SEOUL, December 16 (AJP) -Korea Zinc has struck a strategic alliance with the U.S. government, including defense authorities, to build a $7.4 billion critical-minerals smelter—supporting Washington’s effort to cut reliance on China while shoring up its own defenses against a hostile takeover at home.
The world’s largest non-ferrous metal smelter is deepening its alignment with Washington through a large-scale U.S. expansion that places it at the center of America’s push to rebuild domestic supply chains for critical minerals used in defense systems, semiconductors, artificial intelligence infrastructure and advanced manufacturing.
At the core of the plan is a Tennessee-based integrated smelter, to be developed through Korea Zinc’s U.S. platform Crucible Metals, with total project investment estimated at $7.4 billion, combining equity, debt financing and U.S. government support.
The initiative has drawn explicit backing from Washington. U.S. Commerce Secretary Howard Lutnick described the project as a “big win” for the United States, saying it would materially strengthen America’s industrial and security supply chains.
He said the facility is expected to produce 540,000 tons of essential materials annually, supplying inputs critical to defense systems, advanced chips, AI infrastructure and next-generation manufacturing, while reducing U.S. dependence on China and other geopolitically sensitive sources.
To fund the expansion, Korea Zinc’s board on Monday approved a 2.85 trillion won ($1.94 billion) rights offering scheme , involving 2.21 million new shares priced at 1.29 million won per share, or about a 10% discount to market prices. The shares will be allocated to Crucible JV, the U.S. joint-venture vehicle, with a one-year lock-up. Proceeds will be injected into Crucible Metals Holdings, which oversees U.S. operations.
Additionally, Korea Zinc will provide long-term debt guarantees of up to $3.0 billion, extending through 2040, for borrowings by U.S. affiliate Crucible Metals LLC. The guarantee amount equals roughly 58% of the company’s consolidated equity, underscoring the scale of the financial commitment.
The U.S. government will also take a direct equity role. The U.S. Commerce Department plans to grant $210 million to Crucible Metals under the CHIPS and Science Act, with the funds provided directly to the U.S. entity and the department acquiring a corresponding stake in the joint venture.
Korea Zinc said the U.S. government and American strategic partners will collectively hold around 40% of the JV’s voting rights, while Korea Zinc will take a 9.99% stake. Through the JV structure, U.S. entities are also expected to gain an indirect ownership interest of about 10% in Korea Zinc.
The announcement initially sent Korea Zinc shares sharply higher, reflecting investor optimism about the geopolitical tailwind and the strategic value of anchoring production in the United States at a time when critical minerals have become a cornerstone of industrial and national security policy.
But the move has intensified controversy at home. Korea Zinc is facing a hostile takeover attempt led by Young Poong Group and private equity firm MBK Partners, which argue the U.S. project functions as a management entrenchment strategy that burdens the company with excessive financial risk.
Korea Zinc has rejected that characterization, saying the U.S. expansion is a strategic necessity rather than a takeover defense. The company argues that closer alignment with Washington secures long-term competitiveness, access to policy support and subsidies, and demand tied to defense and advanced manufacturing—advantages that few global peers can replicate.
In a separate capital measure, Korea Zinc said it will cancel 680,010 treasury shares Tuesday, reducing total outstanding shares from 19,343,263 to 18,663,253, a move expected to partially offset dilution from the new issuance.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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