Korea Zinc, the world’s largest zinc smelter, has announced a $7.4bn smelter project that will be funded largely by the United States government as Washington pushes to cut its reliance on China for a range of critical minerals.
Under the plan, which the company announced on Monday, Korea Zinc will sell new shares worth $1.9bn to a joint venture controlled by the US government and unnamed US-based strategic investors who would then control about 10 percent of the South Korean firm.
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The US Department of Defense will hold a 40 percent stake in the venture while Korea Zinc’s stake will be less than 10 percent, the company said.
Korea Zinc will secure the remaining $5.5bn for the plant through $4.7bn in loans from the US government and financial institutions as well as $210m in subsidies from the US Department of Commerce under the CHIPS and Science Act.
The news sent the company’s shares surging as much as 26 percent in Monday trading in South Korea although they later pared their gains to close 4.9 percent higher.
Korea Zinc will kick-start the project by acquiring two mining complexes and the only US zinc smelter, which has been operational since 1978 in Clarksville, Tennessee, from Trafigura’s Nyrstar before constructing an integrated facility in the state, it said.
Nyrstar said the sale of its US assets to Korea Zinc is expected to close in the first half of 2026.
Major Korea Zinc shareholders, who have been seeking to oust the refiner’s chairman, lambasted the planned US investment, saying it was aimed at cementing management’s hold on the company.
US to get first new zinc smelter since 1970s
The deal to build the first US-based zinc smelter in decades comes as the administration of US President Donald Trump ramps up efforts to secure supply chains for critical minerals to reduce US reliance on China.
Korea Zinc also agreed this year to help deep-sea mining firm The Metals Company process polymetallic nodules from the seafloor. TMC has asked Trump to issue it an international seabed mining permit.
The administration has expanded its critical minerals list by adding copper, metallurgical coal, uranium, phosphate, potash, rhenium, silicon and silver.
The Reuters news agency reported earlier this month that the US military would develop a fleet of small-scale refineries to produce critical minerals used to make bullets, armour and other types of weaponry.
In October, South Korea and the US agreed to a trade deal, which included a cut in tariffs imposed by Trump this year and a pledge by South Korea to invest $350bn in strategic American sectors.
The new integrated smelter would produce 540,000 tonnes per year of major nonferrous metals, including 300,000 tonnes of zinc, 35,000 tonnes of copper, 200,000 tonnes of lead and 5,100 tonnes of rare earth minerals annually, it said in a filing.
The Tennessee site would start commercial operations in phases starting in 2029.
Korea Zinc said the plant will “respond to the expansion of global supply chain risks and the increasing demand for non-ferrous metals and strategic minerals in the United States”.
The White House, Commerce Department and Defense Department did not immediately respond to requests for comment.
Separately, a senior White House official told a critical minerals conference on Monday that Trump plans more “historic deals” with the US mining sector.
Major shareholders to block share issue
The Young Poong conglomerate, which together with the private equity firm MBK Partners holds nearly 50 percent of Korea Zinc’s voting shares, said it will file a complaint with a court to block the new share issue plan.
It is rare for the US government to acquire a stake in a foreign company, and Korea Zinc’s management was simply trying to secure a “white knight” so Chairman Yun B Choi can retain control, Young Poong said in a statement.
China dominates the world’s supply of critical minerals, such as antimony and germanium, which are used in telecommunications equipment, semiconductors and military technology.
Beijing banned exports of these minerals to the US in December 2024 after Washington’s crackdown on China’s chip sector. The ban has been suspended since November.
