Shinhan Investment & Securities said Korea Zinc's decision to build a nonferrous metal smelter in Tennessee means the company has emerged as a key partner in the United States' "supply chain restructuring" strategy to break away from a global critical minerals supply chain dominated by China.
Earlier, Korea Zinc announced on the 14th the "Crucible Project," a plan to build an integrated nonferrous metal smelter in Tennessee worth about 11 trillion won ($7.4 billion). As part of funding and a strategic partnership, the company also decided to carry out a third-party paid-in capital increase worth about 2.85 trillion won targeting Crucible JV LLC, a local U.S. joint venture.
Park Gwang-rae, an analyst at Shinhan Investment & Securities, said the direct support and participation of the U.S. Department of Commerce and Department of War suggests the project will become a symbolic asset of the Korea-U.S. economic and security alliance that goes beyond a simple private investment, adding that U.S. Commerce Secretary Howard Lutnick called the deal the definitive version of a "build a de-China supply chain."
However, the Young Poong–MBK alliance, which is locked in a management rights dispute with Chairman Choi Yoon-beom's management team, labeled the paid-in capital increase as a "breach of trust that damages shareholder value to defend management control and abandons zinc sovereignty," and signaled an injunction lawsuit to block the new share issuance.
Park, however, saw the partnership with the U.S. government as providing a strong justification for Korea Zinc's management. The argument that it is an "indispensable choice not only for the company's interests but also for the Korea-U.S. alliance and economic security" will be the strongest shield to counter MBK's claim that it is "for defending management control" in future court battles, he said.