As China repeatedly uses rare earths as a political card, concerns are growing that Korea cannot be at ease. Fifteen years have passed since China first moved to weaponize rare earths in 2010, but Korea's dependence on Chinese rare earths has not decreased, prompting calls to review resource security measures.
According to major foreign media on the 10th, China has recently been delaying the rare earth export licensing process for Japanese corporations more than usual. Tensions between the two countries are cited as the backdrop after Sanae Takaichi, the Japanese prime minister, hinted that Japan could intervene militarily in the event of a Taiwan contingency.
The two countries also clashed over rare earths in 2010. The trigger was a sovereignty dispute between Japan and China over the Senkaku Islands (Diaoyu Islands in Chinese) in September of that year. At the time, Japan detained a Chinese captain on the grounds of violating its sovereignty. China retaliated by banning rare earth exports, and Japan released the Chinese captain.
In October of that year, when the U.S. Trade Representative (USTR) said it would investigate China's green industry subsidies, China also halted rare earth exports to the United States. As a result, rare earth prices in the international market soared by up to ninefold.
China has already made rare earths a strategic weapon against the United States this year. After the second U.S. administration of Donald Trump imposed high reciprocal tariff rates on China, China moved to retaliate in April by implementing export restrictions on seven types of rare earths and magnet products containing them.
President Trump immediately spoke by phone with Chinese President Xi Jinping, and the United States entered into a second round of high-level talks with China. Ultimately, in accordance with the summit agreement reached at Gimhae Airport on Oct. 30, China decided to postpone for one year, until Nov. 10 next year, its control measures on rare earths bound for the United States.
However, China's position could change at any time. This is the backdrop for President Trump seeking to diversify rare earth supply chains, including holding a summit with Australian Prime Minister Anthony Albanese in November and jointly signing the "U.S.-Australia framework for securing stable supply chains of critical minerals and rare earths."
China is also taking an adversarial stance with the European Union (EU). In the outbound export restrictions released on Oct. 9, China additionally included rare earths such as samarium and dysprosium on the export control list. It is tightening rare earth export controls by requiring export licenses from the Chinese government even for products manufactured overseas if they contain even 0.1% Chinese rare earths or used China's refining and processing technologies.
In response, French President Emmanuel Macron said, "If EU member states do not feel improvements in trade imbalances, we will have no choice but to consider new tariff measures on Chinese products," taking a hard line.
In 2010, when China is believed to have first used rare earths as a weapon and collided with Japan, voices in Korea also called for reducing dependence on China for rare earths. Rare earths are so essential to key industries that they are called the "vitamins of industry." China grips the global supply chain.
According to a report the International Energy Agency (IEA) released in October, China accounts for 59% of global rare earth mining. It holds 91% of the world's rare earth refining capacity. Its share of production of permanent magnets containing neodymium and dysprosium—two of the 17 rare earths—reaches 94%. Permanent magnets are up to 15 times stronger in magnetic force than iron magnets of the same weight. They go into electric vehicle motors, wind turbine generators, robots and drones.
Since 2010, Japan has established four strategies to secure rare earths—obtaining mining rights overseas, promoting recycling, developing substitutes and building national stockpiles—to reduce dependence on China. First, Japan, led by the Japan Organization for Metals and Energy Security (JOGMEC), actively invested in overseas rare earth development.
The Japan Organization for Metals and Energy Security invested 200 million Australian dollars in February 2023 in Australia's Lynas, the world's No. 2 rare earth producer with rare earth mines, and signed a rare earth supply contract. In March, it invested 100 million euros in Carester in France to secure rare earths essential for high-performance magnets.
In addition, Japan's industry, under government leadership, set out to develop technologies to reduce or replace rare earth usage. Toyota Motor developed a new magnet that uses only half the neodymium essential for electric vehicle motors. Shin-Etsu Chemical succeeded in developing a technology that cuts the use of China-made rare earths in high-performance magnets to one-third of the previous level.
As a result, Japan's dependence on Chinese rare earths has fallen, by industry estimates, from more than 90% in 2010—when it was engaged in a rare earth war with China—to the 60%–70% range today.
By contrast, as of 2024, Korea's dependence on imports of Chinese rare earths is 79.8%, higher than Japan's. For permanent magnets alone, Chinese products account for 90%. The government in 2023 set out a critical minerals securing strategy to diversify suppliers, develop overseas mineral resources and expand stockpiles. However, aside from the goal of stockpiling more than 180 days' worth of items highly dependent on specific countries, it has not achieved notable results.
In particular, government-led overseas mineral development has not taken place. This is the fallout from Korea Resources Corporation (KORES), which sought resource acquisition at the national level under the Lee Myung-bak administration, falling into capital erosion after directly investing in resource development. KORES was later merged with the Mine Reclamation Corporation (MIRECO), which had stronger fiscal soundness.
Kim Jin-su, a professor in the Department of Resources and Environmental Engineering at Hanyang University, said, "Aside from policies to stockpile critical minerals such as rare earths, there is little financial support," adding, "Because Chinese rare earths and related products are cheap, the economic incentive to seek alternatives is weak." He added, "Like Japan, regardless of changes in administrations, policies related to securing resources should move forward so that corporations have incentives to diversify mineral supply chains."