Korea Zinc board to discuss smelter joint venture plan with US government, source says

By Hyunjoo Jin

SEOUL, Dec 15 (Reuters) – Korea Zinc’s board will discuss on Monday a plan to build a 10 trillion won ($6.8 billion) smelter to refine critical minerals in the United States by forming a ‍venture with the U.S. government and U.S. companies, a source familiar with the matter said.

The news sent shares in Korea Zinc surging 11% in Monday morning trade. But major shareholders, who have been seeking to oust the refiner’s chairman, lambasted the plan, saying it was aimed at cementing management’s hold on the company.

The new smelter would ‌produce zinc, antimony, germanium and other critical minerals and ‌would be part of efforts by Washington to reduce U.S. reliance on China amid heightened trade tensions, local media reported.

The source was not authorised to speak to media and declined to be identified. A spokesperson for Korea Zinc was not immediately available ​for comment.

According to South Korean newspaper Joongang Ilbo, the U.S. government and U.S. defence companies will invest 1 trillion won in the venture, and the ‍U.S. side will also acquire a 10% ​stake in Korea Zinc. Most of the funding for the ​smelter will come from borrowings, it added.

The Young Poong conglomerate, which together with a ‍private equity firm MBK Partners held about 41% of Korea Zinc’s voting rights as of last January, criticised the plan.

It is rare for the U.S. government to acquire a stake in a foreign company and Korea Zinc’s management was simply attempting to secure a “white knight” so that Chairman Yun B. ‍Choi can retain control, Young Poong said in a statement.

Young Poong and MBK failed in an attempt earlier this year to secure a majority of board seats at ‍Korea Zinc, the world’s ‍largest zinc smelting company.

In a separate deal announced in ​August, Korea Zinc agreed with Lockheed Martin to produce ​germanium from ⁠2028 using raw materials procured outside China.

China dominates the ‌world’s supply of critical minerals such as antimony and germanium, which are used in telecommunications equipment, semiconductors and military technology.

Beijing banned exports of these minerals to the U.S. on December 3, 2024, following Washington’s crackdown on China’s chip sector. The ban has been suspended since November.

($1 = 1,475.5400 won)

(Reporting by Hyunjoo Jin and Jack KimEditing by Ed ⁠Davies and Edwina Gibbs)