Korea Zinc Unveils $7.4 Billion U.S.-Backed Smelter Project to Cut China Reliance
Korea Zinc, the world’s largest zinc smelter, announced on Monday a $7.4 billion project to build a major smelting and critical minerals processing plant in the United States. The development, which will receive substantial backing from the U.S. government, underscores Washington’s push to secure supply chains and lessen dependence on China for essential minerals.
U.S. Government Takes Stake Through Joint Venture
As part of the deal, Korea Zinc will issue $1.9 billion worth of new shares to a joint venture controlled by the U.S. government and U.S.-based strategic investors. Once completed, the venture will hold about 10% of the South Korean firm. The U.S. Department of War will own 40% of the joint venture, while Korea Zinc’s share will remain below 10%, the company said.
The firm plans to raise the remaining $5.5 billion through $4.7 billion in loans from the U.S. government and financial institutions, alongside $210 million in subsidies from the Commerce Department under the CHIPS and Science Act.
Shares in Korea Zinc surged as much as 26% after the announcement before closing up nearly 5% on Monday.
First U.S. Zinc Smelter in Five Decades
The Tennessee-based facility will be the first U.S. zinc smelter and critical minerals processing plant built since the 1970s. Korea Zinc said the site will produce key non-ferrous metals such as zinc, lead and copper, as well as precious metals including gold and silver. It will also process strategic minerals such as antimony, germanium and gallium—materials vital for semiconductors, communications equipment and defence technologies.
Commercial operations are expected to begin in phases from 2029. Korea Zinc said the project will “respond to the expansion of global supply chain risks and the increasing demand for non-ferrous metals and strategic minerals in the United States.”
Shareholder Backlash Over Control
The plan has sparked opposition from major Korea Zinc shareholders, who accused the company’s leadership of attempting to use the deal to consolidate power. The Young Poong conglomerate, which along with MBK Partners controls nearly half of the company’s shares, said it would file a court complaint to block the share issuance.
Young Poong described the move as an effort by Chairman Yun B. Choi to bring in a “white knight” investor to maintain control. The group also noted that it is highly unusual for the U.S. government to acquire equity in a foreign corporation.
Strategic Response to China’s Mineral Dominance
The smelter announcement comes amid growing competition between Washington and Beijing over access to critical raw materials. China remains the dominant supplier of minerals such as antimony and germanium, both of which are used in advanced electronics and defence systems.
In late 2024, Beijing banned exports of these minerals to the United States in retaliation for U.S. restrictions on China’s chip sector, though it suspended the ban in November.
The U.S. Commerce Department and the Department of War have not yet commented on the project.
with inputs from Reuters