Korea Zinc's Major Shareholders Seek Ban on Share Sale to Fund U.S. Smelter — Update

By Kwanwoo Jun

Major shareholders at Korea Zinc, the world's largest zinc smelter that is pushing for a multibillion-dollar U.S. joint venture, have sought a court injunction to stop its plan to issue shares to fund the project.

Private-equity firm MBK Partners and Young Poong, which claim to hold a combined stake of well over 40% in Korea Zinc, said they filed a complaint with the Seoul Central District Court on Tuesday to block the company's planned rights issue.

Shares in Korea Zinc slumped 14% in Seoul as jitters resurfaced over the continuing dispute between Chairman Yun B. Choi and the rival MBK-Young Poong alliance for control over the company.

The stock erased its nearly 5% gain in the prior session on news of the joint venture. The benchmark Kospi closed 2.2% lower on Tuesday.

MBK and Young Poong said their move isn't aimed at opposing Korea Zinc's plan to build a $7.43 billion smelter in the U.S. Rather, it is to block the planned share issuance they said is structured to preserve Chairman Choi's control of the company.

Korea Zinc said in a regulatory filing overnight that it will issue 2.2 million new shares, roughly 10% of its total stock, to help fund the JV smelter to be built in Clarksville, Tenn., raising 2.850 trillion won, equivalent to $1.94 billion. It said it will allocate the new shares to the smelter funded by the U.S. government and U.S. investors.

The planned equity sale, which would introduce new U.S. stakeholders with a sizable stake in Korea Zinc, could affect dynamics in the future battle for control over the company.

"We do not oppose a strategic partnership with the United States....What must be corrected is the issuance of new shares being used as a tool for management entrenchment," Young Poong said in a statement.

"Allocating new shares to a friendly third party to reinforce Chairman Choi's position during an active governance conflict lacks legal basis and severely distorts shareholder rights and the company's governance structure," MBK said separately.

Korea Zinc refuted the claims by the major shareholders, saying, "MBK Partners and Young Poong continue to view Korea Zinc as a hostile M&A target, and they are recklessly disparaging the value of this project."

It added that the newly established overseas JV exercises independent voting rights over the company, as Korea Zinc owns a stake of less than 10% in the venture.

The U.S.-South Korea partnership underscores Washington's push for a stable and independent supply of rare earths amid concerns about China's dominance in the critical minerals market.

"This is exactly how we win: build here, secure our supply chains, create great jobs, and keep America the world's industrial and technological leader," U.S. Commerce Secretary Howard Lutnick said in a post on X.

Analyst Kwangrae Park of Shinhan Securities said in a note that the partnership with the U.S. government could provide strong justification for the Choi-led management to maintain control and stable leadership over Korea Zinc in future boardroom battles.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

December 16, 2025 04:39 ET (09:39 GMT)