(Bloomberg) -- South Korea has pledged to spend 55 trillion won ($38 billion) over the next three years to shore up the nation’s supply chain for critical minerals and the components needed for key industries, like electric vehicles and battery making.
The hefty investment comes as Korea seeks to shield itself from an escalating US-China trade war and minimize the impact tariffs that are being levied on companies from other nations may have on its own supply chain.
According to a statement from the Korean finance ministry on Thursday, the government is seeking to lower its dependence on a “certain country” that it didn’t name by 2027. It will also develop monitoring systems and contingency plans to prevent supply chain disruptions and increase its own inventory of precious metals.
Some 25 trillion won will also be invested in research and development around “cutting edge technologies” such as solid-state batteries, the ministry said. Companies seeking exploration projects for mining will be offered financial support, it added.
To help fund the spending, Korea will sell government-backed bonds to raise 10 trillion won a year through 2027.
South Korea’s pledge comes after the country suffered shortages of critical minerals and raw materials for sectors including semiconductors, batteries and automobiles as a result of China’s ban on such input ingredients.
In 2023, China strengthened export controls on some categories of graphite, an important component in EV batteries. Korea also suffered shortage of urea in 2021 when China restricted exports of that material.
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