Korea Zinc refuted Young Poong and MBK Partners' claim that, even if a final joint-venture agreement is not signed in connection with the U.S. Smelter construction, the U.S. government would hold 10% equity in the joint venture (JV) of Korea Zinc. It said Young Poong is trying to scuttle the U.S. Smelter construction with unreasonable assumptions to seize control of Korea Zinc's board.
According to Korea Zinc on the 21st, the "Business Alliance Framework Agreement (BAFA)" that Young Poong mentioned that day, which presupposes a final contract within two years, carries the meaning of a "declaration" to conclude the final contract by no later than that period. Korea Zinc said this reflects the U.S. government's urgent need to build a supply chain for critical minerals.
Earlier, Young Poong said, "While the agreement stipulates that the agreement itself may be terminated if the final contract—which determines the success or failure of the joint venture—is not signed within two years, it contains no provisions regarding the effectiveness, retrieval, or extinguishment of the new shares of Korea Zinc already issued," adding, "It is an abnormal structure in which the JV would retain 10% equity in Korea Zinc even if the final joint-venture agreement is not signed."
Korea Zinc said the U.S. government, too, would acquire Korea Zinc shares through the JV (Crucible JV) and could gain or lose depending on changes in corporate value.
Regarding Young Poong's claim, it countered, "Although the U.S. government has poured trillions of won into acquiring new shares of Korea Zinc to urgently build a critical minerals supply chain, the assertion by MBK and Young Poong that a final contract might not be concluded for two years and that BAFA could therefore be terminated is irrational, unreasonable, and not factual."
It continued, "The purpose of drafting BAFA was to specifically set out the support commitments the U.S. side promised to the local project company Crucible Metals, which is building the smelter," adding, "It also states the intention to jointly explore and discuss additional measures to expand the critical minerals supply chain beyond smelter construction."
Korea Zinc emphasized that the U.S. side would be responsible for 91% of the total project cost through its investment and support for smelter construction.
It said the U.S. government and a strategic investor (SI) would invest $1.85 billion in the Crucible JV, and the U.S. government and major U.S. financial institutions would provide a total of $4.91 billion in financing to Crucible Metals, which is building Korea Zinc's U.S. Smelter.
In other words, the U.S. side's direct investment and financing support amounts to $6.76 billion, which corresponds to 91% of the total $7.4 billion to be injected into the smelter construction.
It also noted that, at the U.S. government level, various benefits would be provided, including the Inflation Reduction Act (IRA) tax credit, bonus depreciation (OBBBA), low-interest policy financing, and strengthened partnerships with the U.S. government. Korea Zinc plans to produce a total of 13 products at the U.S. Smelter, including 11 critical minerals designated by the U.S. government.
Korea Zinc called Young Poong's claims "clearly false." A Korea Zinc official said, "Young Poong, calling itself 'Korea Zinc's largest shareholder,' is criticizing Korea Zinc by asserting—based on unrealistic and unreasonable assumptions that the U.S. smelter construction will not proceed as planned—that Korea Zinc decided to hand over 10% equity in Korea Zinc to the Crucible JV without any consideration," adding, "This is a malicious attempt, fixated solely on seizing control of Korea Zinc's board, that would make us lose the opportunity to preempt the U.S. market, one of the world's largest critical minerals markets."