panels, lasers, night-vision goggles, light-emitting diodes (LEDs), and high-speed integrated circuits. Korea, through the Special Act on Resource Security, has designated gallium as one of 33 critical minerals and is managing it with special oversight. The United States has also placed gallium on the list of critical minerals under the Energy Act and is strictly controlling it for national security.
But gallium production is firmly in China's grip. Last year, 98.7% of the world's output (762 t) came from China. As it engaged in a semiconductor war with the United States, China began controlling exports of gallium and germanium in Aug. 2023, and when the United States tightened semiconductor restrictions on China, China struck back by banning gallium exports to the United States in Dec. last year.
This has tightened the gallium supply chain, and prices continue to rise. As of June 30, 2023, just before China's gallium export controls, the London Metal Exchange price for gallium was $257.50 per kilogram (about 370,000 won), but on the 17th it traded at $1,112.50 (about 1.59 million won), more than four times higher.
With securing gallium the top priority for advanced industries such as semiconductors, Korea Zinc's gallium production is expected to emerge as a key card to reduce dependence on China.
As it begins gallium production, Korea Zinc also expects additional income. That is because more than 16 t of indium, another strategic mineral, can be secured annually as a byproduct of the gallium production process. Indium is a rare metal used in major advanced industries such as semiconductors and renewable energy, and most of it is likewise dependent on China. Amid the supply chain crisis, prices have roughly doubled over the past five years.
As of last year, Korea Zinc produced about 150 t of indium annually, accounting for roughly 11% of global indium demand. That is the second-largest volume after China.
A Korea Zinc official said, "With China's export controls, global supply chain instability, and intense competition among countries to secure strategic minerals to strengthen advanced industry competitiveness, the importance of strategic minerals has further increased for the economy and security," adding, "As Korea's only strategic mineral hub, Korea Zinc will enhance technological self-reliance and contribute to supply chain stability through investment and efforts to improve technology in this field."