"Shadow of China Looms Over Korea Zinc"... Unwavering 'Supply Chain Concerns'

As the management dispute between Korea Zinc and Young Poong intensifies, concerns are continuously raised that Korea Zinc's smelting technology and production capacity could be transferred to China. The Wall Street Journal (WSJ), a leading American daily, mentioned the possibility of Korea Zinc being acquired by a Chinese company and expressed concerns about China's expanding control over the supply chain of key industrial minerals such as zinc and nickel.

According to industry sources on the 30th, following the U.S. energy security think tank SAFE, the WSJ recently reported concerns regarding MBK Partners and Young Poong's attempts to acquire Korea Zinc. On the 28th (local time), WSJ published an article titled "A $1.7 Billion Acquisition Battle Fueled by Fear of China," stating, "Concerns over China's dominance of mineral resources cast a shadow over the deal to control the world's largest zinc smelter."

Young Poong and MBK have dismissed the possibility of technology leakage and acquisition by Chinese companies, but concerns over the supply chain persist. WSJ noted, "The confrontation surrounding Korea Zinc shows that even the possibility of (smelting) technology being transferred to China can complicate transactions in the global supply chain," adding, "Western officials are uneasy about China's capability to disrupt supply chains or create an unfair competitive environment through oversupply." It further stated, "Despite Western efforts, China's dominance in minerals such as nickel, cobalt, and lithium is expanding."

This is because China's influence on the global mineral supply chain is overwhelming. According to Benchmark Mineral Intelligence, a raw materials market research firm, China's share of mineral mining is only about 20%, but it holds around 80-90% market share in refining and smelting. Refining and smelting refer to processes that extract high-purity metals by melting ores or applying chemical methods such as oxidation and reduction. This process is essential for the industrial use of mined minerals. China aims to lead key industries such as semiconductors, electric vehicles, and batteries through this raw material supply chain advantage and price competitiveness. This is why there are concerns that China covets Korea Zinc's technology and production capacity, as Korea Zinc is one of the few global 'supply chain challengers.'

Hailey Channer, Director of Economics and Security at the University of Sydney's United States Studies Centre in Australia, expressed to WSJ, "China's mineral purchasing area has expanded from Africa to Argentina," and warned, "Someday Korea Zinc, and then many companies worldwide, could face the same situation."

In particular, Korea Zinc possesses world-class technology, producing about 1.2 million tons annually of over ten types of non-ferrous metals including zinc, lead, and copper, which heightens concerns about Chinese influence. According to British research and consulting firm Wood Mackenzie, China's market share in zinc refining last year was 49%, while Korea Zinc and its affiliates accounted for 8.5%. In refining key minerals for the battery industry such as nickel and lithium, China's market share far exceeds 70-80%. Korea Zinc began construction of a nickel refinery, a key battery mineral, last year. Nickel production is expected to reach 65,000 tons by 2026.