There is growing expectation that Chair Choi Yoon-beom of Korea Zinc will gain the upper hand at the regular shareholders meeting in Mar. next year. Korea Zinc has formed a strategic alliance with the U.S. government and joined a non-China supply chain for rare earths and strategic minerals. As the joint venture (JV) with the U.S. side will hold 10% equity in Korea Zinc, the likelihood has increased that the U.S. government will become Chair Choi's "white knight."
According to the Financial Supervisory Service's electronic disclosure on the 15th, Korea Zinc announced it will proceed with an investment to strengthen future growth drivers by building an integrated nonferrous metal smelter in the United States. The investment for the project, named "U.S. Smelter," is about 10 trillion won ($6.6 billion), and including working capital and financing costs, the total comes to 11 trillion won ($7.4 billion).
The company leading the smelter project is a Korea-U.S. JV to be created by Korea Zinc's U.S. subsidiary "CrucibleMetals, LLC," established on the 11th. Korea Zinc will first invest about 1 trillion won, and strategic investors (SI), including the U.S. Department of Commerce, the Department of War (formerly the Ministry of National Defense), and defense strategy companies, will each invest about 3.2 trillion won in the JV. The remaining roughly 7 trillion won will be raised through loans guaranteed jointly by Korea Zinc, the U.S. government, and JPMorgan.
Korea Zinc disclosed it will issue new shares through a third-party allotment to the JV for about 10% equity in Korea Zinc on the 26th. The JV's largest shareholder (40.1%) is the U.S. Department of War. It is extremely rare for the U.S. government to invest in the equity of a foreign company. The investment schedule runs from today through the end of 2029.
Korea Zinc said in the filing that it decided to invest to respond to expanding global supply chain risks and rising demand for nonferrous metals and strategic minerals in the United States, and to secure a lead in the North American market. It added that the U.S. government asked Korea Zinc to participate in order to realign the supply chain.
Korea Zinc will build the smelter in Clarksville, Tennessee. The company said the area's power rates are relatively lower than in other regions, providing significant savings on electricity costs and advantages in treatment charges. Various federal and state-level support measures are also under active review.
Regarding construction, Korea Zinc plans next year to carry out site preparation and foundational work, select an engineering, procurement and construction (EPC) contractor, and place orders for key equipment. It aims to break ground in 2027 and complete the smelter in 2029, with phased operations starting in the order of zinc, lead, and copper processes. The facility will process about 1.1 million tons (t) of raw materials annually to produce 540,000 t of final products. Korea Zinc's U.S. Smelter will combine hydrometallurgical and pyrometallurgical processes modeled after the Onsan Smelter. The site will cover about 650,000 square meters (about 200,000 pyeong).
The production slate totals 13 products, including industrial base metals such as zinc, lead and copper; precious metals such as gold and silver; and key strategic minerals including antimony, indium, bismuth, tellurium, cadmium, palladium, gallium and germanium. Sulfuric acid for semiconductors will also be produced.
Of these, 11 are included in the U.S. Department of the Interior's "2025 final critical minerals list," published via the U.S. Geological Survey (USGS). The list designates minerals essential to U.S. national and economic security that face high supply disruption risks. Korea Zinc presented annual target production for key metals as follows: ▲ zinc 300,000 t ▲ lead 200,000 t ▲ copper 35,000 t ▲ rare metals 5,100 t.
Howard Lutnick, U.S. Minister of Commerce, said, "Korea Zinc's project in Tennessee is a transformational deal," adding, "Through this, the United States will produce at scale 13 core and strategic minerals essential to aerospace and defense, semiconductors, artificial intelligence (AI), quantum computing, automobiles, industry overall, and national security."
The odds have risen sharply that Chair Choi's side will retain control at Korea Zinc's shareholders meeting in Mar. Currently, the Young Poong and MBK alliance holds 44.24% equity in Korea Zinc. Chair Choi and related parties hold 19.41%, and including allies such as Hanwha, their combined equity is about 32%. The remaining roughly 24% is held by the National Pension Service (5%) and minority shareholders.
If the JV acquires roughly 10% of the issued shares as new shares, the equity split will shift in Chair Choi's favor. Young Poong's equity will fall to about 40%, and Chair Choi's side will rise to 39%. Korea Zinc also disclosed it will cancel 680,010 treasury shares on the 16th. As a result, the total number of issued shares will be reduced from 19,343,263 to 18,663,253.
News of the JV with the U.S. side could sway votes from the National Pension Service and minority shareholders, who hold the casting vote. Of the 19 directors on Korea Zinc's board, the terms of six end in Mar. Of the remaining 15 seats, four are for directors currently suspended from duty. Securing eight or more of the 15 seats—a majority—is the crux of the control battle.
Excluding those suspended or expiring, of the nine directors, Chair Choi's side holds six and Young Poong's side holds three, with votes from the National Pension Service (about 5%) and minority shareholders mixed in. Of the six seats up for term expiration, five are on Chair Choi's side and one is on Young Poong's side.
It is understood that the maximum Young Poong can secure on the board is four seats. Even then, it would have seven of the 15 seats, short of a majority. Korea Zinc would secure eight seats. The fact that Young Poong's partner MBK faces impending Financial Supervisory Service sanctions over the "Homeplus Co. case" could also influence the National Pension Service and minority shareholders.
A Korea Zinc official said, "We cannot guarantee how minority shareholders will view the U.S. government's equity investment under current circumstances," adding, "By the 2027 shareholders meeting, it will likely become clear."
That morning, Young Poong issued a statement on the U.S. side's securing of Korea Zinc equity and said it would take legal action. A Young Poong official said, "We judge this to be a serious matter that could harm shareholder value and worsen financial stability," adding, "Korea Zinc's board, where Chair Choi's side holds a majority, rushed through large-scale overseas investment and a governance change agenda during a control dispute without sufficient review or public explanation."
It added, "To protect Korea Zinc's long-term sustainability and shareholder interests, we plan to immediately file for an injunction to stop the issuance of new shares with the court."