Korea to enhance cooperation with African nations on rare earth minerals, renewable energy

President Yoon Suk Yeol, right, shakes hands with Ethiopian Prime Minister Abiy Ahmed at the presidential office in Seoul, Sunday. The Ethiopian prime minister arrived in Seoul to attend 2024 Korea-Africa Summit in Seoul on Tuesday to Wednesday. Courtesy of presidential office

Korea is expected to bolster partnerships with African countries in sectors such as rare earth minerals, renewable energy and other industries when it hosts representatives of over 45 nations from the continent for a two-day multilateral summit in Seoul, according to government officials and industry analysts, Monday.

With envoys from Africa's leading economic powers such as South Africa, Nigeria, Ghana, and Kenya set to attend the 2024 Korea-Africa Summit in Seoul on Tuesday and Wednesday, the mega-event is poised to provide Korea with opportunities to establish secure import routes for rare earth minerals. Traditionally reliant on China and a handful of other nations for these minerals, Korea sees this summit as a chance to diversify its sources and ensure a stable supply chain.

With African nations having geological traits ideal for harnessing different natural energy resources for power generation, the continent also presents itself as a promising land for Korea’s utility firms and renewable power technology developers especially when the world is now rapidly moving towards carbon neutrality.

According to a recent report, released by the Korea International Trade Association (KITA) in anticipation of the summit, Korea and Africa have been “undoubtedly” dependent on one another with Korea mostly importing from the continent primary goods while exporting capital goods. The report added that for Korea, which is 95 percent reliant on imports for its rare earth mineral needs, Africa is an ideal source.

To secure the opportunity, the report said that Korea can broaden inroads to the continent by introducing advanced facilities, infrastructure and other engineering support for mineral excavation, management and transportation.

“It’s a win-win trade,” the report said. “Not only can Korea secure its source for critical earth minerals required for Korea’s key future industries like secondary batteries, African countries can also improve their business models from simple earth mineral excavation to more advanced, higher-added value industries using their earth mineral ecosystems.”

Korea has to date depended on China for over 96 percent of its imports of graphite, 80 percent of its lithium and 65 percent of its cobalt, figures too risky for Korea’s global supply chain security. Africa, meanwhile, possesses reserves for rare earth minerals, coal, natural gas and petroleum and has been Seoul’s trading partner for decades. Korea last year imported over $1.6 billion worth of coal from Africa and the figure the year before peaked at $1.89 billion.

The heightened geopolitical risks posed by the Russian invasion of Ukraine and the Israel-Hamas war have also hoisted African nations as strong bets for Korea to supply for rare earth minerals. As of last year, African nations accounted for the world’s 77.2 percent of platinum, 61 percent of graphite, 57.8 percent of diamonds and 43.9 percent of cobalt and chromium.

Deputy Minister for Political Affairs under the Ministry of Foreign Affairs Chung Byung-won, center, speaks during the Senior Officials' Meeting ahead of 2024 Korea-Africa Summit at Lotte Hotel Seoul, April 29. Yonhap

Experts said that if the Korean government seals economic partnership agreement (EPA) deals with African countries during the upcoming summit, Seoul’s trade routes for earth minerals and natural fuels will be solidified further. They added that if the EPA deals encompass countries that already hold free trade agreement (FTA) pacts with the United States, Seoul's imports from those nations could potentially qualify for benefits under the U.S. Inflation Reduction Act (IRA) through tax exemptions.

Regarding natural energy resources, the KITA report suggests that the Korean government should prioritize countries based on the specific energy resources they possess. This approach is necessary because different regions of the continent have distinct advantages for various natural energy resources.

“Algeria, Libya, Sudan and Morocco are most competitive for solar, while Niger and Egypt for wind and Congo, Ethiopia, Mozambique and Zambia for hydropower,” the report said.

K-A.F.R.I.C.A

 

Since 2010, Korea's trade with African countries has remained steady, according to KITA. In the previous year, Korea exported $9.1 billion worth of goods to Africa and imported $7.5 billion. The preceding year witnessed even higher volumes of trade.

Korea’s major exports to Africa include ships and related parts (44.2 percent) and petrochemical products (18 percent), with Liberia accounting for over 44 percent of the exports. Korea’s key imports from Africa include coals (21.6 percent), natural gas (12.6 percent) and coffee beans and chocolates (3.5 percent), with South Africa accounting for 46.6 percent of the imports.

The report highlights that Korea's future trade with Africa should encompass agriculture, facilities, resources, ICT, and cooperative alliances, or K-A.F.R.I.C.A. Beyond earth minerals and natural energy resources, the continent offers opportunities for Korea's business expansion, particularly in addressing food shortages and advancing information communication technologies (ICT). Projections indicate that the ICT markets in South Africa, Nigeria, Kenya, and Ghana will collectively exhibit an average annual growth rate of 6.7 percent over the next five years.

“Korea has distinguished strengths for crop harvest and management as well as rice production,” the report said. “The country should bolster its official development assistance (ODA) efforts for Africa by advancing farming machines, exporting agricultural technologies and improving crop seeds for higher productivity.”

The report indicates that approximately 49.5 million people in western and central African regions are projected to experience food shortages from June to August. This situation has been exacerbated by the increase in prices of wheat and fertilizers following the Russian invasion of Ukraine, as many African countries heavily rely on imports for these commodities. Furthermore, underdeveloped automation and a lack of knowledge regarding farming technologies contribute to the continent's persistent challenges in achieving self-sustainability in agriculture.