Australian politicians voice worries over Korea Zinc takeover dispute

Australian politicians are urging an end to Korea Zinc's ownership dispute with MBK Partners, citing potential setbacks in clean energy projects, job losses in Townsville, and risks to proprietary technologies.

Ark Energy's solar farm in Townsville, North Queensland. Ark Energy is an Australian energy subsidiary owned by Korea Zinc. [KOREA ZINC]

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Australian politicians are casting anxieties over Korea Zinc’s elongated, bruising ownership fight with private equity firm MBK Partners, calling for an immediate end to the dispute that may cause setbacks in ongoing clean energy projects and disruption in the global zinc supply chain.

Some lawmakers have publicly sided with Korea Zinc Chairman Choi Yun-beom, grandson of its co-founder, citing the risks of the world’s largest zinc smelter’s proprietary technologies leaking to China, the current dominant player in the raw materials refining industry.

Annastacia Palaszczuk, the former premier of Queensland, Australia, recently left a supportive message for Choi on social media, pinpointing his contribution to the development of Queensland through various investments in clean energy programs.

“As premier and trade minister, I worked closely with Yun on our shared vision to ensure that renewable energy investment in regional Australia would support the growth of value-added refining to the resources sector,” Palaszczuk wrote.

“I hope some common sense can prevail in this takeover and Yun’s leadership on renewable energy can be maintained.”

Korea Zinc Chairman Choi Yun-beom speaks during a press conference held in central Seoul on Wednesday. [YONHAP]

Korea Zinc entered the Australian market in 1996 with the establishment of Sun Metals, a zinc refining subsidiary, in Queensland. The Korean company then also formed Ark Energy, a green hydrogen maker, in 2021. The two companies created around 1,000 local jobs.

Choi’s risk of losing management control heated up after Young Poong, Korea Zinc’s largest stakeholder, teamed up with MBK Partners to launch a tender offer to acquire more shares to obtain the controlling stake.

Korea Zinc executives are strongly opposing the move, calling it a “hostile takeover bid.”

Queensland Sen. Nita Green also expressed her concerns regarding a takeover from “an entity that does not have the same vision for North Queensland."

“Korea Zinc supports hundreds of jobs in Townsville and has a really good safety record,” Green said during a recent news conference in Cairns. “I am concerned about any ownership change and what that might mean for the people of Townsville. People of Townsville are pretty vocal when it comes to what happens to their town, so I’m sure that they have concerns as well.”

“As a North Queensland senator, I will continue to express my concerns publicly until this matter is resolved.”

Left, Annastacia Palaszczuk, the former premier of Queensland, Australia, and Queensland Senator Nita Green [SCREEN CAPTURE]

Zinc was the fourth most used metal in the world in 2023, behind aluminum, iron and copper, which are also used in major industries like automobiles, electronics and construction. The metal's production stands at around 14 million tons per year.

Korea Zinc is the world’s largest zinc smelter that makes up around 10 percent of the world’s zinc production. The Korean company produces around 1.2 million tons of some 10 types of nonferrous metals including zinc, lead and copper.

Bob Katter, a member of the Australian Parliament for Kennedy, Queensland, also submitted a question in writing to the Australian prime minister asking him to “intervene on the hostile takeover attempt.”

“Now, a bunch of slithering shareholder sharks that wouldn't know the difference between zinc and kryptonite want to play Monopoly games — they will conquer and divide with disastrous outcomes,” Katter wrote in the statement.

“If the hostile takeover of Korea Zinc occurs, Townsville will lose another 1,000 jobs. Operations will be split up and moved overseas,” he added. “High-level government intervention and diplomacy must be used to stop this takeover and keep Australian jobs and industry.”

MacIntyre Wind Farm's wind farm in Queensland. Ark Energy has 30 percent stake in the farm. [KOREA ZINC]

Korea Zinc executives also speculate that the takeover will potentially cause an outflow of their proprietary technologies into China, citing the fact that MBK Partners is backed by Chinese capital.

Currently, China controls up to 90 percent of the world’s raw material refining market, according to data from the market tracker Benchmark Mineral Intelligence.

Countries other than China, including the U.S. and Korean governments, have formed a series of alliances in past years to cooperate on raw material sources in hopes of creating a supply chain independent of China.

The Wall Street Journal pinpointed growing worries over “China’s mineral dominance” and “Beijing’s ability to vex supply chains or create an uneven playing field by flooding the market” with supply behind the ongoing ownership dispute over Korea Zinc.

Global chipmakers are already expressing concerns regarding the potential supply chain disruptions that could stem from the intensifying management feud as Korea Zinc plays a key role in supplying sulfuric acid, a material crucial to the removal of impurities from silicon wafers for semiconductors.

A Korean chipmaker recently sent a letter to the Korean materials firm raising worries over the products losing quality amid the prolonged battle.

“Sulfuric acid is an essential material for making chips, thus needing constant and expert quality control,” the letter read. “We request the stable supply of sulfuric acid and quality maintenance and improvement.”

Korea Zinc supplies pure sulfuric acid to the two largest domestic chipmakers, Samsung Electronics and SK hynix.

High-purity sulfuric acid is mostly used in the chip industry due to its enhancement of chip performance yield rates. Korea Zinc’s Onsan refinery in Ulsan produces 230,000 tons of pure sulfuric acid annually. Of all the sulfuric acid needed for local chipmakers, Korea Zinc is in charge of 65 percent.

BY SARAH CHEA [chea.sarah@joongang.co.kr]