Korea Zinc Shareholder Dispute Threatens $7.4B US Smelter Project

Korea Zinc Shareholders Challenge US Smelter Funding Plan

Korea Zinc faces a legal challenge as major shareholders seek to block the $7.4 billion US smelter project. Young Poong and MBK Partners filed an injunction at Seoul Central District Court. They cited concerns over issuing new shares that could dilute their holdings. The plan would allocate $1.9 billion in new shares to a US government-backed joint venture. This move threatens to shift control of Korea Zinc and triggered a 14% share decline.

The dispute exposes tensions between Korea Zinc’s founding families and management. Young Poong and MBK own 37% and 9% of the company, respectively, but hold only four board seats. Chairman Yun B. Choi’s supporters control 11 seats. Shareholders argue the rushed approval violated governance standards and undermined their rights. Experts warn governance risks may escalate if the project proceeds without broader shareholder support.

Strategic US Partnership Drives Project Forward

Korea Zinc asserts the US smelter is essential to secure a critical minerals supply chain and boost global competitiveness. The project strengthens US-South Korea collaboration and aligns with US policy to reduce dependence on Chinese minerals. Commerce Secretary Howard Lutnick praised the initiative as a strategic win, highlighting its role in powering semiconductors, AI, and data centers.

Despite the legal challenge, management stresses full compliance with regulations and sufficient disclosure to the board. Analysts note the US partnership gives management leverage to retain control while advancing Korea Zinc’s global expansion.

SuperMetalPrice Commentary:

The Korea Zinc dispute underscores the intersection of corporate governance, global supply chain strategy, and geopolitical priorities. Shareholder conflicts may delay key projects, impacting zinc supply for US critical minerals initiatives. Investors should monitor court rulings closely, as the outcome could set a precedent for cross-border investment governance in strategic metals projects.