The construction of a smelter in Clarksville, Tennessee, that Korea Zinc is pushing with the U.S. government is expected to proceed normally for now. The U.S. government will secure a significant portion of equity in the smelter operating corporation and take its place as a pillar of the project. Korea Zinc appears likely to emerge as a key company forming "Pax Silica," the U.S. government's core security consultative body. However, with Young Poong and MBK Partners signaling additional legal and institutional challenges, it will be difficult to lower the tension.
According to the legal and industrial sectors on the 24th, the court on this day dismissed an injunction request filed by Young Poong, and Korea Zinc will carry out its planned rights offering 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 50th Civil Agreement Division of the Seoul Central District Court (Presiding Judge Kim Sang-hun) on this day dismissed Young Poong's request for an injunction to prohibit a third-party allotment rights offering against Korea Zinc. Article 416 of the Commercial Act generally requires that the business purpose be clear when allocating new shares to a third party; the court accepted Korea Zinc's assertion that this was an "issuance for business purposes."
A Korea Zinc official said, "We are grateful for the court's wise judgment. We will proceed without a hitch with the Crucible project, which will drive Korea Zinc's future growth, 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 (for 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 concerns raised through this process—such as the potential damage to existing shareholders' value, the fairness of the investment contract, and the financial and managerial risk factors that Korea Zinc will bear in the mid to long term—have been fully resolved."
Regarding the construction of the Clarksville, Tennessee, smelter, 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 operations will begin, with full operations in 2030, and the goals are expected to proceed without disruption.
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-fledged 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 from corporations in autos and chemicals. When 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 can also procure critical minerals essential to their businesses. Domestic corporations with U.S. production bases—Hanwha, LG CHEM, and Hyundai Motor—can also secure key raw materials through Korea Zinc.
As the construction of Korea Zinc's U.S. smelter becomes more tangible, cooperation between Korea and the United States over the strategic mineral supply chain is increasingly likely to be elevated to the level of a resource alliance. Considering that there was prior coordination not only with the United States but also with the Korean government, Korea Zinc appears poised to become a core company of "Pax Silica," a core security consultative body envisioned by the U.S. government, following the MASGA shipbuilding cooperation project.
Lee Jeong-woo, an analyst at DAOL Investment & Securities, said, "The United States has a high import dependency on zinc, lead, copper, silver, gold, and rare metals including antimony that are slated for production, so local sales should be smooth," adding, "These are materials and supplies needed for data centers, AI, and the defense industry, aligning with U.S. demand to diversify the strategic minerals value chain."
Park Gwang-rae, an analyst at Shinhan Investment Corp., said, "Direct support and participation by the U.S. Department of Commerce and Department of War suggests this project will become a symbolic asset of the Korea-U.S. economic security alliance that goes beyond a simple private investment," adding, "The biggest differentiator from existing corporations investments is the deep involvement of the U.S. government."
However, because the Young Poong side may take additional measures, the possibility of legal disputes remains. In legal circles, there are many opinions that Korea Zinc still needs to clearly explain how it will resolve the risks it will assume through the rights offering and payment guarantees. With the court's decision, Korea Zinc's originally designed investment and financing plan in the United States will proceed without a hitch, but questions about the overall risk design of the 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 is carried out not for a specific individual or short-term interests, but to maximize the long-term value of all shareholders and the company."
A trade lawyer at a major law firm said, "We should see the court as having resolved doubts about whether the funding structure designed by Korea Zinc is appropriate," adding, "There is a need to be clearer about warranties 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 Chairman Choi Yoon-beom of Korea Zinc has been in discussions with the U.S. government over the smelter construction since August. In August, Chairman Choi attended as a member of the business delegation for the Korea-U.S. summit held in the United States and signed a memorandum of understanding (MOU) with Lockheed Martin on germanium supply and purchase and cooperation on the critical minerals supply chain.
Later, at the "APEC summit in Gyeongju" in October, U.S. Commerce Minister Howard Lutnick requested Chairman Choi's attendance along with the heads of the four major groups. Korea Zinc announced on the 15th that, together with the U.S. government and local investors, it would push a plan to invest a total of 10.95 trillion won to build a smelter in the United States.