Korea Zinc plunges over 13% as largest shareholder opposes plans for U.S.

Korea Zinc shares plunged over 13% on Tuesday, as its largest shareholder is reportedly opposing plans to create a U.S.-backed joint venture that will see a dilution of its equity stake in the South Korean company.

Shares of the world’s largest zinc smelting company had climbed over 26% on Monday, before paring gains to 5%, as it announced a $7.4 billion mineral smelter project in Tennessee.

The company’s largest shareholder alliance is opposing the move and would seek a court injunction to stop the company from issuing new shares.

The Korea Times reported that the alliance, made up of private equity firm MBK Partners and conglomerate YoongPoong, said the plan was designed for company Chairman Choi Yun-beom to hold on to management control.

Under the deal, a joint venture company will be set up to build the smelter in Tennessee, with the Pentagon having a 40% stake in the JV.

As part of the project, Korea Zinc will sell new shares worth $1.9 billion to this joint venture controlled by the U.S. government and certain U.S.-based strategic investors that have not been named, effectively giving the group 10% stake in the South Korean company.

South Korean media outlet Business Korea said that issuing 10% of new shares will reduce the combined Yoong-Poong-MBK stake ratio from about 44% to the “high 30% range” while allowing friendly stakes from Choi and the U.S. government to rise to the 40% range.

Early Tuesday, U.S. Commerce Secretary Howard Lutnick said in a post on X that “Starting in 2026, the United States will have priority access to Korea Zinc’s expanded global production, putting American security and manufacturing FIRST.”

The Tennessee project seeks to build an integrated smelter producing base metals as well as critical and strategic minerals, with phased commercial operations targeted for 2029, Korea Zinc said in a statement.

The planned critical minerals smelting and processing facility could produce 540,000 tons of materials in the U.S. per year, according to the U.S. Commerce Department, and comes as the U.S. seeks to form critical mineral partnerships that are not dependent on China.