[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, decided to build a refinery in the United States capable of producing strategic minerals. The company’s investment in a smelter in Tennessee is not simply an overseas business expansion, but a strategic choice that will determine the standing of Korean companies within the global strategic minerals supply chain.

This project, carried out in partnership with the U.S. Department of Defense, is valued at a total of 11 trillion won. It aims to construct one of North America’s largest integrated refineries, producing 300,000 tons of zinc, 200,000 tons of lead, 35,000 tons of copper annually, as well as 13 types of strategic metals. From the perspective of the strategic minerals supply chain, this investment holds decisive significance in three respects.

First, it is an opportunity to become a core partner in the United States’ policy to rebuild its strategic minerals supply chain. For Korea, establishing a supply chain for strategic minerals with allied nations, especially the United States, is an urgent task. As demand continues to surge across all advanced industries, securing rare metals such as antimony, gallium, and germanium is directly linked to national survival. The structure in which the U.S. Department of Defense participates through direct equity investment provides institutional stability that private companies cannot access.

Second, it establishes a preemptive position in the core materials market for electric vehicle batteries. With the implementation of the Inflation Reduction Act (IRA), demand for North American battery materials is rising. It is widely expected that over the next 10 to 15 years, demand for non-ferrous and strategic metals in the United States will grow by double digits, but domestic refining capacity will fall short of half of that demand. Korea Zinc’s Tennessee refinery will serve as a strategic hub to fill this supply gap, becoming an essential partner for automakers such as General Motors and Ford, battery manufacturers, and strategic material producers including semiconductor companies.

Third, it is about securing technological leadership. Korea Zinc possesses world-class integrated process technology accumulated over 51 years at its Onsan refinery. Through integrated processes for zinc, lead, and copper, the company maximizes the recovery rate of valuable metals to the highest industry standards and has the capability to process complex raw materials such as low-grade concentrates and scrap. Additionally, Korea Zinc owns the industry’s most advanced technology for converting smelting process residues into clean slag, which is then recycled as cement raw material. As the global smelting industry faces increasing pressure for carbon neutrality, building a demonstration plant for eco-friendly, high-efficiency smelting technology in the United States provides a decisive advantage in future technology licensing and in setting global standards.

From a financial perspective, this investment is relatively rational. Out of the total project value of approximately 7.4 billion dollars (about 11 trillion won), Korea Zinc will invest about 2.5 billion dollars through a joint venture and direct investment, with only about 680 million dollars (about 1 trillion won) coming directly from Korea Zinc’s own funds. With the U.S. Department of Defense investing 1.4 billion dollars directly, the Department of Commerce providing 210 million dollars in subsidies, and policy financing of about 4.7 billion dollars, more than 90% of the total investment will be covered by the U.S. government and strategic investors. This minimizes Korea Zinc’s financial burden while ensuring operational leadership and technological dominance.

Some have raised concerns that the U.S. Department of Defense’s equity participation could pose a risk to control, but in fact, the U.S. government’s direct stake in the project increases its vested interest in the project’s stability, thereby actually reducing business risk. Government equity participation, combined with long-term purchase agreements, serves as a mechanism to guarantee stable returns in a strategic minerals market characterized by extreme price volatility.

The strategic minerals market has now entered a period of geopolitical realignment. The West’s efforts to move away from China-centered supply chains, the surge in demand due to the expansion of electric vehicles and renewable energy, and the tightening of carbon-neutral regulations are all structural changes. In this environment, securing a key North American hub in partnership with the U.S. government is the key to unlocking business opportunities for decades to come.

There are some voices expressing concern about taking sides in the U.S.-China strategic competition, but given that China is currently weaponizing resources against the rest of the world, the government cannot avoid participating in a Korea-U.S. resource alliance. Therefore, I hope this investment will be realized in a way that not only benefits the company but also serves the national interest.

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