South Korean Court Rejects Bid to Block Korea Zinc Share Sale for U.S. Smelter Project

Post by : Saif

A South Korean court has cleared the way for Korea Zinc to move ahead with its $7.4 billion smelter project in the United States. The ruling rejected a request by two major shareholders, MBK Partners and YoungPoong, to block the company’s plan to issue new shares to help fund the project. The court decision has had an immediate impact on the stock market, sending Korea Zinc shares up by as much as 5%, while YoungPoong shares fell nearly 10%.

The U.S. smelter project, located in Tennessee, is a critical step for Korea Zinc, the world’s largest refined zinc producer. The refinery will help the United States reduce its reliance on China for minerals used in electronics, chips, and defense equipment. Under the plan, Korea Zinc will sell shares worth $1.9 billion to a joint venture controlled by the U.S. government and strategic U.S.-based investors. These investors will gain a roughly 10% stake in the South Korean firm.

MBK Partners and YoungPoong, which together hold around 46% of Korea Zinc, expressed disappointment over the court ruling. They raised concerns about potential dilution of their shares and the fairness of the investment terms. However, both companies emphasized their intention to support the U.S. smelter project to create a “win-win” outcome for the United States, Korea Zinc, and the South Korean economy.

Experts note that a major potential beneficiary of the share sale is Korea Zinc Chairman Yun B. Choi. Since October last year, Choi has been engaged in a power struggle with MBK Partners and YoungPoong. Issuing shares to U.S.-linked investors could strengthen Choi’s position and help him gain more control over the company.

Korea Zinc has argued that the U.S. smelter aligns with Washington’s efforts to diversify mineral supply chains. It also provides the company with an opportunity to establish a growth base in the United States, the world’s largest market for critical minerals.

The project also reflects a broader strategic partnership between the U.S. government and private industry. By supporting foreign investment in key mineral projects, Washington aims to secure essential materials while encouraging international collaboration.

Overall, the court’s decision removes a significant legal obstacle for Korea Zinc, allowing the company to move forward with its ambitious expansion plans. The U.S. smelter project is expected to strengthen Korea Zinc’s global presence, benefit U.S. industrial goals, and create new opportunities for the South Korean economy.

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