South Korea has begun building lithium stockpiles to secure supplies of the key mineral, which is crucial to its battery and car industries.
The nation has already bought some lithium carbonate, an improved form of battery material used in electric vehicles, from Chile this year through the state-controlled Korea Mine Rehabilitation and Mineral Resources Corp. (KOMIR), said two people familiar with the matter who are not authorized to speak publicly.
According to another person with knowledge of the matter, the government has currently allocated 233.1 billion won ($171 million) to secure minerals key to the development of cutting-edge technologies in the country. It plans to spend most of that amount on stockpiling lithium for electric car batteries to counter potential shortages amid heightened geopolitical tensions, the person added.
According to this person, the budget, which represents an raise of 526% compared to last year, is to be used in 2024.
KOMIR declined to comment when reached by phone.
South Korea’s stockpiling strategy comes as lithium prices have struggled to recover from a pointed decline last year. The authorities also want to ensure that domestic companies can remain competitive in the US by meeting the requirements of the Inflation Reduction Act.
The legislation signed by President Joe Biden and passed in 2022 aims to reduce dependence on China, which still dominates the processing of key battery materials, including lithium.
Lithium prices hit record highs in slow 2022 as the global push for electrified transport fleets boosted consumption and supplies struggled to keep pace. Car and battery makers have scrambled to secure sales or expansion contracts to block lithium.
Since then, growth in demand for electric vehicles has been weaker than expected, and battery makers including LG Energy Solution Ltd. and Samsung SDI Co. reported lower profits last year. Meanwhile, the massive wave of recent lithium supplies has also weighed on prices – which have fallen by more than 80% in 2023 and have yet to see a significant recovery this year.
South Korea’s commerce ministry in March unveiled a plan to invest 241.7 billion won over the next three years to build warehouses to store key minerals including lithium, gallium and uncommon earth elements.
