Korea Zinc shares fell over 13 percent on Tuesday, with its biggest shareholder reportedly dissenting against plans to establish a U.S.-supported joint venture, which will entail a dilution of its equity interest in the South Korean firms.
The shares of the world’s largest zinc smelting company had surged by over 26 percent on Monday, then decreased by 5 percent, as it declared a $7.4 billion mineral smelter venture in Tennessee.
The largest shareholder alliance in the company is protesting the move and would apply to the court to issue an injunction to prevent the issuance of new shares by the company.
According to the Korea Times, the alliance, which consists of a private equity firm MBK Partners and a conglomerate YoongPoong, stated that the plan was to keep the management under the control of the company Chairman, Choi Yun-beom.
However, the deal will involve the establishment of a joint venture company to construct the smelter in Tennessee, with the Pentagon holding a 40 percent stake in the JV.
As part of the project, Korea Zinc will sell new shares of up to $1.9 billion to this joint venture that is controlled by the U.S. government and some U.S.-based strategic investors, who have not been named, and which will give the group a 10 percent stake in the South Korean company.
South Korean media outlet Business Korea reported that issuing 10 percent of new shares will cause the combined Yoong-Poong-MBK stake ratio to decrease to the “high 30% range” rather than the 44 percent range, whilst enabling friendly stakes by Choi and the U.S. government to increase to the 40 percent range.
In a post on X (formerly known as Twitter), U.S. Commerce Secretary Howard Lutnick wrote on Tuesday that “Starting in 2026, the United States will have priority access to Korea Zinc’s expanded global production, putting American security and manufacturing FIRST.”
In a statement, Korea Zinc said that the Tennessee project aims to construct a combined smelter that will produce base metals and strategic and critical minerals, and its commercial activities will be established in phases, with the first stage to be launched in the year 2029.
The U.S. Commerce Department noted that the planned critical minerals smelting and processing plant would yield 540,000 tons of metals in the United States annually, which comes at a time when the U.S. is seeking to establish critical mineral relationships that are not necessarily reliant on China.
