China link roils Korea Zinc control battle
Ahead of Korea Zinc’s March 24 annual shareholders' meeting, scrutiny of China Investment Corp.’s investment in MBK’s Fund VI has resurfaced as the ownership fight between the Young Poong-MBK alliance and Korea Zinc further intensifies.
Young Poong, Korea Zinc’s largest shareholder, joined forces with MBK in 2024 to challenge Chairman Choi Yun-beom, setting up the current contest for control. With Young Poong and MBK seen as holding the larger stake and Choi relying on friendly shareholders and swing votes, the meeting is shaping up as a pivotal test of who will gain the upper hand.
The CIC controversy centers on indirect exposure through MBK’s financing structure.
China’s sovereign wealth fund is a limited partner in MBK’s Fund VI, one of the vehicles used to finance MBK’s campaign for Korea Zinc. MBK says CIC accounts for about 5 percent of the fund, making it one investor in a globally diversified pool of institutional capital rather than a direct Korea Zinc shareholder. Yet, reports that MBK used capital from the fund to repay part of the bridge loan raised for its 2024 tender offer have fueled concern that CIC’s money may have indirectly supported MBK’s push for control.
Korea Zinc says even indirect exposure to Chinese sovereign capital matters, because it is not an ordinary industrial target. Its high-nickel precursor technology was designated as a national strategy technology in late 2024, and the company has cast itself as part of US-led efforts to secure critical minerals outside China. In December, it announced a $7.4 billion critical-minerals smelter project in Tennessee with US government backing, while Choi recently told Reuters the company was in talks with major US tech firms on rare-earth recycling.
The company argues the question is whether a bid for control of a strategically sensitive company can be separated from the Chinese capital behind it.
Critics also point to CIC’s footprint beyond MBK. It owns about 5.4 percent of Canada’s Teck Resources, one of Korea Zinc’s key upstream counterparties, placing it alongside Korea Zinc on both the financing and raw-material sides and raising concerns about indirect influence across the critical-minerals supply chain.
While MBK has framed CIC’s roughly 5 percent stake as minor, experts say the size of Fund VI makes that characterization hard to sustain. The fund is estimated at 8 trillion won ($5.4 billion), which would put CIC’s commitment at roughly 400 billion won.
“If Chinese capital accounts for about 5 percent of MBK’s fund, that is by no means a small share. If their interests align, that is enough to warrant caution,” said Cho Dong-geun, emeritus professor of economics at Myongji University. “Korea Zinc is a company that has built itself up over time, and such companies and their technologies need to be protected.”
Ryou Hyo-sang, head of Seoul-based Unicorn Management & Economy Institute, pointed to what he described as a more sensitive issue: MBK’s role as a private equity firm seeking management control.
“I think the bigger problem may be not the stake itself, but the possibility of information flowing through the process in which the (general partner) reports to its LPs,” Ryou said. “Private equity funds are inherently structured to invest, generate returns and exit, which means a certain level of portfolio information is bound to be shared with investors such as CIC. That raises concerns that details related to Korea Zinc could flow to China.”
MBK has rejected that argument, calling the security framing an attempt by Chairman Choi Yun-beom’s side to deflect attention from governance failures and broader market concerns. “This is nothing more than an attempt to blur the issue,” an MBK official said.
The private equity firm says the real question for shareholders is not the nationality of one limited partner, but whether Korea Zinc’s board structure, oversight and capital allocation need to be overhauled.
That view was reinforced by proxy advisory firm ISS, which earlier this month recommended voting against Choi’s reappointment as inside director. Other proxy advisers, including Glass Lewis and local governance firms, have backed Choi or the company’s board proposals, leaving shareholders with mixed signals ahead of the vote.
With proxy advisers split, attention has turned back to the numbers. Ahead of the general meeting, the Young Poong-MBK alliance is seen holding 42.1 percent of the voting rights, compared to about 38.7 percent for Chairman Choi Yun-beom and friendly shareholders.
The gap is narrow, and with cumulative voting in play, the outcome may depend as much on how each side allocates votes among board candidates as on the headline stake count. That leaves roughly 15 percent in swing votes, including the National Pension Service’s roughly 4.8 percent stake, making the March 24 ballot a test not only of ownership strength, but of how effectively each side deploys it.
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