Engaging Korea in Critical Minerals Cooperation with the Quad
By Dr Jeffrey Wilson
The following article is based on a presentation given by Research Director Jeffrey Wilson at an event facilitated by the German Marshall Fund of the United States on 3 February 2022.
A comprehensive article is available via the GMF website.
Critical minerals make up a group of around 30 commodities, which are essential components in high-technology products like renewable energy, electric vehicles and grid-scale battery storage.
Demand for critical minerals will soon soar as the world transitions towards decarbonised energy systems. Without a stable and secure supply of critical minerals, there can be no renewable energy transition.
Concern over China’s control of global value chains
There are several points in the value chain where near-monopolies could interrupt supply:
- The upstream stage (mineral extractions), where a single country typically controls half or more of the global supply of critical minerals
- The midstream stage (processing) of several critical minerals value chains
For example, in the global battery industry, despite supplier diversity at the up and downstream stage, China commands a powerful monopoly over the processing of battery components.
[China’s] deteriorating political relationships with many countries, and its ongoing use of coercive trade practices as a diplomatic tool, pose risks that it could weaponise its critical minerals market power.“
In 2010, China suspended supplies of rare earths to Japan as retaliation during a diplomatic dispute. Similarly, threats have been made to the US regarding the supply of rare earth magnets for defence supply chains.
The Quad needs new and more secure critical minerals value chains
The Quad wants to secure supplies of critical minerals to support the clean energy transition. Since 2019, all four Quad governments have had national policies in place to develop new critical minerals industries.
Complementaries between Quad partner’s capabilities:
- Australia is the world’s leading ‘upstream’ critical minerals producer
- India has low-cost manufacturing capacity required for success at the ‘downstream’ end
- Japan and the US have significant technological and financial resources to develop new value chains and will be key markets
Korea as an ideal partner
Korea would make an ideal partner for the Quad’s critical minerals efforts.
In 2020, Korea recognised the security risks facing critical minerals supply and put national policies in place to build new partnerships.
Quad-Korea critical minerals cooperation means Korea would benefit from increased supply security while the Quad would benefit from an infusion of technical capabilities and a broader range of commercial partners.
Korea also brings synergistic industrial capabilities to the table, in the form of world leading capacity in electric vehicles, battery production and chemicals processing.“
Bilateral agreements as the first step
Korea and Australia established an agreement in December 2021; similar instruments could be developed with other Quad partners to align Korea’s national policies with the Quad’s.
Bilateral agreements are ideal as the first step as they can be faster to negotiate and navigate. Additionally, they avoid the geopolitical concerns that a formal ‘Quad Plus’ format would bring.
Korea is more likely to join mechanisms that focus on less-sensitive issues and provide direct, tangible benefits for Korean interests.
Critical minerals can thus provide an appropriate vehicle for Korea to begin Quad Plus engagement, potentially paving the way for engagement with more substantive issues in future years.