'Korea Zinc Management Dispute' Youngpoong, Seokpo Smelter Operation Suspension Confirmed

Second Trial 'Guilty' in Unauthorized Discharge of Water Pollutants Case
Submission of Application for Temporary Shareholders' Meeting of Korea Zinc

Yeongpung's Seokpo Smelter, which is engaged in a management rights dispute over Korea Zinc, will halt operations for '1 month and 30 days.'

On the 1st, Yeongpung announced that it will suspend operations at the Seokpo Smelter following the Supreme Court's final ruling confirming administrative sanctions for violations of the Water Environment Conservation Act related to wastewater discharge. The schedule for the suspension of operations has not yet been determined.

Gyeongsangbuk-do issued an administrative order to suspend operations related to wastewater discharge from Yeongpung's Seokpo Smelter in 2019, but Yeongpung filed a lawsuit to cancel the suspension in protest. However, Yeongpung lost in both the first and second trials, and this time the Supreme Court also rejected the Seokpo Smelter's claims.

Additionally, on the same day, the Daegu District Court Criminal Appeals Division 5 (Presiding Judge Kim Sang-yoon) overturned the original ruling in the appeal trial of Yeongpung and Mr. A, who were indicted for violating the Water Environment Conservation Act, and sentenced them to fines of 10 million KRW and 5 million KRW, respectively.

Mr. A, an employee of Yeongpung, was prosecuted on charges of discharging water pollutants entering the prevention facilities without passing through the final discharge outlet and discharging water pollutants from the discharge facilities without passing through the prevention facilities. Yeongpung was indicted on charges of discharging water pollutants, developing and using groundwater without permission from the competent authority, and failing to attach a water flow totalizer.

It is known that at the Seokpo Smelter site, 14 unauthorized groundwater wells were installed in January 2007, and until August 2019, 52 wells were used to extract groundwater, which was used as washing water in the sulfuric acid process during the zinc smelting process.

The court stated, "The double retaining wall tank installed and operated by the Seokpo Smelter is difficult to be regarded as a prevention facility as defined by the Water Environment Conservation Act," and added, "It is reasonable to consider that discharging wastewater overflowing from the high-efficiency sedimentation tank into the double retaining wall tank through drainage channels and pipes, or discharging cushion tank wastewater into the double retaining wall tank through pipes, constitutes discharge," thus ruling in favor of the prosecutor's claims.

[Image source=Yonhap News]

Meanwhile, Yeongpung and MBK Partners submitted an application to the Seoul Central District Court on the same day to convene an extraordinary general meeting of Korea Zinc shareholders.

Yeongpung explained the reason for the application, stating, "Although we requested the convening of an extraordinary general meeting, the company has not yet taken steps to convene the meeting. Two days after the request, the board of directors decided on a large-scale paid-in capital increase, and if it proceeds as planned, it could cause damage to existing shareholders and lead to changes in the company's shareholder composition and governance structure."

Previously, Yeongpung and MBK Partners, who became the largest shareholders of Korea Zinc by acquiring an additional 5.34% voting stake through a public tender offer, had requested the convening of an extraordinary general meeting to appoint 14 new directors and amend the articles of incorporation to introduce an executive officer system.