In 2006, South Korea was the world’s tenth-largest consumer of primary energy at 2.1% of the global total. Korea’s total primary energy consumption increased fairly steadily from 193.0 million metric tonnes of oil equivalent (Mtoe) in 2000 to 240.8 Mtoe in 2008, an average annual growth rate over the period of 3%. Korea has only limited domestic supplies of energy, and has to import 96.4% of its energy requirements. A remarkable change in the structure of energy consumption has occurred recently. Coal consumption has increased steadily in the recent past, while petroleum consumption has remained more or less unchanged. LNG consumption increased most rapidly and by 2005, LNG has replaced most other sources of energy in the domestic sector and overtaken oil as a major source of power generation. Nuclear power provides about 15% of primary energy consumption and all uranium required has to be imported.

In terms of energy imports, Korea is the world’s fourth-largest oil importer and second largest importer of coal and natural gas (LNG) after Japan. All Korea’s energy imports must arrive by maritime transport because of the division of the Korean peninsula. According to the International Energy Agency (IEA), Korea’s total primary energy supply requirement is expected to increase by 37% between 2006 and 2020. The uncertainty that surrounds North Korea adds a layer of difficulty to South Korea’s energy security strategy. In the event of a North Korean collapse and some form of unification, Korea’s energy demand would increase dramatically. North Korea has experienced a critical energy deficit for many years.

Most of Korean mineral requirements have to be met with imports. The Korean steel industry has grown steadily along with its economic growth. Korea has to import all iron ore and coking coal needed for its steel industry. Because of the close link between the non-ferrous industry and the economy, the Korean non-ferrous industry has also expanded over time, thereby increasing its demand for non-ferrous metal ingots, including aluminium, lead, zinc and nickel. Korea depends heavily on imported ingots for most non-ferrous metals.

Because of its high dependence on external sources for energy and mineral resources, Korea’s strategies to secure them are in essence diversification of energy and mineral supply sources and their overseas development, although the main thrust varies with the characteristics of their industries. For energy in particular, Korea seeks to secure stable, cost-effective, and environmentally-friendly energy supply. To this end, the government focuses on developing a blend of mainly natural gas, bituminous coal and nuclear power for the country’s energy supply into the extended future. It also seeks to reduce its reliance on imported oil in addition to diversifying its sources of imported oil. Korea has undertaken direct investments in numerous overseas resource projects to secure energy and mineral supplies and set targets of importing an increasing portion of imports from Korean-owned overseas operations. In particular, Korea expects large growth potential in imports of Russian oil through its participation in oil development.

Korea’s strategy of import diversification of energy and mineral sources could have some implications for Australia. Some of Australia's competitors with price advantages may increase their market shares in Korea’s imports of energy and minerals at Australia’s expense. Russia and Indonesia appear to be future competitors in supplying LNG to Korea. Although Korea’s investment in Australian energy and mineral sectors could be welcome in principle, Korean investors would seek to participate in and control management of Australian companies for their benefit.

Australia should remain vigilant about the development of Korea’s long-term strategies to secure energy and mineral resources. It should also seek to improve its diplomatic ties and economic relations by establishing a Free Trade Agreement with Korea. Australia should keep an eye on energy and mineral developments in East Asia including Siberia. Australia should also incessantly seek to diversify its export destination of energy and mineral resources. Australia should attract Korean investment in its energy and mineral sectors as a way of securing the Korean markets for its resources. However, Australia should not lose its managerial power of its major energy and resources sectors.