South Korea said on Wednesday it has enough strategic reserves and domestic production capacity to weather China’s new export controls on tungsten and four other minerals, at least in the short term. The trade ministry said it holds about six months’ worth of tungsten stockpiles and over three months of molybdenum supplies, though it acknowledged heavy reliance on Chinese imports with dependency rates of 85% and 90% respectively. While reserves offer a short-term buffer, a prolonged restriction could disrupt supply chains and drive up costs for firms like Samsung Electronics and SK Hynix.

The export control measures, announced by Beijing on Tuesday in response to U.S. tariffs, require Chinese exporters to obtain permits for shipping tungsten, molybdenum, germanium, bismuth and tellurium products — key materials used in semiconductors and displays. While South Korea’s trade ministry stressed the controls don’t amount to an outright ban, it said it would closely monitor supply chains and work to diversify import sources, noting that for some materials like indium, South Korea is already the world’s second-largest producer after China.

WHY IT MATTERS

China’s latest export curbs tighten its grip on global supply chains, following similar restrictions on gallium, germanium and graphite in 2023. Those controls drove up costs for South Korea’s semiconductor industry, and the new measures targeting tungsten and molybdenum are set to do the same.

Beijing is using mineral exports as a trade weapon in response to U.S. tariffs and restrictions on advanced semiconductor exports to China, pressuring U.S. allies that rely on its supply chains. With South Korea’s semiconductor sector making up 20% of its exports, any disruption to raw material supplies could squeeze production costs and erode competitiveness.

Seoul has stockpiles, but they offer only a short-term buffer. Long-term diversification is costly and slow, forcing South Korea to accelerate its diplomatic outreach to Beijing while concurrently restructuring supply chains and reducing dependency on Chinese imports. However, the technical and economic hurdles involved in diversifying supply chains mean that China’s export control measures will cause long-term challenges for South Korea.