[Column] Korea Zinc's U.S. Investment: A Key Opportunity in Reshaping the Strategic Mineral Supply Chain

Recently, Korea Zinc, the world’s leading non-ferrous metal smelting company, announced plans to build a refinery in the United States capable of producing rare earth elements and other strategic minerals. Korea Zinc’s investment in a Tennessee refinery is not simply an overseas business expansion, but a strategic decision that will determine the standing of Korean companies within the global strategic mineral supply chain.

This project, undertaken in partnership with the U.S. Department of Defense, involves a total investment of 11 trillion won and aims to construct the largest eco-friendly refinery in North America, with an annual production capacity of 300,000 tons of zinc and 150,000 tons of nickel. From the perspective of the strategic mineral supply chain, this investment carries decisive significance in three key areas.

First, it is an opportunity to establish Korea Zinc as a core partner in the United States’ policy to rebuild its strategic mineral supply chain. For Korea, building a supply chain for strategic minerals with allied countries, especially the United States, is an urgent task. As demand continues to surge across all advanced industries, securing rare metals such as rare earth elements, antimony, and gallium is a matter of national survival. The structure of this project, in which the U.S. Department of Defense directly invests equity and guarantees long-term purchase contracts, provides institutional stability that private companies cannot access.

Second, it establishes a proactive foothold in the core materials market for electric vehicle batteries. The implementation of the Inflation Reduction Act (IRA) has led to an explosive increase in demand for North American battery materials. By 2030, demand for nickel used in North American electric vehicle batteries is expected to increase more than fivefold compared to current levels. The problem lies in supply. Currently, North America’s nickel refining capacity does not meet even 20% of its demand. Korea Zinc’s Tennessee refinery will serve as a strategic base to fill this supply gap, becoming an essential partner for automakers and battery manufacturers such as General Motors and Ford.

Third, it secures technological leadership. This project will utilize Korea Zinc’s proprietary PRMS (Plasma Reduction Melting System) process. This technology reduces carbon emissions by more than 70% compared to conventional smelting methods and enables the economical extraction of high-purity metals even from complex, low-grade ores. As the global smelting industry faces increasing pressure for carbon neutrality, establishing a demonstration plant for eco-friendly, high-efficiency smelting technology in the United States will provide a decisive advantage in future technology licensing and in setting global standards.

From a financial perspective, this investment is also relatively reasonable. Korea Zinc will contribute only about 1 trillion won out of the total 11 trillion won, yet will secure more than a 50% stake in the joint venture and maintain operational control. With direct investment from the U.S. Department of Defense, policy financing, and tax incentives, the actual risks are limited. From 2030, annual EBITDA is expected to reach 1.3 trillion won, representing a new revenue source equivalent to 40% of Korea Zinc’s current operating profit.

Some have raised concerns that the U.S. Department of Defense’s equity participation poses a risk to control, but in fact, it lowers business risk by ensuring the U.S. government’s direct interest in the project’s stability. Government equity participation combined with long-term purchase contracts serves as a mechanism to guarantee stable profits amid the extreme price volatility of the strategic mineral market.

The strategic mineral market has now entered a period of geopolitical restructuring. The West’s efforts to break away from China-centered supply chains, the surge in demand driven by the expansion of electric vehicles and renewable energy, and the strengthening of carbon neutrality regulations are all structural changes. In this environment, securing a key North American base in partnership with the U.S. government is the key to unlocking business opportunities for decades to come.

Although some voices warn that this means taking sides in the U.S.-China strategic competition, it is unavoidable for the government to participate in the Korea-U.S. resource alliance, given that China is effectively weaponizing resources against the world. Therefore, it is hoped that this investment will be realized in a way that benefits not only corporate interests but also the national interest.

Kang Cheongu, Visiting Professor at Inha University Graduate School of Manufacturing Innovation