Overcoming Scarcity, South Korea Builds Lithium Reserves To Secure Electric Vehicle Battery Supply

JAKARTA – Lithium plays a crucial role in the electric car battery and manufacturing industry. The importance of the lithium function is well realized by South Korea, which has succeeded in building a reputation as a country that produces electric vehicles and global battery manufacturers.

South Korea has now started the construction of national lithium reserves to secure the supply of these important minerals.

According to an anonymous source familiar with the matter, reported by Bloomberg, quoted on May 28, the country has purchased a number of lithium carbonate, processed form of battery material used in electric vehicles (EVs), from Chile this year through the state-owned enterprise, Korea Mine Rehabilitation and Mineral Resources Corp. (COMIR).

Another source with knowledge related to this problem said the government allocated 233.1 billion won (approximately IDR 2.7 trillion) funds to secure important minerals for the development of state-of-the-art technology. Most of the funds are planned to be used to build lithium reserves for electric car batteries, as an effort to overcome potential scarcity amid increasing geopolitical tensions.

This budget, which jumped 526 percent from last year, is expected to be used throughout 2024. KOMIR itself declined to comment when contacted by telephone.

South Korea’s stockpiling strategy was carried out at a time when lithium prices still do not show signs of recovering from a sharp decline last year. Authorities are also trying to ensure domestic companies can maintain competitiveness in the United States by meeting the requirements of the Inflation Reduction Act.

It is known that the law passed by President Joe Biden in 2022 aims to reduce dependence on China, a country that still dominates processing of essential battery materials including lithium.

The price of lithium soared to its highest level by the end of 2022. This was driven by global demand for an increasingly high electric transportation fleet, while the supply of these minerals struggled to keep up with the surge in demand. Car and battery manufacturers are also competing to secure supply or expansion deals to lock down the availability of lithium.

However, since then, demand for electric vehicles has been weaker than expected. Battery manufacturers such as LG Energy Solution Ltd. and Samsung SDI Co. reported a decline in profit last year. Meanwhile, a large wave of new lithium supplies also suppressed prices – which fell more than 80 percent in 2023 and has not shown significant recovery this year.

South Korea’s Ministry of Trade last March announced plans to invest 241.7 billion won over the next three years to build important mineral storage warehouses, including lithium, lithum, and rare earth metals.

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