Highlights

• South Korea's rare earth import dependence on China remains at ~80% for 15 years.
• Japan successfully reduced reliance on rare earth imports from 90% to 60-70% through strategic mining investments, recycling, and substitution technologies.
• China's expanded export controls now cover any product with 0.1% Chinese rare earth content, creating structural supply risks for Korea's EV, robotics, and electronics industries that depend on NdFeB magnets.
• Korea's failed national strategy—marked by the collapse of KORES and lack of overseas resource investments—creates opportunities for non-Chinese suppliers like Lynas, MP Materials, and Arafura to fill the gap.

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South Korea has had fifteen years to reduce its exposure to Chinese rare earths—and has essentially stood still. That is the uncomfortable conclusion of new reporting from ChosunBiz, which highlights Korea’s persistent ~80% dependence on Chinese rare earth imports, a level that has barely improved since China first “weaponized” exports against Japan in 2010.

South Korea has a large, highly developed economy

Ranking as the world's 13th-largest by nominal GDP, around $1.87 trillion in 2024/2025, making it Asia's 4th biggest economy, known for its strong tech (Samsung, LG) and automotive (Hyundai, Kia) sectors, high R&D investment, and rapid growth (the "Miracle on the Han River (opens in a new tab)"). 

So what’s with Korea’s failure to reduce rare-earth dependence, contrasting with Japan’s successful diversification? And does China’s tightening export controls suggest strategic risks to the Korean industry? What are some opportunities for emerging non-Chinese suppliers?

This is not merely a Korean problem. It is an Asian supply chain tremor that matters to automakers, semiconductor producers, battery manufacturers, and global NdFeB magnet buyers.

A Tale of Two Neighbors: Japan Diversifies, Korea Drifts

Today’s Chosun.Biz entry accurately frames Japan’s remarkable decoupling success. Since the 2010 crisis, Tokyo has executed a disciplined four-pillar strategy—overseas mining rights, recycling, substitution, and strategic stockpiling—reducing Chinese dependence from >90% to roughly 60–70%.

Japan’s approach is verifiable:

• JOGMEC’s AU$200M investment in Lynas (2023)
• €100M investment in Carester
• Toyota and Shin-Etsu technologies that cut Nd use by 50% and Chinese content by two-thirds

These facts align with known industry disclosures and demonstrate Japan’s consistent midstream strategy.

Korea, by contrast, has struggled. The ChosunBiz report correctly notes that Korea Resources Corporation (KORES) collapsed (opens in a new tab) under overseas investment losses, leaving no national champion to secure foreign resources. As of 2024, Korea’s permanent magnet imports remain ~90% Chinese, and government diversification plans lack execution detail.

The one caution: Korea’s dependence figure (79.8%) comes from government data but may understate embedded Chinese content in finished magnets.

China Tightens the Tap—Again

China has delayed export licenses for Japanese firms and newly expanded controls on samarium, dysprosium, and any product containing even 0.1% Chinese rare earths. Export-control language released in October matches the 0.1% threshold. For investors, this is a structural warning: China is shifting from controlling raw oxides to controlling downstream value. Export licensing for Europe will hinge on “political confidence,” as BDI’s Strack notes—a subtle but essential detail.

The Untold Risk: Korea’s Industries Run on NdFeB

Korea’s EV, robotics, and electronics sectors cannot operate without rare earth magnets. Korea may become the weakest link in Asia’s supply chain if diversification stalls—creating opportunity for non-Chinese producers if they can scale.

Investors should ask:

• Does Korea intend to replicate Japan’s recycling and substitution model?
• Will Korea reestablish an overseas mining/processing strategy?
• What companies stand to benefit from Korea’s vulnerability—Lynas, Arafura, MP, USAR, Vulcan, Noveon?

Source: ChosunBiz (Jeong Mi-ha), Dec. 10, 2025

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