Seoul court dismisses injunction, paving way for Korea Zinc’s U.S. smelter investment

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Seoul court dismisses injunction, paving way for Korea Zinc’s U.S. smelter investment

Published: 24 Dec. 2025, 12:39 Updated: 02 Jan. 2026, 18:14

SARAH CHEA
[email protected]

PARK EUN-JEE
[email protected]

Audio report: written by reporters, read by AI

Korea Zinc Chairman Choi Yun-birm speaks during an interview with the Yonhap News Agency on Jan. 9. [YONHAP]

[NEWS ANALYSIS]

A Seoul court on Wednesday dismissed an injunction sought by MBK Partners-Young Poong alliance against Korea Zinc, clearing the way for the company’s plan to issue third-party shares for its $7.4 billion investment project in the United States.

The ruling removes a key legal obstacle that had threatened to derail Korea Zinc’s smelting facility in Tennessee, which could allow the U.S. government to own roughly 10 percent of the Korean company — a move widely viewed as a means for Chairman Choi Yun-birm to consolidate managerial control.

The Seoul Central District Court dismissed the injunction request in favor of Korea Zinc, explaining the capital raise is essential for the smelter's business.

“Core minerals are subject to high price volatility and supply chain risks, and any disruption could have a significant ripple effect on the broader economy and industry,” the court stated. “Korea Zinc’s managerial need to scale up production of critical minerals, which are classified as rare metals, is acknowledged.”

At the core of the court’s reasoning was whether the capital increase constituted a measure “strictly necessary for business management.” Under Article 418 of Korea’s Commercial Act, third-party allotments are permitted only on an exceptional basis, and solely when demonstrably required for legitimate managerial purposes.

Korea Zinc on Dec. 15 approved $7.4 billion to build a smelting facility in Tennessee, where it will establish a joint venture with the U.S. government, Crucible JV, valued at $1.9 billion. The U.S. participants include the U.S. Department of War and the Department of Commerce.

To finance the project, Korea Zinc authorized a 2.85 trillion won ($1.9 billion) third-party share issuance, with all newly issued shares to be allocated to Crucible JV. If executed as planned, the structure would leave the U.S. government essentially holding a 10.6 percent stake in Korea Zinc through the joint venture.

Such an issuance would significantly reshape the company’s shareholder landscape, effectively securing a decisive “casting vote” in favor of Chairman Choi’s ongoing conflict with the MBK Partners-Young Poong alliance.

With an expanded share base, the Young Poong side’s ownership would decline to roughly 40 percent from 44 percent, while Choi's camp would see its influence rise to nearly 39 percent with the joint venture’s stake.

From left, Korea's Industry Minister Kim Jung-kwan, Korea Zinc Chairman Choi Yun-beom, Michael Williamson, president of Lockheed Martin International, and Howard Lutnick, U.S. Secretary of Commerce, take a commemorative photo during a signing ceremony for germanium supply and procurement held in Washington on Aug. 25. [KOREA ZINC]

The Young Poong-MBK faction harshly criticized the structure of the investment, arguing that the proposed share issuance is a “tactical maneuver designed to entrench management control.”

“It’s a clear circumvention that grants favorable equity to a specific party in the midst of a management control dispute,” the alliance said. “An abnormal structure exists under which the joint venture would retain a 10 percent stake in Korea Zinc even if a final joint venture agreement were never concluded.”

Korea Zinc rejected the criticism, saying that it was a “strategic decision made on national security grounds in response to a strong request from the U.S. government.”

The U.S. Department of Commerce on Dec. 15 announced $210 million in direct funding to Korea Zinc under the CHIPS and Science Act, adding that its “critical minerals production in the United States is vital to our country’s national and economic security and a win for the U.S. economy.”

“This reshoring of critical minerals production is another pillar of this administration’s commitment to semiconductor manufacturing in the United States and accelerating the build-out of our most strategic industries,” said Michael Grimes, executive director of the U.S. Investment Accelerator.

Update, Dec 24: Additional quotes from court added.

BY SARAH CHEA,PARK EUN-JEE [[email protected]]