Chair Choi Yoon-beom of Korea Zinc said on the 6th that "Korea Zinc's U.S. Smelter will contribute to enhancing long-term shareholder value based on solid profitability."
According to Korea Zinc that day, Chair Choi Yoon-beom sent a New Year letter to shareholders that included detailed explanations about building an integrated smelter with the U.S. government. This shareholder letter is the eighth since a management rights dispute with MBK Partners and Young Poong erupted in Sep. 2024.
Choi said, "The United States, the world's largest and most dynamic market, will see structural growth in demand for critical minerals driven by the expansion of key industries such as artificial intelligence (AI), data centers, defense, electric vehicles, and batteries," adding, "Choosing the United States as a strategic production base is an important business opportunity to achieve sustainable growth."
Choi added, "This investment will also expand our global business foothold and is expected to strengthen long-term supply chain stability for allied industries."
Korea Zinc announced on Dec. 15 last year that it would pursue a plan to invest a total of 10.95 trillion won with the U.S. government and local investors to build a smelter in Clarksville, Tennessee. To fund the smelter construction, the company completed a "third-party allotment paid-in capital increase" on the 26th of the same month. This capital increase was carried out with Crucible JV, whose largest shareholder is the U.S. government, as the counterparty. The total number of shares issued was 20,872,969, and the amount was 115.59152 billion won.
Korea Zinc's U.S. Smelter is scheduled to produce 13 types of nonferrous metals—from base metals to precious and rare metals—starting in 2029. Of the 13, 11 are designated by the U.S. government as critical minerals deemed important to the national economy and security. Korea Zinc established a subsidiary, "Crucible Metals LLC," to directly operate the smelter. Korea Zinc expects the U.S. Smelter to show profitability of 17% to 19% in terms of earnings before interest, taxes, depreciation and amortization (EBITDA).
Choi said, "The U.S. integrated smelter will further strengthen Korea Zinc's strategic standing in the global critical minerals market while providing a stable foundation that supports long-term profitability and growth," adding, "This investment structure—combining our proven operational capabilities with the U.S. government's policy and financial support—will mitigate risks in the project's early stage and deliver sustainable value to all stakeholders, including shareholders, customers, employees, and partners."
In this letter, Choi also mentioned about $210 million in subsidies under the U.S. Department of Commerce's CHIPS Act. He said, "Subsidies under the CHIPS Act must be injected directly into the project entity (Crucible Metals)," adding, "From an economic standpoint, the subsidies effectively serve as a substitute for project capital, thereby reducing the amount of capital our company needs to bear."
Korea Zinc assessed that this paid-in capital increase has, structurally, an effect that is effectively equivalent to an offering at market price.
Choi said, "This structure significantly alleviates the dilution of existing shareholders' equity while appropriately sharing the financial burden of推进 the project with the U.S. government, and at the same time allows our company to retain full leadership in project operations and technical aspects."
He went on, "By building the U.S. smelter, we will establish responsible global leadership and contribute to strengthening supply chains not only in Korea but also among allied nations," adding, "We will work closely with the U.S. government and strategic investors to help reinforce a resilient critical minerals supply chain that supports the semiconductor, clean energy, and defense industries of both Korea and the United States."
Choi said, "The trust and support you, our shareholders, have given us so far—and will continue to give—will remain the most important foundation for Korea Zinc's growth," adding, "As we enter a new phase for a fresh leap forward, we look forward to your continued company on our journey for Korea Zinc to rise as a true global leader in the critical minerals space."
Meanwhile, Korea Zinc plans to exercise Crucible JV's voting rights at the regular shareholders meeting in March this year. Following the completion of Crucible JV's payment for the subscription of Korea Zinc's new shares, electronic registration with the Korea Securities Depository and changes to corporate registration have recently proceeded.