Government's First Official Assessment: "Helps Build Supply Chain"
U.S. Smelter to Become Key in Korea-U.S. Strategic Minerals Cooperation
On Guarantee Controversy: "Standard Procedure for Investment Recovery"
With the government issuing a positive assessment of Korea Zinc's investment in a U.S. smelter, the project is expected to become not just a simple overseas investment by a corporation, but a key pillar in restructuring the South Korea-U.S. critical minerals supply chain.
Kim Jeong-Kag, Minister of Trade, Industry and Energy, met with reporters at the Government Sejong Complex on the 17th after completing next year's work report to President Lee Jae-myung. Regarding Korea Zinc's plan to build a smelter in Clarksville, Tennessee, he said, "It is a decision made based on strategic judgment, despite the financial burden."
Minister Kim commented on the project, saying, "There was a certain consensus reached in the form of a memorandum of understanding (MOU) last August," and added, "From Korea's perspective, this will help establish a stable supply chain for rare earth elements and critical minerals."
Kim Jeong-Kag, Minister of Trade, Industry and Energy, is reporting to President Lee Jae-myung at the Government Sejong Convention Center on the 17th. Photo by Yonhap News
On the 15th, Korea Zinc officially announced that, together with the U.S. government and other strategic investors, it would invest about 11 trillion won to build a smelter in the United States. Minister Kim's remarks represent the government's first official evaluation since that announcement.
Minister Kim further stated, "I understand that Korea Zinc has calculated the costs and benefits of this project," and noted, "It is a project welcomed by the U.S. Department of Commerce." Regarding the possibility of linkage with the Korea-U.S. Strategic Investment Fund, which is to be established under the Korea-U.S. investment MOU, he said, "It is a matter to be discussed with the U.S. Department of Commerce."
The Korea Zinc U.S. smelter plans to produce a total of 13 minerals, including industrial base metals such as zinc, lead, and copper, as well as antimony, indium, and bismuth. Among these, 11 items are included in the "2025 Critical Minerals List" designated by the United States.
In the market, some analysts are also evaluating this investment in the context of the U.S. supply chain restructuring trend. Hong Kwangpyo, a researcher at Macquarie Securities, stated in a recent report, "Korea Zinc is emerging as a strategic asset for the U.S. government."
Park Kwangrae, a researcher at Shinhan Investment Corp., also analyzed, "Korea Zinc has established itself as a key partner in the U.S. supply chain restructuring strategy," and added, "The possibility of direct support and participation from the U.S. government sets this project apart from a simple private investment."
Meanwhile, there are concerns about financial burden related to Korea Zinc providing a payment guarantee for the borrowing of its U.S. subsidiary for this investment. Credit rating agencies believe that consolidated borrowings could increase due to the execution of this large-scale investment.
In response, Korea Zinc explained that since the structure ensures that U.S. investors in the smelter construction and operation corporation do not have management or decision-making authority, the guarantee requirement was included to secure the stability of investment recovery. The company also noted that this is a contract structure commonly used in large-scale infrastructure and construction projects in the United States.
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