The construction of a smelter in Tennessee that Korea Zinc is pursuing with the U.S. government is expected to proceed normally for now. The U.S. government will secure a significant portion of the equity in Korea Zinc and the smelter operating company, positioning itself as one pillar of the project. Korea Zinc has a strong chance of emerging as a core corporations composing the U.S. government's key security consultative body "Pax Silica." However, with Young Poong and MBK Partners signaling further legal and institutional challenges, it will be hard to ease tensions.
According to the legal and industrial sectors on the 24th, the court on this day rejected the injunction filed by Young Poong, and Korea Zinc will proceed with the paid-in capital increase as scheduled on the 26th. By issuing 2,209,716 new shares (2.85 trillion won), Crucible JV, a joint venture with the U.S. government, will secure 10.59% equity in Korea Zinc through a third-party allotment.
The Seoul Central District Court Civil Division 50 (Presiding Judge Kim Sang-hun) on this day dismissed Young Poong's injunction request to prohibit a third-party allotment paid-in capital increase against Korea Zinc. Article 416 of the Commercial Act generally requires that when new shares are allotted to a third party, the management purpose must be clear, and the court accepted Korea Zinc's claim that this was an "issuance for management purposes."
A Korea Zinc official said, "We appreciate the court's wise judgment. We will proceed with the Crucible project, which will drive Korea Zinc's future growth, without setbacks and lead it to success," adding, "As a central corporations in the critical minerals supply chain, we will strive to contribute to the national economy and to Korea's economic security."
Young Poong and MBK Partners (on the Young Poong side) said, "We express regret over the court's decision to dismiss the injunction to prohibit the issuance of new shares," adding, "It is difficult to see that the concerns raised through this process—such as the potential damage to existing shareholders' value, the fairness of the investment agreement, and the financial and managerial risk factors that Korea Zinc will bear over the mid to long term—have been fully resolved."
Regarding the construction of the Clarksville (Clarksville) smelter in Tennessee, Korea Zinc plans to select engineering, procurement and construction companies and place orders for major equipment in 2026, and break ground in 2027. After completion in 2029, phased operation and full operation in 2030 are expected to proceed without a hitch.
Korea Zinc expects annual sales of 5.6 trillion won and operating profit of 1.25 trillion won at this site. The U.S. smelter of Korea Zinc will produce 11 of the 60 minerals designated by the U.S. government in 2022.
If Korea Zinc begins full-scale production of strategic minerals in the United States, demand is expected not only from U.S. defense contractors but also from advanced industries such as semiconductors and artificial intelligence (AI), and corporations such as automobiles and chemicals. Once the supply of gallium and high-purity sulfuric acid—essential to semiconductor processes—ramps up, local semiconductor corporations such as Intel and Micron can be secured as customers.
AI corporations such as Meta, Google and Amazon will also be able to procure key minerals essential to their business. Domestic corporations with production bases in the United States, including Hanwha, LG CHEM and Hyundai Motor, can also secure core raw materials through Korea Zinc.
As the construction of Korea Zinc's U.S. smelter becomes visible, cooperation between Korea and the United States over the strategic minerals supply chain is increasingly likely to be elevated to the level of a resource alliance. Given that there was prior coordination not only with the United States but also with the Korean government, Korea Zinc is expected to become a core company of the U.S. government's envisioned key security consultative body "Pax Silica," following the MASGA project for shipbuilding cooperation.
Lee Jeong-woo, an analyst at DAOL Investment & Securities, said, "The United States has a high import dependence on zinc, lead, copper, silver, gold and antimony, which are scheduled for production, so local sales are expected to be smooth," adding, "These are materials and supplies needed for data centers, AI and defense industries, aligning with U.S. demand to diversify the strategic minerals value chain."
Park Kwang-rae, an analyst at Shinhan Investment Corp., said, "The direct support and participation of the U.S. Department of Commerce and Department of War suggests that this project will become a symbolic asset of the Korea-U.S. economic security alliance beyond a simple private investment," adding, "The biggest differentiator from existing corporations investments is the deep involvement of the U.S. government."
However, since the Young Poong side can take additional measures, the possibility of legal disputes still remains. In the legal community, there are many opinions that a clear explanation is needed on how Korea Zinc will address the risks it will assume through the paid-in capital increase and payment guarantees. While the court's decision means the U.S. investment and financing plan originally designed by Korea Zinc will proceed without difficulty, questions over the risk design of the overall project need to be resolved.
A Young Poong official said, "Going forward, we will make every institutional and legal effort to ensure that Korea Zinc's management proceeds for the maximization of long-term value for all shareholders and the company, rather than for a specific individual or short-term interests."
A trade law specialist at a major law firm said, "We should see the court as having resolved questions over whether the financing structure designed by Korea Zinc is appropriate," adding, "There is a need to clarify further the guarantees for the technology Korea Zinc will provide and the risks associated with payment guarantees if the business fails to generate revenue as planned."
Meanwhile, it is understood that Chair Choi Yoon-beom of Korea Zinc has been in discussions with the U.S. government over the construction of the U.S. smelter since August. In August, Chair Choi participated as a member of the business delegation for the Korea-U.S. summit in the United States and signed a memorandum of understanding (MOU) with Lockheed Martin for germanium supply and purchase and cooperation on the critical minerals supply chain.
Subsequently, at the "Gyeongju Asia-Pacific Economic Cooperation (APEC) Summit" on the 10th, U.S. Commerce Minister Howard Lutnick requested Chair Choi's attendance along with the heads of the four major groups. On the 15th, Korea Zinc announced it would promote a plan to invest a total of 10.95 trillion won with the U.S. government and local investors to build a smelter in the United States.