South Korea is demonstrating strategic balancing in its foreign policy towards both the United States and China under President Lee Jae-myung's administration. In a recent dual-track maneuver, the country joined a US-led critical minerals alliance while simultaneously announcing efforts to enhance cooperation with China on mineral supply chains.

According to Yonhap News Agency, South Korea's Ministry of Trade, Industry and Energy unveiled a comprehensive rare earth supply chain strategy on February 5. This marks the government's first holistic approach covering the entire rare earth ecosystem, including upstream resource development, midstream separation and refining, downstream manufacturing, and recycling processes.

The strategy emphasizes strengthening cooperation with China through multiple channels. The ministry stated it would establish hotlines and joint committee mechanisms with Chinese authorities to help Korean companies secure stable and efficient imports of mineral resources.

Data shows China accounts for 60-70% of global rare earth production, approximately 85-90% of smelting and separation processes, and over 80% of the rare earth magnet market. South Korea aims to reduce short-term supply and demand risks through enhanced collaboration.

Trade Minister Kim Jong-gan noted that while South Korea excels in advanced industries like semiconductors, electric vehicles, and batteries, it faces significant challenges in supply chain management due to heavy dependence on imported resources.

The strategy designates 17 rare earth elements as critical minerals related to national security. By establishing new detailed import-export codes, the government aims to improve the accuracy of supply-demand analysis.

For medium to long-term diversification, South Korea plans to collaborate with the United States, Vietnam, and Laos, allocating 250 billion won in public funds to support overseas mineral development projects.

The government will increase public support for overseas resource development, raising this year's loan budget to 67.5 billion won and increasing the loan support ratio from 50% to 70%. If exploration fails, the loan forgiveness rate will increase from 80% to 90%.

South Korea also plans to reactivate the Korea Mine Rehabilitation and Mineral Resources Corporation, enhancing its project management capabilities to help companies address political and regulatory risks in resource-rich countries like Vietnam.

Notably, this outreach to China comes just one day after South Korea joined the US-led Critical Minerals Alliance, which aims to reduce dependence on Chinese rare earths.

On February 4, the US held its first ministerial meeting on critical minerals, proposing price floors and "adjustment tariffs" to maintain Western pricing power. US Secretary of State Marco Rubio acknowledged South Korea's leadership role in the Mineral Security Partnership, which includes 16 countries and regions.

Recent US actions include President Trump's announcement of a $12 billion strategic mineral reserve project, combining private and Export-Import Bank funding to stockpile minerals for manufacturers.

Experts suggest the US faces significant challenges in rebuilding rare earth supply chains, potentially requiring 10-20 years to establish secure, independent systems. Current efforts focus primarily on funding and exploration, while technological acquisition and capacity expansion remain major hurdles.

Regarding the US-led alliance, China's Foreign Ministry spokesperson emphasized maintaining an open and inclusive international trade environment, opposing any "small circle" rules that undermine global economic order.