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Korea Zinc stock price plunged more than 13% on Tuesday. This is because the company’s largest shareholder is reportedly opposed to a plan to establish a U.S.-backed joint venture that would dilute its stake in the Korean company.
Shares of the world’s largest zinc smelter rose more than 26% on Monday, but gains were limited to 5% as the company announced a $7.4 billion mineral smelting project in Tennessee.
The company’s largest shareholder coalition opposes this move and plans to ask the court to block the issuance of new shares.
The Korea Times reported that the partnership plan, which is comprised of private equity firm MBK Partners and conglomerate Yunpoong, is aimed at allowing company chairman Choi Yunbeom to retain control.
Under the agreement, a joint venture will be established to build a smelter in Tennessee, with the Department of Defense owning a 40% stake in the joint venture.
As part of the project, Korea Zinc will sell $1.9 billion worth of new shares to the joint venture, which is controlled by the U.S. government and certain unnamed U.S.-based strategic investors, effectively giving the group a 10% stake in the Korean company.
Business Korea, a South Korean media outlet, reported that with the issuance of 10% new shares, the total shareholding ratio of Mr. Yoon-poong and MBK will drop from approximately 44% to the “high 30% range,” while the friendly shareholding ratio of Mr. Choi and the US government will rise to the 40% range.
“Starting in 2026, the United States will have priority access to expanding global production of Korean zinc, putting American security and manufacturing first,” U.S. Commerce Secretary Howard Lutnick said in a post on X earlier Tuesday.
Korea Zinc said in a statement that the Tennessee project aims to build an integrated smelter that will produce base metals and important strategic minerals, with phased commercial operations targeted for 2029.
The planned critical minerals smelting and processing facility could produce 540,000 tons of materials annually in the United States, according to the U.S. Department of Commerce, and comes as the United States seeks to form a critical minerals partnership that is independent of China.
