sustainability Article Towards Improved Circular Economy and Resource Security in South Korea Kyounga Lee 1 and Jongmun Cha 2,* 1 Faculty of Law, Saarland University, 66123 Saarbrücken, Germany; [email protected] 2 Department of Energy and Mineral Resources Engineering, Dong-A University, Busan 49315, Korea * Correspondence: [email protected] Abstract: This study explores the importance of critical raw materials and minerals by analyzing the Republic of Korea’s recent circular economy and resource security policy. Raw materials and rare metals are becoming increasingly significant to the Korean economy because the country is currently shifting away from fossil fuels and nuclear power towards renewable energy resources as well as transforming its industries towards decarbonization, digitization, and automation. Korea is a resource-poor country and is heavily dependent on imported minerals and rare earths, which are essential for its economy and new industry. Responding to these challenges and concerns, Korea is moving towards a sustainable circular economy and achieving greater resource security. Despite certain limitations, this transition would ultimately contribute in preparing Korea for current and future challenges in the areas of critical raw materials and minerals. Keywords: circular economy; critical raw material; critical mineral; resource security 1. Introduction Today, we face global challenges concerning climate change, resource scarcity, the se- curity of raw materials, population growth, and increasing consumption, all of which are burdening the sustainable development of the Earth [1]. Overcoming this sustainability Citation: Lee, K.; Cha, J. Towards crisis will require a paradigm shift to maintain economic prosperity and societal stability for Improved Circular Economy and future generations. In particular, raw materials and rare metals are becoming increasingly Resource Security in South Korea. significant to our economies, their global demand is growing, and global competition Sustainability 2021, 13, 17. https://dx. for accessing critical minerals and metals is becoming stronger. Moreover, due to tech- doi.org/10.3390/su13010017 nological innovation and the emergence of new technologies, countries are transforming their industries towards decarbonization, digitization, and automation. As geological Received: 6 November 2020 deposits and production are geographically concentrated in a very small number of coun- Accepted: 21 December 2020 tries, securing reliable, sustainable, and undistorted access to them is a matter of growing Published: 22 December 2020 concern for highly dependent countries, which rely on the imports of critical raw materials and minerals [2–4]. Publisher’s Note: MDPI stays neu- The Republic of Korea (Korea) is a resource-poor country and one of the largest energy tral with regard to jurisdictional claims consumers worldwide [5]. Due to the lack of domestic raw materials, Korea is heavily in published maps and institutional dependent on imported critical raw materials, which are essential for its main industries, affiliations. such as the production of steel, semiconductors, automobiles, and ships [6]. Korea is cur- rently in a state of transition from fossil fuels and nuclear power towards renewable energy sources. The government announced the “Renewable Energy 3020 Plan”, which aims to in- Copyright: © 2020 by the authors. Li- crease the share of renewable energy in the energy sector by 20% by 2030 [7,8]. Furthermore, censee MDPI, Basel, Switzerland. This Korea experiences industry transformation [9] in response to technological developments article is an open access article distributed such as autonomous driving, 3D printing, drones, and renewable energy, which are often under the terms and conditions of the described as Industry 4.0 (or the 4th industrial revolution) [10]. Creative Commons Attribution (CC BY) In response to these challenges and concerns, Korea is moving towards a sustain- license (https://creativecommons.org/ able circular economy, thereby achieving greater resource security. Circular economy and licenses/by/4.0/). Sustainability 2021, 13, 17. https://dx.doi.org/10.3390/su13010017 https://www.mdpi.com/journal/sustainability Sustainability 2021, 13, 17 2 of 14 resource security have become Korea’s environmental and resource policy priorities. Specif- ically, Korea enacted the Framework Act on Resource Circulation (FARC), which came into effect on 1 January 2018. To prescribe specific requirements delegated by the FARC and the necessary conditions to enforce it, the FARC enforcement decree and rule were enacted. Subsequently, the First Master Plan on Resource Circulation (Resource Circulation Plan) was established for the transition towards a circular economy under Article 11 of the FARC. Recently, Korea published the Master Plan on Resource Development (Resource Development Plan). The several problems to be resolved include the major challenges for Korea in the raw materials and minerals sector, roles of critical raw materials or critical minerals in Korea’s circular economy and resource security policy, and if Korea’s recent transition towards circular economy and resource security can contribute in solving the current challenges. To resolve these problems, this study employs an interdisciplinary approach from legal and practical perspectives and explores the importance of critical raw materials and minerals through an analysis of Korea’s circular economy and resource security policy. The remainder of this paper is presented as follows. We provide an overview of the current status of Korea’s mineral resources and challenges as well as the classification of critical minerals or critical mineral resources. We then analyze the recent developments in Korea’s circular economy law and policy, including the First Master Plan on Resources Circulation and the current direction of Korea’s resource policy and strategy described in the Master Plan on Resources Development Plan. We also present a short assessment of renewable energy and critical raw materials to show the interdependence between circular economy and resource security. In conclusion, our study discusses important concerns and future considerations. 2. Overview of Current Status of Korea’s Critical Mineral Resources and Challenges 2.1. Overview The Korean peninsula is geographically divided into south and north, and it is the storm center of Asia, surrounded by the conflicts of interests between China, Japan, Russia, and the Democratic People’s Republic of Korea (North Korea). Korea’s major challenges originate from China and Japan, being sandwiched between them. China has been re- stricting its raw materials and rare earths exports and aggressively expanding resource investments overseas. Japan, which is a leader in metal production and processing, has re- stricted its raw material exports to Korea. Korea’s manufacturing industry suffers from a lack of raw material resources and a weak supporting industry [11,12]. Most primary raw materials are imported from China and refinery materials from Japan to supply its industries and markets [11]. Korea has deposits of some nonmetallic minerals such as feldspar, limestone, siliceous earth, quartz sand, sulfur, serpentine, talc, and zeolite; however, it has limited domestic deposits of rare metals such as titanium, molybdenum, tungsten, tin, vanadium, and lithium [11,13]. In contrast, it is established that North Korea possesses abundant under- ground resources including coal, copper, fluorspar, gold, graphite, iron ore, lead, magne- sium, rare earth elements, silver, tungsten, and zinc. However, North Korea has never made its public reserves of natural resources or actual production volumes official [11,14]. Because of Korea’s heavy dependence on raw material imports and vulnerability to the changes in external economic circumstances, Korea has made efforts to overcome this by establishing comprehensive resource strategies, including securing overseas raw mate- rial supplies, stockpiling reserves, technological innovation, and developing a recycling industry [11]. Moreover, Korea explores the possibility of close resource cooperation and participation in investing and developing North Korea’s natural resources [14]. The current dispute between Korea and Japan and the rare earth crisis in 2010 demon- strate that the world’s dominant producers and suppliers, which hold large global market shares in raw materials or rare earth elements, could use their dominance on these materials as a political weapon to solve unrelated disputes [2]. China is the world’s largest producer, Sustainability 2021, 13, 17 3 of 14 consumer, and exporter of rare earths, controlling 90% of the global supply base [15,16]. Owing to a territorial dispute between China and Japan, China disrupted the supply of rare earths to Japan. Accordingly, together with the European Union (EU) and the United States, Japan requested consultations under the World Trade Organization (WTO) Dispute Settlement Understanding with China over export restrictions on rare earths [17]. The recent dispute between Korea and Japan resembled the rare earths crisis in 2010. Japan restricted the exports of three kinds of critical materials (resists, hydrogen fluoride, and fluorinated polyamide) used in Korea’s high-tech industry, such as semiconductors and digital displays, by citing national security concerns regarding the mishandling of sensitive exports [18]. Japan has a 70% to 90% global market share for these materials, and the dependence