Major Credit Rating Agencies: "Korea Zinc's U.S. Smelter, a Catalyst for Strengthening Strategic Standing"

Major credit rating agencies have assessed Korea Zinc's U.S. smelter construction project as a strategic investment in response to changes in the global supply chain, predicting that it will enhance the company's mid- to long-term business competitiveness and standing. They also analyzed that the financial burden remains manageable and limited, and that strong cash generation is expected based on tax incentives linked to U.S. government policies.

Signboard in front of the Korea Zinc headquarters in Jongno-gu, Seoul. Photo by Yonhap News Agency

Korea Investors Service stated in a report on the 22nd, "From a business perspective, as global supply chain risks expand and demand for non-ferrous metals and strategic minerals increases in the United States, strengthening production capabilities in the North American market will enhance competitiveness and secure growth momentum in the mid- to long-term." The agency further noted, "Korea Zinc's importance within the supply chain has increased through cooperation with the U.S. government and strategic investors, and its strategic standing will also be strengthened by expanding into key national industries such as defense."

From a financial standpoint, the agency predicted, "A large-scale paid-in capital increase within the consolidated entity is expected to lead to short-term improvements in financial indicators." However, it also pointed out, "There is a possibility that the financial burden may persist over the mid- to long-term, as funds will be gradually allocated throughout the course of the project."

Earlier, NICE Investors Service published a report on the 17th, stating, "With the future expansion of markets such as artificial intelligence (AI), electric vehicles, and batteries, demand for critical minerals in the United States is expected to rise." The agency analyzed, "Investment in the U.S. smelter will enable the company to expand its presence and scale in the U.S. market."

NICE Investors Service also projected that risks could be hedged through the utilization of the smelter site and portfolio. The agency stated, "Korea Zinc plans to reduce investment costs by acquiring the Nyrstar USA smelter site, which offers low electricity costs and excellent logistics infrastructure, and to create additional added value by recycling residual by-products from smelting. By applying the same portfolio as the Onsan Smelter, the company aims to establish an integrated production process and reduce operational risks."

On the same day, Korea Ratings Corporation commented, "The inclusion in the U.S. security supply chain is expected to contribute to the enhancement of mid- to long-term business competitiveness and profitability, which is a positive factor." The agency added, "As the impact of strategic mineral production capabilities on business competitiveness grows, increasing rare metal output through smelter construction is expected to enhance Korea Zinc's profitability." The agency also noted that rare metals accounted for approximately 36% of Korea Zinc's consolidated gross profit of 292.8 billion won in the third quarter, highlighting their significant contribution to earnings.