Korea Zinc refuted Young Poong and MBK Partners' claim that even if a final joint venture agreement for the U.S. Smelter is not signed, the U.S. government would hold 10% equity in the JV of Korea Zinc. It said Young Poong is trying to scuttle the U.S. Smelter project with unreasonable assumptions to seize control of the Korea Zinc board.
On the 21st, according to Korea Zinc, the "Business Alliance Framework Agreement (BAFA)" that Young Poong mentioned that day, which presupposes the signing of a final contract within two years, carries the meaning of a "declaration" to sign the final contract within that period at the latest. Korea Zinc said this reflects the U.S. government's urgent need to build a critical minerals supply chain.
Earlier, Young Poong said, "The agreement stipulates that the agreement itself may be terminated if the final contract, which determines the success or failure of the JV, is not signed within two years, yet it provides no provisions on the validity, retrieval, or cancellation of Korea Zinc's newly issued shares," and argued, "It is an abnormal structure in which the JV retains 10% equity in Korea Zinc even if the final JV agreement is not signed."
Korea Zinc said the U.S. government also acquires 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 Korea Zinc shares to urgently build a critical minerals supply chain, the assertion by MBK and Young Poong that a final contract may not be signed for two years and that BAFA could be terminated is irrational and unreasonable, and it is not true."
It added, "The purpose of drafting BAFA was to specifically set out the support commitments promised by the U.S. side to Crucible Metals, the operating company that will build the local smelter," and said, "It also states the intent to jointly seek and discuss additional measures to expand the critical minerals supply chain beyond smelter construction."
Korea Zinc stressed that the U.S. side will be responsible for 91% of the total project cost through its investment and support for the smelter construction.
It said the U.S. government and a strategic investor (SI) will invest $1.85 billion in Crucible JV, and the U.S. government and a major U.S. financial institution will provide a total of $4.91 billion in financing to Crucible Metals, the operating company building the Korea Zinc U.S. Smelter.
In other words, the U.S. side's direct investment and financing support totals $6.76 billion, which corresponds to 91% of the $7.4 billion total amount投入 for the smelter construction.
It also noted that several benefits are provided at the U.S. government level, 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 claim "clearly false." A Korea Zinc official said, "Young Poong, which calls itself the 'largest shareholder of Korea Zinc,' is criticizing Korea Zinc for having decided to hand over 10% equity in Korea Zinc to the JV for nothing, based on unrealistic and unreasonable assumptions that the U.S. Smelter construction will not proceed as planned," adding, "It is a malicious attempt, focused solely on taking control of the Korea Zinc board, that would make us lose the chance to preempt the U.S., one of the world's largest critical minerals markets."
Meanwhile, Korea Zinc announced on the 15th that it will establish a JV with the U.S. Department of Commerce and the Department of War (former Ministry of National Defense) and defense strategy corporations to build a nonferrous metal smelter in Clarksville, Tennessee. As one of the financing methods, Korea Zinc decided to allocate about 10.59% equity in Korea Zinc to the JV—whose largest shareholder is the U.S. Department of War with 40.1%—through a third-party paid-in capital increase. In response, Young Poong, which is in a management control dispute with Korea Zinc, filed for an injunction to prohibit the issuance of new shares, and a decision could come as early as the 22nd.