It was confirmed on the 25th that the government has decided to exempt the 3%–8% tariff that had been imposed when domestic corporations directly produce and bring in core minerals such as lithium, graphite, and rare earths from overseas. The government expects this to help ease concerns about supply chain shocks stemming from the Middle East situation.
The Ministry of Trade, Industry and Resources recently issued an advance notice of legislation for the enactment of the Notice on confirmation of eligibility for tariff exemption for overseas-developed resources. The notice states that if overseas resource development operators secure a total of 14 core minerals—lithium, graphite, nickel, cobalt, manganese, copper, and zinc, plus rare earths such as lanthanum, cerium, neodymium, terbium, dysprosium, yttrium, and scandium—and bring them into the country, the tariff will be exempted. The notice takes effect on Apr. 3.
The minerals for which the import tariff is exempt are key materials for advanced industries such as electric-vehicle batteries, semiconductors, and defense, and have a high import dependence. According to a report recently published by the National Assembly Futures Institutee titled "Evaluation of resource security policies for core minerals and future strategies," 97% of the graphite and more than 90% of the rare earths used by domestic corporations are from China. More than 90% of neodymium, dysprosium, and terbium are also imported from China. The current tariff rates are 3% for lithium and graphite, around 5% for mineral products, and 8% for rare earths.
This notice is a follow-up measure to the amendment to the Customs Act that passed the National Assembly in Dec. last year. The amendment was proposed by Rep. Lee Yeon-hee of the Democratic Party of Korea with the aim of reducing the burden on corporations that import core minerals. Under the amendment, a basis was established for tariff exemptions on core minerals, and the government specified the tax-exempt minerals in this notice.
The government believes the notice will help mitigate concerns about supply chain shocks caused by the Middle East situation. If the situation in the Middle East drags on, demand for rare earths—essential for producing advanced weapons such as missiles and precision-guided munitions—could increase, leading to shortages in the supply of core minerals and higher prices.