How Korea approaches energy resource security: an interview with Lee Jin-mong

In times of geopolitical conflicts, acquiring energy resources becomes a significant challenge, especially for countries such as South Korea that heavily relies on foreign resources. At the center of addressing such issues is the Korea Overseas Resources Development Association (KORDA), which coordinates government policies based on business interests. In this interview, Lee Jin-mong at the association's policy support team shared the recent changes in Korea's foreign resource policies and diplomatic strategies to balance energy security and carbon neutrality.

Could you first introduce what the Policy Support team at KORDA is doing?

We are responsible for supporting the government’s policies on overseas resource development projects. As the name implies, we are a team that supports government policy. So, we run programs that provide financial support to resource development companies so they can conduct business overseas. In a way, we listen to companies’ suggestions and concerns regarding overseas resource development, then convey them to government agencies. Once policies are established based on that feedback, we help companies conduct their business more smoothly.

With the global trend toward carbon neutrality and energy transition gaining momentum, it seems that overseas oil, gas, and mineral development projects are also undergoing changes. Compared to the past, how do you think South Korea’s policies have changed in this regard?

First of all, the government is focusing more on securing natural gas and critical minerals rather than oil. In the past, projects were concentrated solely on oil, but these days, the focus is on securing critical minerals used in electric vehicles, smartphones, and batteries for robots. That is one of the most significant policy changes. Another change is that, in the past, the mindset was that we had to develop as many resources as possible, so resource development was largely viewed in terms of sheer numbers. 

But have you heard the term resource security lately? For example, with the recent conflict between the U.S. and Iran, we’ve seen gasoline prices at our gas stations suddenly spike from 1,500 won to 2,000 won. In the same lines, ensuring that our citizens have a stable supply of energy is, simply put, the concept of resource security. 

To summarize, the policy has shifted significantly from the past in two main ways: first, the focus has shifted from oil to natural gas and critical minerals; and second, the emphasis has shifted from simply increasing resource development to ensuring a stable supply of resources to the public.

Additionally, demand for resources like lithium and cobalt is rising significantly due to electric vehicles and batteries. Is there a specific area that South Korea is focusing on most in its policies to ensure a stable supply of these resources?

In a way, the main focus of policy deliberations is diversifying supply chains. This might be a difficult concept to grasp, but since it’s been in the news a lot lately, you’ve probably heard about the Strait of Hormuz. To explain what the Strait of Hormuz is: if we assume South Korea’s oil imports are 100%, about 70% of that comes from the Middle East. However, to bring oil from the Middle East, we have to pass directly through the Strait of Hormuz. Because of this, if the supply chain is too heavily concentrated in one area, then if the Strait of Hormuz were to be blocked, we’d have to find another country to get it from. So, you can think of it as securing multiple countries as sources for our resources. 

Also, the US government is currently making a lot of efforts to secure a resource called rare earth elements. However, China holds 70 to 80% of those rare earth elements. And when there is conflict between China and the U.S., China weaponizes rare earths. Since rare earths are heavily used in high-tech industries, if China says, “We won’t supply rare earths to other countries,” those countries won’t be able to develop high-tech industries because they lack rare earths. So, to put it simply, we are securing multiple countries that supply rare earths or other critical minerals.

Given the current political climate, it seems like these kinds of issues are becoming more frequent. Especially since overseas resource development projects are closely tied to the political and diplomatic environment, are there any particular areas that companies need to be especially cautious about or take into consideration these days?

Rather than just being cautious or taking things into consideration, the reality is that to engage in resource development, you need to have a good relationship with that country. For example, take the project our company is currently working on. Are you familiar with the term “ODA”? ODA stands for Official Development Assistance. Back in the 1950s, after the Korean War ended, we were a country with virtually nothing, but other nations provided us with a great deal of aid. That’s why we’re able to live in nice homes and enjoy good food today. In the same way, this time it’s our country’s turn to help developing nations like Vietnam or Laos, and in return for that assistance, we receive resources. We’re trying to build friendly relationships with resource-rich countries in this manner. That’s why we’re promoting ODA projects as part of these efforts.

Returning to the topic of carbon neutrality, even as renewable energy increases, we still need resources like gas and minerals in the short term. How do you think Korea should strike a balance between the trend you mentioned earlier regarding the need to secure energy through overseas resource development and carbon reduction?

It’s a bit of a tricky question to answer, but for now, the government is making significant efforts to secure renewable energy. For example, we’re redirecting a lot of the funding that used to go toward oil and gas toward renewable energy.

We’re actively working to expand renewable energy in this way. However, in my view, if South Korea were to pursue solar power projects, for instance, we’d need to significantly increase the number of facilities like solar and wind power plants. But as you know, South Korea is a very small country. Therefore, I believe there are limits to how much renewable energy we can secure, and I feel I still need to look more into this issue further.