This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:57 p.m. on Dec. 15, 2025.
As Korea Zinc decided to build a strategic minerals smelter in the United States with a price tag of 10 trillion won, it was confirmed that executives cited the "deterioration of profitability at the Korean plant" as the reason.
Korea Zinc said the new smelter is part of a strategic resources alliance, but industry officials worry that if the move is driven by profitability, the future role and status of the existing Onsan smelter will inevitably come into question. Young Poong and MBK Partners are pushing back, saying it is "abandoning 'zinc sovereignty' to defend management control."
According to the investment banking (IB) industry on the 15th, Korea Zinc held a board meeting that day and is discussing an agenda to establish a U.S. smelter and an agenda on investments by the U.S. Ministry of National Defense and defense-related investment firms.
Korea Zinc discussed creating a smelter by setting up a joint venture (JV) worth about 3 trillion won with the U.S. side and carrying out a third-party allotment paid-in capital increase so that the U.S. side would secure about 10% of Korea Zinc equity.
According to industry officials, at the board meeting the top management of Korea Zinc said to the effect that "the Korean plant has high electricity bills, which hurts profitability."
The explanation is that a smelter is being built in the United States because profitability has worsened due to high electricity bills, prompting speculation that the role of the domestic Onsan smelter could be reduced. Earlier, Korea Zinc said the establishment of the smelter is in the context of a "Korea-U.S. strategic resources alliance."
An IB industry official said, "If a 10 trillion won smelter is built in the United States, it will instantly rank among the world's top five, and the United States would handle an amount equivalent to half of the Onsan smelter's output," adding, "From the company's perspective, it would have no choice but to reduce production at the Onsan smelter, where profitability is relatively weaker, and this could lead to job insecurity."
Young Poong–MBK Partners, which is in a management control dispute with Chairman Choi Yun-beom's side over Korea Zinc, argues that "it is a distorted structure in which Korea Zinc takes on the risk while handing over 'choice equity' to the U.S. side," and that "such a decision violates directors' fiduciary duty to shareholders."
The industry analyzes that if the paid-in capital increase goes through, Young Poong–MBK's 44% equity would be diluted to around 40%, while Chairman Choi Yun-beom's side (including friendly equity at 32%) would bring in the U.S. JV (10%) to reach a level on par with the Young Poong–MBK alliance.
A Korea Zinc official said, "The United States has advantages such as electricity costs, and it is true that we chose, among 60 sites, a location favorable for electricity rates," but added, "It is not the concept of moving over there (the United States) because electricity in Korea is expensive. Onsan will operate as Onsan does, and there is absolutely no plan to scale down or transfer the smelter."