Korea Zinc’s Australian ventures come under scrutiny

A panoramic view of Korea Zinc’s smelter facility. (Korea Zinc)

Korea Zinc Inc. faces growing concern from Australian community, political and business circles over the operation of its long-standing business in Australia as it continues a management dispute with Young Poong Corp.

Industry sources revealed on Wednesday that Korea Zinc has been operating the Sun Metals Corp. (SMC) zinc refinery in Townsville, Queensland, since 1999. Townsville, which is rich in copper and zinc, has recently become a hub for renewable energy and other emerging industries and Korea Zinc Chairman Choi Yoon-beom, who led the Australian subsidiary Sun Metals from 2014 to 2019, has strong ties to the region.

Under Choi’s leadership, Korea Zinc entered the renewable energy market in 2018 by building a 125-megawatt solar power plant at the SMC refinery. The move allowed the company to expand its renewable energy business as a key growth strategy, and it secured approval for the 335 MW Bowman Creek wind farm project in New South Wales in 2021 via its renewable energy and green hydrogen subsidiary Ark Energy Corp. Korea Zinc also acquired a 30 percent stake in the McIntyre wind farm in May 2024, investing 670 billion won ($503 million) in Queensland.

With Choi driving most of Korea Zinc‘s Australian ventures, there are concerns about whether Young Poong and MBK Partners can continue these efforts. Former mayor of Townsville Jenny Hill raised concerns in the Australian media about Young Poong’s ability to manage the company. While Young Poong has expanded operations in Vietnam and China, it lacks experience in managing Australian operations while Korea Zinc has grown independently in Australia.

Young Poong and MBK Partners issued a statement on Wednesday rejecting claims that their tender offer is a hostile takeover, stating it aims to strengthen the control of the largest shareholder. Young Poong and its related persons, including the founding family, hold a 33.1 percent stake in Korea Zinc as of September 2024, while Choi’s family owns 15.6 percent.

Young Poong and MBK Partners also argued that the 16 percent stake held by major corporations in Korea Zinc were not “white knight” shareholders supporting Choi, as they have not participated in any joint actions as major shareholders.

In response, Choi and Korea Zinc stated they are considering legal options as they view the tender offer by Young Poong and MBK Partners as a serious breach of duty.