Korea Zinc management dispute sparks job concerns in Australia

Korea Zinc’s renewable energy expansion in Australia.

Australia’s political and business sectors are strongly opposed to the move made by Young Poong Co., the largest shareholder of South Korean non-ferrous metal smelting company Korea Zinc Co., which is seeking joint management by transferring its stake in Korea Zinc to MBK Partners, a Korean private equity fund (PEF) management firm.

Australia is a key base for Korea Zinc’s new growth businesses, including smelting, hydrogen, and renewable energy.

The Financial Review, one of Australia’s leading economic newspapers, reported on Tuesday, local time, that MBK Partners’ “takeover bid for Korea Zinc has thrown the future of one of the biggest portfolios of renewable energy and hydrogen interests in Queensland into doubt, raising fears over billions of dollars of proposed investment and hundreds of jobs.”

Chief Executive Officer Claudia Brumme-Smith of Townsville Enterprise Ltd., a Queensland economic organization, also noted that “private equity firms chasing short-term profits could lead to serious problems, including business downsizing and job losses due to restructuring.”

Australian federal lawmaker Bob Katter echoed similar concerns, telling local media that “we cannot allow a foreign private equity firm, which knows nothing about smelting, to exert influence over a vital asset like the smelter in Australia.”

Katter added that he would make the Prime Minister aware of the situation and will insist that the country’s Foreign Investment Review Board (FIRB) intervene if there is a change of hands to Korea Zinc’s management.

The situation is also heating up in Ulsan, South Korea.

Kim Doo-gyum, the mayor of Ulsan, warned that he “will not sit idly by while a private equity firm attempts a predatory merger and acquisition (M&A) of Korea Zinc.”

The Ulsan Metropolitan Council also expressed concerns over the hostile M&A attempt.

Korea Zinc’s CEO Park Ki-deok, in the meantime, issued a statement on Wednesday, stressing that Young Poong’s move could severely disrupt his company’s key strategic businesses, including secondary battery materials, and significantly harm shareholder value.

The family of Korea Zinc Chairman Choi Yun-beom and Korea Zinc also announced plans for legal action on Wednesday.

The Choi family and Korea Zinc intend to take all possible legal measures, including various injunctions, to confirm the invalidity of the management cooperation agreement between Young Poong adviser Chang Hyung-jin and MBK Partners, and to hold them accountable.

MBK Partners dismissed concerns, saying that “its tender offer is clearly aimed at strengthening the management rights of the largest and first major shareholder, and claims of a hostile M&A are absurd, especially given the gap in ownership stakes between Chang and the Choi family.”