Korea Zinc, Trafigura ink investment deal for nickel refinery expansion

[Courtesy of Korea Zinc]

Korea Zinc, in tandem with global raw materials company Trafigura, has sealed an investment agreement and intends to further invest in KEMCO, its subsidiary focused on sulfuric acid nickel production. This move equips Korea Zinc with the necessary momentum to penetrate the electric vehicle battery market.

According to sources, Korea Zinc and Trafigura formalized a $142.8 million investment agreement on Thursday at Korea Zinc’s headquarters in Seoul.

The investment will be utilized for KEMCO’s nickel refinery construction costs and initial operational capital. Korea Zinc and KEMCO are spearheading the development of the world’s first All-in-One Nickel Refinery.

Their strategy revolves around processing all types of nickel-containing raw materials, such as nickel matte and mixed nickel hydroxide precipitate (MHP), while also producing sulfuric acid nickel, cobalt sulfate, and precursor materials to cater to the growing EV market.

As per the agreement, Korea Zinc and Trafigura will jointly participate in KEMCO’s planned rights offering. Korea Zinc will inject 147.9 billion won, while Trafigura will contribute 37 billion won. Through this investment, Korea Zinc, as the major shareholder of KEMCO, will escalate its stake from 35 percent to 64 percent. Trafigura, as a new shareholder, secures a 12.9 percent stake. Consequently, this capital increase will reclassify KEMCO from an equity method subsidiary to a consolidated subsidiary within Korea Zinc’s financial statements, potentially benefiting from KEMCO’s future performance growth.

This investment follows up on a business alliance announced last November. At that time, Korea Zinc had established alliances by divesting its shares to Hanwha, LG Chem, Hyundai Motor Group, and Trafigura.

Trafigura, a global commodities trading firm with an annual turnover of 400 trillion won, leads the market in oil, metals, and minerals. The collaboration between Korea Zinc, possessing the world’s leading non-ferrous metal refining technology, and Trafigura, capable of reliably sourcing nickel, a crucial mineral for secondary batteries, is anticipated to flexibly navigate through regulations like the Inflation Reduction Act (IRA).

Korea Zinc and Trafigura also inked a contract aimed at securing a stable supply of raw materials for the All-in-One Nickel Refinery. Trafigura commits to supply between 20,000 to 40,000 tons of nickel annually. Moreover, Trafigura holds the right to secure 20 percent of the sulfuric acid nickel production output from KEMCO.