BUSAN (Business Emerge/Asia): Two major shareholders of Korea Zinc requested a Seoul court to block the company’s proposal to issue new shares intended to finance a $7.4 billion zinc and critical minerals smelter in the United States. The legal move cast uncertainty over the project and caused Korea Zinc’s shares to fall by 14 percent.
The filing was submitted to the Seoul Central District Court on Tuesday. The plan, unveiled a day earlier, involves constructing a U.S.-based refinery in partnership with the U.S. government. The project is designed to reduce America’s reliance on Chinese-sourced critical materials essential for electronics and defense manufacturing.
Young Poong, a conglomerate holding about 37 percent of Korea Zinc, and private equity firm MBK Partners, which owns around 9 percent, said they do not oppose the refinery itself. Their objection centers on the issuance of new shares valued at $1.9 billion to a joint venture supported by U.S. government entities and undisclosed strategic investors. The share sale would grant the new investors a 10 percent stake in Korea Zinc, diluting existing holdings and consolidating control under Chairman Yun B. Choi.
The dispute underscores tensions among Korea Zinc’s major stakeholders. Choi and his supporters, holding roughly 32 percent of shares, control four of the 15 board seats, while the remaining 11 seats are aligned with current management. Young Poong and MBK have repeatedly sought to gain management control, arguing that the proposed share issuance infringes on shareholder rights and compromises governance practices. They also claimed that board members were not given adequate time or documentation before Monday’s meeting that approved the plan.
Korea Zinc issued a statement asserting that board members received sufficient materials and time to review the proposal. The company emphasized that the project complies with legal and regulatory requirements and is aimed at developing a critical minerals supply chain aligned with U.S. government policy. Management also cited the U.S. partnership as a strategic justification for retaining control, emphasizing its contribution to economic security and global competitiveness.
U.S. officials have publicly endorsed the refinery plan. Commerce Secretary Howard Lutnick described the project as a significant step for America, highlighting that the minerals produced will support technologies in defense, semiconductors, artificial intelligence, and data centers.
Market analysts noted that the legal challenge introduces additional uncertainty for Korea Zinc’s expansion plans. Shareholders pursuing the injunction could delay the issuance of new shares, affecting the funding schedule and potentially slowing the project timeline. The outcome of the court review will influence investor confidence and governance dynamics within the company.
Korea Zinc’s plan to develop the U.S. refinery represents a broader effort to secure critical mineral resources outside China. If approved and implemented, the project would expand Korea Zinc’s global footprint and provide the U.S. with an alternative supply source. The legal dispute and court decision are expected to determine the next steps in the company’s U.S. expansion strategy.
