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Young Poong, MBK challenge Korea Zinc’s $6.8 billion US smelter plan
Korea Zinc's Onsan Refinery in Ulsan / Courtesy of Korea Zinc
By Jun Ji-hye
Largest shareholder seeks court injunction to block new share issuance
Young Poong and MBK Partners criticized Korea Zinc’s push to build a smelter in the United States, saying on Monday that the plan runs counter to commercial logic and is designed to defend company Chairman Choi Yun-beom’s management control.
They issued the objections after reports that the world’s largest zinc smelter plans to construct a strategic minerals smelter worth 10 trillion won ($6.8 billion) in the southeastern United States, with the U.S. government and corporations expected to contribute around 2 trillion won. The facility is slated to serve as a U.S.-based production hub for key strategic minerals, including antimony and germanium, which Korea Zinc currently manufactures domestically.
The Young Poong-MBK alliance is the largest shareholder of Korea Zinc and has been challenging Choi’s managerial control since launching a tender offer on Sept. 13, 2024.
Korea Zinc’s management convened an emergency board meeting and later approved a third-party allotment capital increase to fund the construction of a U.S. smelter.
“As Korea Zinc’s largest shareholder, directors appointed by Young Poong and MBK Partners express deep regret that they were entirely excluded from any meaningful prior briefing or discussion on a matter of such far-reaching importance to the company’s future,” a Young Poong official said. “This represents a severe breakdown in corporate governance and a serious procedural violation.”
The alliance stated its strong objection to the board’s approval, warning that the decisions could erode shareholder value and weaken the company’s financial soundness.
It argued that the Korea Zinc board, dominated by directors aligned with Choi, rushed through major overseas investment- and governance-related resolutions amid the ongoing battle for management control, without sufficient scrutiny or proper communication with stakeholders.
“We will promptly seek a court injunction to halt the issuance of new shares, in order to safeguard Korea Zinc’s long-term viability and shareholder interests,” the Young Poong official added.
The official argued that the initiative, framed as a response to geopolitical tensions and the U.S.-China rivalry, in reality sacrifices Korea’s strategic national asset — its “zinc sovereignty” — to protect Choi’s personal control of the company, rather than reflecting genuine business necessity.
He also said claims that the U.S. government is “investing” in Korea Zinc are fundamentally misleading.
“In a normal commercial structure, an investor supporting the construction of a new smelter would invest directly in the project entity,” he said. “Instead, as reported, the proposed transaction would take the unprecedented step of having a U.S.-backed joint venture acquire newly issued shares of Korea Zinc through a third-party allotment.”
The official added that channeling funds into Korea Zinc and granting voting rights to a foreign investor shows the move is aimed not at financing the project but at forming a friendly voting bloc to shore up Choi’s control.
He added that the plan raises serious fiduciary duty concerns under Korea’s revised Commercial Act, noting that the hurried dilution of shareholders — despite the project’s long timeline — casts doubt on its true intent.
Korea Zinc’s Onsan Refinery in Ulsan operates an integrated hydrometallurgical and pyrometallurgical process to produce zinc as well as strategic minerals such as antimony and germanium. The proposed U.S. facility is expected to use a similar integrated process and function as a hub for supplying critical minerals and advanced industrial materials.
Young Poong and MBK Partners warned, however, that building a U.S. “twin” of the Onsan plant could hollow out Korea’s domestic smelting industry, replace exports with local output and heighten the risk of decades of proprietary smelting expertise being transferred abroad.
Meanwhile, in a separate press release issued the previous day, Young Poong said its review of regulatory filings, court rulings and intercompany fund flows suggests that Choi and Ji Chang-bae, the former CEO of private equity firm OneAsia Partners and Choi’s middle school classmate, may have indirectly used 20 billion won of Korea Zinc funds to recover investments in Cheongho Comnet and pursue personal gains.
Young Poong argued that the fund movements appear to have been driven by the interests of specific individuals rather than the company’s benefit, calling for a thorough investigation into the appropriateness of the transactions and potential breaches of fiduciary duty.