According to court filings and company disclosures, a South Korean court has rejected a request by major shareholders MBK Partners and YoungPoong to block Korea Zinc’s planned issuance of new shares, a decision that clears the way for funding a $7.4 billion smelter project in the United States.
Court Ruling Backs Strategic Minerals Push
As per data released by the company, the new shares are intended to raise capital for the construction of a large critical minerals refinery in Tennessee, an investment Korea Zinc unveiled last week as part of its expansion strategy in North America. The project, estimated at $7.4 billion, is expected to be overwhelmingly financed by the US government and is designed to strengthen supply chains for critical minerals used in areas such as semiconductors and defense, reducing US reliance on China.
As seen in the market data, Korea Zinc shares climbed as much as 5% following the ruling, reflecting investor approval of the court’s decision and renewed confidence that the project will move forward without further legal delays. In contrast, YoungPoong shares fell by more than 10%, as reported by Reuters, highlighting the sharp divergence in the market reaction between the two companies.
As stated by the court, the ruling cited national strategic interests, including the importance of reinforcing the cooperation between South Korea and the United States in the critical mineral sector. The shares linked to the issuance are valued at $1.9 billion and will be sold to a U.S government-based joint venture, which would receive roughly 10% ownership in Korea Zinc.
Despite the legal setback, MBK Partners and YoungPoong said, according to their statements, that they will continue to support the project for mutual benefit, signalling that opposition to the funding plan has eased even as financial and strategic stakes remain high.
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Shareholder Tensions and Governance Concerns Persist
The court has drawn a sharp response from Korea Zinc’s largest shareholders, highlighting the deep division surrounding the company’s U.S. expansion plans. Private equity from MBK Partners and conglomerate YoungPoong, which together control roughly 46% of Korea Zinc, said they were disappointed with the decision. They repeated concerns that the planned transaction could dilute shareholder value and questioned whether the investment terms are balanced and fair for existing investors.
Despite their objections, the two shareholders struck a conciliatory tone on the broader strategy. In a joint statement, MBK and YoungPoong said they would continue to support the US smelter project, stressing that they want it to produce genuine winning outcomes. According to their remarks, the project should benefit the United States, strengthen Korea Zinc’s global position, and contribute effectively to the wider Korean economy.
Korea Zinc, in a regulatory filing, framed the court’s decision as a validation of the project’s strategic intent. The company said the Seoul Central Court concluded that the transaction was designed to back a US-led restructuring of the global critical mineral supply chain.
As per the filing, the court also recognized the deal’s role in deepening the cooperation between South Korea and the United States while keeping Korea Zinc secure, stable, long-term global demand. The document added that US authorities preferred taking an equity stake through a joint venture, judging that subsidies or direct funding alone would not guarantee the project’s success.
Governance experts, however, point to a parallel power struggle within the company. Since October last year, Chairman Yun B.Choi has been locked in a control battle with MBK and YoungPoong, and analysts have been saying issuing shares to a potential ally could strengthen his position. Market reaction underscored the tension, with Korea Zinc shares down 2.7% and YoungPoong falling 10.4% compared with a modest 0.2% dip in KOSPI as of 05:29 GMT.
