Fortune Minerals : COBALT NEWS

The Korea Herald - April 19, 2021

Why Korea's EV battery ambition is vulnerable to supply chain disruptions in key metals

dramas. A cobalt war scenario Much of the world's supply of cobalt comes from the politically unstable Democratic Republic of Congo, and

Cobalt, a key component in lithium-ion batteries, offers one way to understand the vulnerability of South Korea's global battery expansion. It is often described by officials here with the term K-battery, in the hopes that it would follow the success of Korea's more globally popular products like K-pop and K-dramas…In 2019, more than 70 percent of the 140,000 metric tons of the metal mined globally came from the DRC, and eight of the 14 largest cobalt miners in the country were Chinese-owned, accounting for almost half of the country's output…This control of Congolese cobalt has allowed China to consistently control over 60 percent of global cobalt supply. Most importantly, it's China that refines 80 percent of the world's mined cobalt,according to OECD's 2019 report…For South Korea, the situation is worrisome, as China can use the supply shortage and potentially prioritize the supply of cobalt to Chinese battery firms such CATL and BYD. The strategy could limit the growth of LG Energy Solution, Samsung SDI and SK Innovation, the top three Korean battery firms who together controlled 34.7 percent of the global electric vehicle battery market last year…Experts agree that China could use its cobalt access as a weapon against Korea if things turn bad, just like it did to Japan with rare earth metals in 2010…'If Korea shows any signs of siding with the United States (in the ongoing US-China trade war), then China could tighten its grip on the cobalt supply as a diplomatic card.'..Han said China has a track record of punishing Korea's battery industry over diplomatic issues. In 2016, when Korea decided to deploy a US-led missile defense system called THAAD on the Korean Peninsula, China, viewing it as a threat to the mainland, responded in economic retaliation against Korea…Chinese authorities halted subsidies to EVs loaded with Korean-made batteries, while Chinese automakers terminated supply contracts with Korean battery firms and switched to local suppliers. Overnight, Korea battery firms lost the entire Chinese EV market, the biggest one in the world…Korea falling behind in metals 'arms race'…China's cobalt monopoly is the result of decades of state-led investment and diplomacy, but South Korea, despite being poor in natural resources, has been sitting on its hands, experts point out. The situation is not very different with other essential raw materials…Starting 2000, Beijing encouraged overseas foreign investment in developing countries, especially natural resources such as minerals. Then in 2013, as part of 'Belt and Road' initiative, Beijing started injecting trillions of dollars into building channels between China and Africa and Europe. China won mining rights in cobalt mines in the DRC in exchange for rolling out infrastructure such as roads, highways and hospitals…In January, China announced that it would write off $28 million in debt to the DRC, repayment of which were due by the end of 2020, and even provide $17 million in the name of financial support to help the DRC overcome the COVID-19 crisis…In contrast to China's all-out efforts, Korea's influence in Africa is almost non-existent…South Korea's lack of interest in the global race to secure key metals, minerals and other resources stemmed from a policy debacle during the 2008-2013 Lee Myung-bak administration…During his five years in office, Lee poured in a total of 31 trillion won into overseas resources development projects. The state-run Korea Resources Corp. was his key vehicle for that. The effort, however, received a harsh public criticism and was a breeding ground for corruption and irregularities. Many of the projects have also failed and the Korea Resources Corp.'s debt stood at 6.65 trillion won as of last year…Now, the state-run agency only takes supportive roles and has recently liquidated its 30 percent stake in a copper mine in Chile at $154 million, failing to recoup an initial investment of $250 million made 10 years ago. The government has put Korea Resources Corp.'s other assets up for sale -- a copper mine in Mexico, nickel and cobalt mines in Madagascar and a soft coal mine in Australia…China's grip on cobalt is not a risk confined to Korean battery firms. It is a risk shared by all players in the battery and EV fields…Of 7.4 million tons of cobalt that is economically exploitable worldwide, 48 percent is located in the DRC. The 7.4 million tons of cobalt are enough to meet an annual demand of 300,000 tons until 2042, according to Energy Brainpool…Extensive research is already underway to develop batteries without cobalt…Typically, eliminating cobalt shortens lithium-ion batteries' lifespan and slows down charging time…For the time being, the battery industry is focusing on battery recycling technologies.