As global trade tensions continue to rise, China’s latest move to control the export of rare metals has put industries worldwide on high alert. However, South Korea’s Korea Zinc is proving to be a strong buffer against potential disruptions by maintaining a steady domestic supply of key rare metals.
China’s Rare Metal Export Controls: What’s Changing?
On February 4th, China’s Ministry of Commerce implemented export controls on five crucial rare metals: tungsten, molybdenum, indium, bismuth, and tellurium. Rather than enforcing a complete export ban, China introduced an export permit system with a statutory review period of 45 days. These metals are vital for manufacturing semiconductors, display technologies, and other high-tech applications, leading to concerns over supply chain disruptions.
How Is South Korea Responding?
In response to China’s export controls, South Korea’s Ministry of Trade, Industry, and Energy held an emergency supply chain inspection meeting. Their assessment concluded that while supply risks exist, the impact on the domestic industry would be limited due to Korea Zinc’s local production capabilities and alternative import sources.
Korea Zinc’s Crucial Role in Rare Metal Supply
Korea Zinc plays a pivotal role in mitigating supply risks by producing significant amounts of indium, bismuth, and tellurium domestically:
- Indium: Korea Zinc produces 150 tons annually, making up 11% of the global supply (1,400 tons). Indium is essential for transparent electrodes in electronic devices due to its high conductivity and transparency.
- Tellurium: With an annual production of 120 to 170 tons, Korea Zinc helps meet domestic demand for this metal, which is widely used in solar cells, thermoelectric materials, capacitors, and automobile parts.
- Bismuth: Korea Zinc supplies around 900 tons of bismuth per year, primarily used in lead-free brass production and the defense industry.
Lessons from the Past: Korea Zinc’s Response to Antimony Export Controls
China previously restricted antimony exports in September, raising concerns about supply shortages. However, Korea Zinc, which produces around 2,000 tons of antimony annually, was able to meet about half of South Korea’s domestic demand (4,000 tons). Antimony is a key raw material for flame retardants and catalysts in textiles, plastics, and electronic devices.
Economic Implications: Rising Prices and Increased Revenue
As China tightens its grip on rare metal exports, prices have surged, benefiting Korea Zinc’s financial performance. In 2023:
- Antimony sales revenue soared by 170.5% compared to initial forecasts.
- Indium and bismuth revenues exceeded projections by 161.5% and 151.1%, respectively.
- Korea Zinc reported total revenue of 12.82 trillion won, marking a 24.5% increase from the previous year, with an operating profit of 736 billion won (+11.5%).
Looking Ahead: A Secure Supply Chain for South Korea
While China’s export restrictions pose challenges for global industries, South Korea is well-positioned to navigate these disruptions thanks to Korea Zinc’s strategic production of key rare metals. By strengthening domestic supply capabilities and diversifying import sources, the country can reduce dependency on external suppliers and maintain stability in its high-tech industries.
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