[Exclusive] Korea Zinc to Build Additional 200MW Power Plant in Onsan... Accelerating 'Troika Drive'

Laying the Foundation for 'Green Metal' Production

Korea Zinc, a non-ferrous metal smelting company, is expanding its large-scale self-generation facilities in response to steep increases in industrial electricity rates, embarking on a path toward 'energy independence.' The company aims to reduce its reliance on Korea Electric Power Corporation, thereby securing cost competitiveness, while also laying the groundwork for a future transition to hydrogen-based green energy.

A view of the Onsan Smelter of Korea Zinc located in Ulsan. Korea Zinc

According to industry sources on January 19, Korea Zinc applied to the Ministry of Climate, Energy and Environment at the end of last month for a 'district electricity business license' and a 'district energy modification permit' for its Onsan Smelter in Ulsan. The core of this plan is to build an additional power plant with a capacity of approximately 200 MW at the Onsan Smelter, in addition to the currently operating 270 MW self-generation facility.

Until now, Korea Zinc has not had the authority to sell electricity directly, so it has been selling surplus power generated in-house to Korea Electric Power Corporation. However, if this permit is approved, the company will be able to supply and sell electricity directly to users within the district. Currently, the proposal has been submitted to the Electric Power Commission after review by the relevant ministry. The final approval will be determined after administrative procedures, including deliberation by the Electric Power Commission and the collection of opinions from related agencies and local governments.

Korea Zinc’s decision is attributed to the nature of the smelting industry. The smelting process for producing zinc and lead consumes a large amount of electricity, with electricity costs accounting for 30 to 40 percent of total operating expenses. Over the past three years, steep increases in industrial electricity rates have put cost pressures on the company, threatening its competitiveness. Currently, Korea Zinc is known to cover about 50 percent of its total plant electricity needs through self-generation. Once the new power plant is operational, the company’s energy self-sufficiency rate is expected to rise to 80 to 90 percent.

It is also reported that electricity rates were one of several key factors behind Korea Zinc’s decision to build an integrated smelter complex worth 11 trillion won in Tennessee, United States. The company is said to have internally determined that the project was economically viable, considering a combination of factors including electricity rates, mining, and commercial feasibility.

Core of the 'Troika Drive': Hydrogen-Based Green Energy

Korea Zinc plans to convert the newly built power plant to hydrogen turbines in the future, establishing a clean energy foundation for the production of 'green metals.'

Under the leadership of Chairman Choi Yunbum, Korea Zinc is pursuing the 'Troika Drive' as a new growth engine. The Troika Drive encompasses not only the company’s traditional smelting business but also synergistic initiatives such as: ▲renewable energy and green hydrogen business; ▲resource circulation through recycling; and ▲secondary battery materials business.

The company is particularly focused on the hydrogen business. Through its Australian subsidiary, Korea Zinc is leading demonstration projects for green hydrogen production based on renewable energy and hydrogen mobility, such as hydrogen trucks. It is also expanding the hydrogen ecosystem by introducing a hydrogen refueling station at the Onsan Smelter. Korea Zinc plans to establish a value chain that covers the entire process from hydrogen production to storage, transportation, and utilization.

Hydrogen forklift used at the Onsan Smelter of Korea Zinc. Korea Zinc

The 'Distributed Power Generation' Trend Spreads Across Industry

As seen in the case of Korea Zinc, the establishment of distributed power generation-producing and using electricity independently rather than relying on Korea Electric Power Corporation’s centralized grid-has become a major topic throughout the industry. The idea is that, despite the high initial investment in facilities, eliminating the risk of ever-increasing electricity rates is more advantageous in the long run.

An official from the power industry explained, "Recently, manufacturers have been discussing building distributed power generation or their own facilities to increase energy self-sufficiency," adding, "This is because systems that improve and manage energy efficiency are directly linked to corporate profitability."

A Korea Zinc official stated, "The application for additional hydrogen co-firing power generation facilities is not only due to the recent burden of electricity rates, but also an essential step for the actual introduction and commercialization of hydrogen energy in our processes in the future." The official added, "It is a strategic choice to enhance energy self-sufficiency while completing the value chain of the green hydrogen business, which is a key pillar of the Troika Drive."