Korea Zinc, the world’s largest zinc smelter, announced a $7.4 billion smelter project that will be primarily funded by the U.S. government as the U.S. government pushes to reduce dependence on China for a variety of critical minerals.
Under the plan, which the company announced on Monday, Korea Zinc will 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, which will control about 10% of the South Korean company.
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The US Department of Defense will hold a 40% stake in the business, while Korea Zinc’s stake will be less than 10%, the company said.
Korea Zinc plans to secure the remaining $5.5 billion for the plant through a $4.7 billion loan from the U.S. government and financial institutions and a $210 million grant from the U.S. Department of Commerce under the CHIPS and Science Act.
The company’s shares soared as much as 26% in South Korean trading on Monday on the news, but they later pared their gains to close 4.9% higher.
Korea Zinc announced that it will begin the project by acquiring two mining complexes and the only zinc smelter in the United States, which have been in operation since 1978, in Clarksville, Tennessee, from Trafigura’s Nyrstar, before building an integrated facility in the state.
Nylstar said the sale of its U.S. assets to Korea Zinc is expected to be completed in the first half of 2026.
Major shareholders of Korea Zinc, who are calling for the ouster of the refinery’s chairman, have slammed the US investment plan, saying it is aimed at strengthening management’s control over the company.
US acquires first new zinc smelter since 1970s
A deal to build the first U.S.-based zinc smelter in decades has been signed as President Donald Trump’s administration ramps up efforts to secure supply chains for critical minerals to reduce U.S. dependence on China.
Korea Zinc also agreed this year to help deep-sea mining company The Metals Company process polymetallic nodules from the ocean floor. TMC has asked President Trump to issue an international seabed mining permit.
The administration expanded the list of critical minerals by adding copper, metallurgical coal, uranium, phosphates, potash, rhenium, silicon, and silver.
Reuters reported earlier this month that the U.S. military would develop a cluster of small-scale smelters to produce critical minerals used to make bullets, armor and other weapons.
In October, South Korea and the United States agreed to a trade deal that includes reductions in tariffs imposed by President Trump this year and South Korea’s commitment to invest $350 billion in strategic areas of the United States.
The new integrated smelter will produce 540,000 tonnes of key non-ferrous metals per year, including 300,000 tonnes of zinc, 35,000 tonnes of copper, 200,000 tonnes of lead and 5,100 tonnes of rare earth minerals, the filing said.
The Tennessee site is scheduled to begin commercial operations in phases starting in 2029.
Korea Zinc said the plant “responds to expanding global supply chain risks and growing demand for non-ferrous metals and strategic minerals in the United States.”
The White House, Commerce Department, and Department of Defense did not respond to requests for comment.
Separately, a senior White House official told Monday’s Critical Minerals Conference that President Trump is planning further “historic deals” with the U.S. mining sector.
Major shareholders plan to block stock issuance
The Youngpoon conglomerate, which together with private equity firm MBK Partners holds nearly 50% of the voting shares of Korea Zinc, announced that it plans to sue in court to halt the company’s plan to issue new shares.
It is unusual for the U.S. government to acquire stock in a foreign company, and Korea Zinc’s management was simply trying to secure a “white knight” for chairman Yoon B. Choi to maintain control, Yong-poong said in a statement.
China dominates the world’s supply of critical minerals such as antimony and germanium, used in communications equipment, semiconductors and military technology.
In response to the US government’s crackdown on China’s chip sector, the Chinese government banned exports of these minerals to the US in December 2024. The ban has been suspended since November.
