The Pentagon will partner with Korea Zinc to acquire a 40% stake in a $7.4 billion mineral refinery to be built in Tennessee, Reuters reported on Monday.
Critical mineral smelting and processing facilities could produce 540,000 tons of the material annually in the United States, according to the U.S. Department of Commerce.
The agreement comes as the United States seeks to form important mineral partnerships that are independent of China.
Korea Zinc plans to sell new shares worth $1.9 billion to a joint venture controlled by the U.S. government and an unnamed U.S.-based strategic investor, Reuters reported. The government and investors will control 10% of Korea Zinc, the news agency said.
“The United States has not built a large-scale zinc smelter like this since the 1970s, a fact that reflects how decades of poor leadership have put our national and economic security at risk,” White House Press Secretary Khush Desai said in a statement to CNBC on Monday.
“Thanks to President Trump, things are changing with Korea Zinc’s investment in Tennessee,” Desai said. “The Trump Administration will continue to use every tool at its disposal to end America’s dependence on foreign countries for critical minerals and restore prosperity to the working class.”
The Department of Defense did not respond to requests for comment.
“These minerals support the technologies most critical to our future, including defense systems, semiconductors, AI, quantum computing, automotive, data centers, and advanced manufacturing,” the Commerce Department said in a post Monday.
In addition to the smelter, the U.S. will have preferential access to global production of Korean zinc, the Commerce Department said. The deal “strengthens national security, rebuilds our industrial base and ends dependence on foreign supply chains,” the Post said.
The Korean zinc deal follows an $8.5 billion “framework” agreement between the United States and Australia in October to increase investment in rare earths and critical minerals.
Rare earths are an important class of minerals that can be used in the development of weapons, semiconductor manufacturing, robotics, and electric vehicles. Currently, China dominates the rare earth supply chain.
The White House announced at the time that as part of the agreement with Australia, the Department of Defense had agreed to invest in the construction of a gallium smelter in western Australia.
In July, the Pentagon agreed to buy $400 million in preferred stock in rare earth mining company MP Materials, making it the company’s largest shareholder.
