South Korea enacts National Resource Security Special Act establishing crisis-response framework for energy and critical minerals

Mechanism

The Act is Korea's first horizontal "supply-chain statute" for energy and minerals, sitting alongside (but distinct from) the sector-specific K-Chips Act (2023) and Outbound Investment Screening regime (2024). Where prior Korean resource policy was fragmented across the Petroleum Industry Act, Natural Gas Business Act, and Mining Industry Act, the Resource Security Special Act provides a unified statutory toolkit triggered by formal MOTIE designation of a supply crisis.

Key operative provisions:

• Four-tier crisis-alert system (관심 / 주의 / 경계 / 심각 —

Attention / Caution / Alert / Serious). Each tier unlocks a specific package of emergency powers; the higher tiers authorise mandatory release of strategic stockpiles, allocation of imported supply between firms, and price-cap orders.

• MOTIE-led inter-ministerial Resource Security Committee

with statutory authority over the Ministry of Strategy and Finance, MOFA, and the Financial Services Commission for finance/FX measures during designated crises.

• Five-year Basic Resource Security Plan with annual

implementation plans — analogous to the Japanese ESPA five-year basic plan.

• **Designation of "selected critical materials" and "core

resource-security companies"** eligible for tax credits, loan guarantees and KOMIR equity participation in upstream projects abroad.

• Mandatory supply-chain disclosure for designated firms in

steady-state, expanding to mandatory production data and inventory reporting once an alert is declared.

The Enforcement Decree (Presidential Decree, adopted by the Cabinet on 14 January 2025) operationalises the four tiers and specifies that the Korea National Oil Corp. and Korea Gas Corp. must expand their existing strategic petroleum and gas reserves and build new reserves for hydrogen and designated critical minerals.

Why this is severity 4

• First horizontal Korean resource-security statute with binding

emergency powers (price caps, allocation orders, mandatory stockpile build) — comparable in scope to Japan's 2022 ESPA.

• Operationalises through state-owned enterprises (KNOC, KOGAS,

KOMIR) with sovereign balance-sheet capacity to act on designation orders within days, not quarters.

• Direct response to the 2023 Chinese minerals counter-strike

cycle (Ga/Ge licensing July 2023, graphite licensing October 2023) and to mounting US-China decoupling friction — subsequent Chinese escalations (Ga/Ge/Sb ban Dec 2024, heavy REE licensing Apr 2025) reinforce why Korea legislated this framework before the worst of the cycle landed. Korea's semiconductor and battery industries are among the most exposed in Asia ex-China.

• Severity is not 5 because the statute is a framework, not an

executed measure; tier-3/4 designations have not yet been activated and the first round of "selected critical materials" designations is still being finalised.

Downstream implications

• EWY (iShares MSCI South Korea ETF): marginally bullish.

Reduces tail-risk on Korean tech-supply continuity; KOMIR upstream equity stakes are EWY-positive at the margin.

• REMX, LIT: bullish for non-China rare-earth and lithium

upstream — KOMIR mandate to take equity stakes abroad creates a sovereign LP for Western critical-minerals projects.

• Samsung / SK Hynix / LG Energy Solution: designation as

"core resource-security company" carries both subsidies and disclosure burdens; net-positive for HBM and battery cathode supply continuity, modestly negative for cost of compliance.

• Korea-Australia / Korea-Indonesia critical-mineral MOUs:

the Act provides the statutory funding mechanism that makes these MOUs operational — expect step-up in announced equity deals 2025–26.

Open questions

• Final list of "selected critical materials" — IEA records 33

designated critical minerals plus 10 "strategic" subset; the Act expands this through a new statutory designation. Watch for the first formal list under the Act in mid-2025.

• Coordination with the US-Japan critical-minerals framework

(2025-10-27) and the 2025 EU-US Strategic Partnership — Korea is not yet a signatory but the statutory tools now exist for reciprocal stockpile-sharing arrangements.

• Whether tier-1 ("Attention") alerts will be issued

prophylactically in response to specific China export-control packages, or only retrospectively after disruption.