POSCO and NPS Purchase 10% of Rare Earths Metal Company

Strategically, This Purchase Fits
The Seoul Gyopo Guide has highlighted the vulnerability of the Korean economy to the lack of rare earths metals. They are vital to the production of automobiles, and consumer electronics, for example. Those industries, not coincidentally, are the ones that lead the Korean economy (along with KPop, of course). The mK Business Daily reported today that POSCO (Pohang Steel) and the NPS has purchased a 5% equity stake each in Companhia Brasileira de Metalurgia e Mineracao (CBMM), a Brazilian rare earths metal miner. It makes logical sense that Korean companies and investors work to secure reliable supplies of rare earths metals.

Brazil Isn’t a Good Comparison to Korea
Many times, emerging markets analysts try to suggest that Korea belongs within a bloc of nations called BRICs (Brazil, Russia, India, China). That is really quite simplistic. The only similarity is the growth rate of the two economies. However, the growth rate of Korea is due to entirely different factors when compared to Brazil. Korea has relied on its superior technology, and highly skilled workforce to create its advantages. Brazil is much larger geographically, and much, much richer in natural resources. Today’s announcement of the investment in CBMM is a clear reminder that comparisons between Korea and Brazil are invalid.