The Korea Zinc headquarters (Image courtesy of Yonhap)
SEOUL, Dec. 17 (Korea Bizwire) — A long-running management dispute at Korea Zinc intensified this week as rival shareholder groups clashed over the company’s plan to build a massive smelter in Tennessee, a project estimated to be one of its largest overseas investments.
On Wednesday, Youngpoong Group and private-equity firm MBK Partners—major shareholders aligned against Korea Zinc Chairman Choi Yun-beom—filed a complaint with South Korea’s Financial Supervisory Service (FSS), arguing that Korea Zinc’s disclosures about the U.S. project were incomplete and potentially damaging to the company.
The complaint alleges that the financing structure Korea Zinc agreed to with the U.S. Department of Defense includes unusually generous terms for the American side, including warrants that could allow the U.S. government to acquire up to 34.5 percent of the Tennessee operating company at prices as low as one cent per share. Youngpoong claims the arrangement was engineered to create a “white knight” investor supportive of Chairman Choi amid the bitter governance fight.
The complaint also raises concerns about a clause that would give the U.S. government an option to acquire an additional 20 percent stake if the smelter’s valuation reaches $15 billion, and about annual fees of up to $100 million that the joint-venture operator would pay for regulatory and licensing services.
Night view of Korea Zinc’s Onsan plant in Ulsan (image provided by Korea Zinc).
Korea Zinc sharply rejected the accusations, calling them a distortion designed to undermine a strategically important investment. The company said the warrant structure is consistent with terms the U.S. government has offered to other critical-minerals companies, citing MP Materials, which granted up to a 15 percent stake to the Defense Department in exchange for a $400 million investment.
On the disputed 20 percent option, Korea Zinc said the clause reflects “normal market pricing” and would accelerate capital inflows—potentially 4.4 trillion won ($3.4 billion)—if exercised, ultimately strengthening the company’s financial position rather than weakening its control.
The company added that the Tennessee smelter plan was reviewed thoroughly with legal advisers and complies with disclosure rules, promising to issue additional statements when outstanding deal terms are finalized.
The FSS said it will review the complaint to determine whether the company’s disclosures were adequate.
Products produced at Korea Zinc’s Onsan Smelter (Photo provided by Korea Zinc.)
The fight underscores the deepening rift between Korea Zinc’s leadership and its largest shareholders, who have waged an increasingly public and acrimonious battle over governance and strategic direction. The Tennessee project, meant to secure a foothold in the U.S. critical-minerals supply chain, has now become the latest flashpoint in a boardroom war with no clear resolution in sight.
M. H. Lee (mhlee@koreabizwire.com)
