Why Is Cable Maker LS Cable Entering the Rare Earth Magnet Market?...Competition to Secure the Value Chain [Minerals Industrial War] ①

Building a Rare Earth Supply Chain Beyond Cables
Essential for Future Industries Like EVs and Robotics
Rising Demand and Increased Supply Risks from China
Race to Secure Supply Chains from Mining to Processing

Editor's NoteThe global scramble for critical minerals is intensifying. Minerals essential for future industries like electric vehicles, semiconductors, robotics, wind power, and defense are no longer mere raw materials but have become strategic assets determining industrial competitiveness and national security. Countries are overhauling their supply chains—from mine acquisition to refining, material production, and recycling—centered around domestic interests, in what is effectively a "mineral war." In particular, as China dominates the supply chains for key minerals such as rare earth permanent magnets, lithium, nickel, and graphite, the United States, Europe, and Japan are accelerating their efforts to build production bases outside China and create supply chains centered on allied nations. Korean companies are joining the race for survival by expanding their businesses beyond securing overseas resources, moving into refining, material production, and recycling. The Asia Business Daily, in a five-part series, examines the competition among major nations over critical mineral supply chains, domestic companies’ responses, and the survival strategies for Korea, a country lacking natural resources.

Efforts by domestic companies to establish a non-China supply chain for rare earth permanent magnets are gaining momentum. LS Cable is building a supply chain by producing rare earth metals in Vietnam and manufacturing permanent magnets in the United States. POSCO Group is expanding both its securing of overseas raw materials and magnet production, while Korea Zinc is pursuing a recycling business to recover rare earths from discarded magnets. Hyundai Motor Group is supporting diversification of supply chains as a core client by applying non-China permanent magnets in electric vehicle drive motors.

Korean companies are entering the rare earth business because both demand is increasing and the risk of supply disruptions is growing. As electric vehicles, robotics, wind power, and defense sectors expand, demand for permanent magnets keeps rising, but should China choose to control exports, domestic production could be adversely affected. Meanwhile, as the United States and Europe focus their policy support on non-China supply chains, new markets are emerging. By linking together domestic capabilities in raw material procurement, metal conversion, magnet manufacturing, user industries, and recycling, Korean companies can both reduce dependence on China and gain an edge in high-value-added markets.

Rising Demand and Heightened Supply Risks from China

"Rare earths" refer to 17 elements, including scandium and yttrium. Among these, neodymium and praseodymium are essential raw materials for high-strength permanent magnets.

Rare earth permanent magnets are indispensable for making motors that deliver high output with low electricity consumption. They are used not only in electric vehicle drive motors and wind power generators, but also in robots that require multiple joints to move, as well as various defense systems. According to the International Energy Agency (IEA), demand for rare earths for magnets has doubled since 2015 and is projected to rise by over 30% by 2030.

Although demand is growing rapidly, the rare earth supply chain is concentrated in China. Even if a country secures a mine, the ore must go through complex processing—being separated into oxides, refined, turned into metals and alloys, and finally manufactured into permanent magnets. China has control not only over mining but over the entire supply chain, including high value-added processing and magnet production. This is why securing a mine outside China alone is not enough to reduce China dependence.

This drives companies to seek to control the entire value chain. It allows them to hedge against supply disruptions and take the lead in local markets as supply chains in the United States and Europe are reorganized. Expanding into high value-added materials and finished products offers better profitability than simply selling raw materials. As clients in automotive and defense sectors strengthen requirements for supply chain traceability and ESG (environmental, social, and governance) compliance, the ability to manage the complete cycle—raw material sourcing to recycling—has become a key competitive edge for winning contracts.

LS Connects Vietnam Metal Processing and U.S. Magnet Production

Image generated by ChatGPT

LS Group has initiated efforts to build a supply chain spanning from raw material procurement to metal conversion and magnet manufacturing. The key role comes from LS Eco Energy, which has a production base in Vietnam. LS Eco Energy is installing rare earth metal processing systems at its Vietnamese plant, aiming for mass production within the year. This "metalization" process transforms rare earth oxides into metals usable for magnet manufacturing.

LS Eco Energy plans to secure non-China rare earth oxides by cooperating with the Australian rare earth company Lynas. Mass production of rare earth metals will begin within the year, with coverage expanding to include metals such as neodymium and praseodymium (NdPr) for permanent magnets in the future.

The next stage is permanent magnet manufacturing. LS Cable has selected Chesapeake City, Virginia, as a candidate site for a rare earth permanent magnet plant and is considering investment. Domestic production facilities for permanent magnets are also under review. If the investment proceeds as planned, a non-China supply chain will be built with rare earth metal production in Vietnam and magnet manufacturing in the United States.

Synergies with existing businesses are also anticipated. The drive motors for electric vehicles and robots require permanent magnets, winding wires, and motor cores. LS Cable already has a foundation in copper materials and winding wire production. By adding rare earth magnets, the company can extend its business into core motor materials and components.

A representative from LS Cable stated, "We must achieve 'one-stop supply capability'—connecting raw material procurement to finished products to recycling—if we are to meet the demanding technological and ESG standards of global top-tier clients," adding, "Expanding the value chain is a critical move to ensure sustainable growth and capture market dominance."

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

POSCO Group is applying its "process industry" expertise, which connects overseas raw material procurement with processing and advanced material production, to the rare earth sector. POSCO International plans to secure raw material supply chains in Southeast Asia, including Malaysia and Laos, and establish a permanent magnet manufacturing base in North America. POSCO Holdings aims to increase its rare earth production from 4,800 tons in 2028 to 8,700 tons after 2030.

Korea Zinc is targeting the rare earth recycling market using its smelting technology. The company has developed technology to recover rare earth mixtures from discarded permanent magnets extracted from used motors and agreed to cooperate with U.S.-based Altairios Technology this January. Korea Zinc will extract the mixture from waste magnets, and with Altairios' separation and purification technology, produce rare earth oxides.

Recycling offers benefits of reducing both the time and environmental burden associated with developing new mines while ensuring stable raw material supplies. As the volume of waste electric vehicles and motors increases, so too does the opportunity to secure raw materials. A Korea Zinc official said, "Building a stable and sustainable raw material supply chain is essential to developing rare earth element separation and purification technology and achieving commercialization," noting that the company is in discussions with the government, local governments, and industry associations.

However, non-China rare earth supply chains are still in their early stages. While overseas raw material acquisition and recycling businesses have begun, there remains a lack of capabilities for large-scale separation, purification, metalization, and high-performance magnet mass production. Companies will also need to secure stable supplies of raw materials and long-term customers while competing with the lower prices of Chinese products. As each country seeks to use rare earths as a strategic asset and refuses to share resources, establishing a domestic supply chain is not a choice but a matter of survival. Korean companies’ expansion into the rare earth sector is a strategy to reconnect broken supply chains and prepare for the coming “mineral industry war.”

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