Korea Zinc chief boosts his ownership on battery alliance with Hyundai Motor

Korea Zinc Co. Chairman Choi Yoon-beom. [Courtesy of Korea Zinc]

With Hyundai Motor Group’s participation in a paid-in capital increase by Korea Zinc Co., Choi Yoon-beom, the current chairman of the world’s largest lead and zinc smelter is expected to see his ownership stake to surpass that of Young Poong Group Chairman Chang Hyung-jin for the first time. While the Choi and Chang families had previously co-managed Korea Zinc, founded by both families, tensions over the consolidation of ownership stakes emerged last year after third-generation CEO Choi took the reins.

Choi’s intention to separate Korea Zinc, which accounts for 70 percent of Young Poong Group’s revenue, has been widely reported. In this context, Hyundai Motor Group’s acquisition of a 5 percent stake in Korea Zinc is seen as a strategic move that not only secures stable management control for Chairman Choi but also strengthens the company’s competitiveness in the emerging field of electric vehicle batteries.

On Wednesday, Hyundai Motor Group announced that its overseas subsidiary, HMG Global, established through a joint investment by Hyundai, Kia, and Hyundai Mobis, will acquire a 5 percent stake or 1,045,430 shares in Korea Zinc through a paid-in capital increase. HMG Global, formed last year, is the U.S.-based subsidiary aimed at Hyundai Motor Group’s new business and future strategic investments.

The per-share price of the acquisition is set at 504,333 won ($382), a 7.5 percent discount from the closing price on the same day. Consequently, the total size of the paid-in capital increase amounts to 527.2 billion won. Korea Zinc plans to invest the funds in enhancing its competitiveness in the secondary battery materials sector.

Prior to the paid-in capital increase, the stake of Chairman Choi and his supporting groups was 28.53 percent, which includes friendly shareholder stakes from Hanwha Group (8.08 percent), LG Chem (1.97 percent), and Hankook Tire (0.78 percent). This falls slightly short of Young Poong Group’s stake of 32.42 percent. But Hyundai Motor Group’s acquisition of a 5 percent stake in Korea Zinc is expected to tip the scale in Chairman Choi’s favor, narrowly surpassing Chairman Chang’s stake.

Young Poong Group, founded by the late Jang Byung-hee and Choi Ki-ho, has historically operated with a separate management structure where the Choi family has managed Korea Zinc’s affiliates while the Jang family has handled the electronics-related affiliates. However, since Chairman Choi took office last year, he successfully secured favorable shareholders including Hanwha Group and LG Chem through his network connections.

This alliance goes beyond mere shareholder acquisition and is praised for its potential to extend into collaborations in renewable energy and secondary battery fields. Chairman Choi is known for his trusted relationships with executives like Kim Dong-kwan, Vice Chairman of Hanwha Group, and Koo Kwang-mo, Chairman of LG Group.

Korea Zinc is constructing a nickel refinery in Ulsan, which is set to be completed within this year. Post-construction, Korea Zinc’s sulfuric acid nickel production capacity will become the second-largest globally, reaching around 65,000 metric tons annually. Nickel supply will commence from 2026 onwards, with Hyundai Motor Group expected to source around 50 percent of the required nickel for compliance with the U.S. Inflation Reduction Act (IRA) from Korea Zinc by 2031.

“In addition to this collaboration with Korea Zinc for nickel supply, we are exploring various avenues of cooperation with other global raw material companies to secure essential strategic materials for electric vehicle batteries, such as lithium,” said a Hyundai Motor Group spokesperson.