Why Is Cable Company LS Cable Entering Rare Earth Magnets? Competition to Secure the Value Chain [Mineral Industry War] ①

Beyond Cables: Building a Rare Earth Supply Chain
Essential for Future Industries such as Electric Vehicles and Robotics
Growing Demand and Expanding Supply Risks from China
Competition to Secure the Entire Supply Chain from Mining to Processing

Editor's Note
The global race for critical minerals is intensifying. Minerals needed for future industries including electric vehicles, semiconductors, robots, wind power, and defense are no longer just basic raw materials, but strategic assets that determine industrial competitiveness and national security. Countries are restructuring their mineral supply chains with a focus on domestic interests, spanning everything from mining to refining, material production, and recycling—a de facto "mineral war." In particular, the United States, Europe, and Japan are accelerating efforts to establish production hubs and allied supply chains outside of China, in response to China’s dominance over supply chains of major minerals like rare earth permanent magnets, lithium, nickel, and graphite. Korean companies are widening their business scope beyond securing overseas resources to include refining, material production, and recycling, joining a fierce survival race. The Asia Business Daily examines, over a series of five articles, the competition among major countries for critical mineral supply chains, the strategies of Korean companies in response, and the survival strategies for Korea—a country scarce in natural resources.

Korean companies are beginning in earnest to establish supply chains for rare earth permanent magnets outside of China. LS Cable is working to build a supply chain that produces rare earth metals in Vietnam and manufactures permanent magnets in the United States. The POSCO Group is expanding its sourcing of raw materials and the production of magnets overseas, while Korea Zinc is pursuing a recycling business that recovers rare earth elements from spent magnets. Hyundai Motor Group is supporting the diversification of supply chains by adopting non-Chinese permanent magnets for the drive motors of electric vehicles, making them a key client for such materials.

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The reason Korean companies are entering the rare earth sector is that both demand expansion and supply disruption risks are rising at the same time. As electric vehicles, robots, wind power, and defense industries grow, the demand for permanent magnets increases, but if China controls its exports, domestic production could be severely impacted. With the United States and Europe focusing policy support on supply chains that exclude China, new market opportunities are emerging. By connecting raw material procurement, metalization, magnet manufacturing, end-users, and recycling among Korean companies, it is possible to reduce dependence on China while also capturing the high value-added market.

Surging Demand and Rising Supply Risks from China

The term "rare earth elements" refers to 17 elements, including scandium and yttrium. Among these, neodymium and praseodymium are key ingredients for high-magnetic-strength permanent magnets.

Rare earth permanent magnets are essential for manufacturing motors that deliver high output with low power input. They are used not only in drive motors for electric vehicles and wind turbine generators, but also in robotics—where numerous joints need to move—and in various defense equipment. According to the International Energy Agency (IEA), global demand for rare earths used in magnets has doubled since 2015 and is projected to grow by more than 30% again by 2030.

Despite soaring demand, the rare earth supply chain is deeply concentrated in China. Even if a country secures its own mines, it still must process the ore into oxides, then convert those into metals and alloys before fabricating magnets. China dominates the entire value chain—from mining to high value-added processing and magnet manufacturing. Simply securing mining rights abroad is not enough to escape dependence on China.

This is why companies are seeking to control the entire value chain. This not only prepares them for supply chain disruptions, but also allows them to target local demand as the United States and Europe restructure supply routes. Moving up the value chain from raw material sales to the more profitable business of producing materials and finished products is also appealing. As clients in sectors like automotive and defense reinforce requirements for supply chain traceability and environmental, social, and governance (ESG) standards, the ability to manage everything from sourcing to recycling is becoming a crucial competitive advantage for securing contracts.

LS Connects Vietnamese Metalization to U.S. Magnet Production

LS Group is aiming to establish a supply chain spanning from raw material acquisition to metalization and ultimately magnet production. The key role here is played by LS Eco Energy, which has a production base in Vietnam. LS Eco Energy is installing facilities to metalize rare earth elements at its Vietnamese plant, with the goal of mass production within this year. Metalization is the process of converting rare earth oxides into metal suitable for magnet manufacturing.

LS Eco Energy plans to secure non-Chinese rare earth oxides in partnership with the Australian rare earth company Lynas. They will commence with rare earth metal production within the year and later expand output to include neodymium and praseodymium (NdPr) metals for permanent magnets.

The next stage is magnet production. LS Cable has selected Chesapeake, Virginia, as the candidate site for a rare earth permanent magnet plant in the United States and is reviewing investment options. Construction of a permanent magnet facility in Korea is also under consideration. If the investments proceed as planned, a supply chain will be established in which rare earth metal is produced in Vietnam and magnets are manufactured in the U.S.—forming a non-Chinese supply route.

They are also targeting synergies with existing businesses. Drive motors for electric vehicles and robots require permanent magnets, windings, and motor cores. LS Cable has an established business in copper materials and windings. By adding rare earth magnets, it can expand its product offering to cover key motor materials and parts.

An LS Cable official commented, "We need to develop 'one-stop supply capabilities' that encompass everything from raw material sourcing to finished products and even recycling, in order to meet the demanding technical and ESG standards of top-tier global clients. Expanding the value chain is a core strategy for achieving sustainable growth and securing market dominance."

POSCO Focuses on North American Production, Korea Zinc Targets Recycling Market

The POSCO Group is applying its "process industry" expertise—tying raw material procurement with processing and material production overseas—to the rare earth sector. POSCO International aims to secure raw material supply chains in Southeast Asian countries such as Malaysia and Laos, before establishing a permanent magnet production base in North America. POSCO Holdings plans to increase rare earth production capacity from 4,800 tons in 2028 to 8,700 tons after 2030.

Korea Zinc is pursuing the recycling market using its smelting expertise. Having developed a method to extract rare earth compounds from spent magnets recovered from scrapped motors, the company agreed in January to collaborate with the U.S.-based Altareisource Technology. Korea Zinc will recover mixed rare earths from waste magnets, which will then be refined and separated by Altareisource to produce rare earth oxides.

Recycling offers the advantage of securing raw materials reliably while reducing both the time and environmental burden involved in mine development. As the volume of scrapped electric vehicles and motors increases, raw material procurement becomes even more favorable. A Korea Zinc official noted, "Establishing a stable and sustainable supply chain is essential for developing rare earth separation and purification technologies and successfully commercializing them. We are continuing discussions with the government, local authorities, and industry associations."

However, the non-Chinese rare earth supply chain is still in its infancy. While overseas sourcing and recycling operations have started, there is still a lack of capacity for rare earth separation, metalization, and mass production of high-performance magnets. It is necessary to secure both a stable supply of raw materials and long-term customers, while remaining cost-competitive with Chinese products. As countries increasingly guard their rare earth resources as strategic assets, building a domestic supply chain is not a choice but a matter of survival. The entry of Korean companies into rare earths is all about reconnecting broken links in the supply chain and preparing for the 'mineral industry war'—a survival strategy.

This content was produced with the assistance of AI translation services.