US monitoring Korea Zinc takeover amid China supply chain concerns

Korea Herald

20-03-2025

The US State Department said it is closely monitoring the private equity firm MBK Partners' attempt to take over Korea Zinc, the world's largest zinc smelter, amid growing concerns among US lawmakers that the deal could disrupt critical mineral supply chains and expand China's control in a sector the US considers vital to national security.
The State Department's remarks came in an official response to concerns raised last month by Republican Rep. Zach Nunn, who warned that MBK Partners' potential acquisition of Korea Zinc could increase Beijing's leverage over critical mineral supply chains, heightening the risks of economic coercion and technology leakage.
'The ROK knows first-hand the risks of economic retaliation and coercion by China and has been an active participant in Minerals Security Partnership since its founding,' said Paul Guaglianone, senior bureau official of the Bureau of Legislative Affairs at the State Department, in a response to Nunn posted on his X account. ROK is the acronym of South Korea's official name, the Republic of Korea.
'Additionally, Korean companies are leaders throughout the critical minerals supply chain and are vital partners in countering Chinese market manipulation," he said.
Guaglianone added that the State Department is aware of the ongoing situation regarding Korea Zinc and 'engages regularly' with South Korean officials to discuss this and other issues.
'We understand that the ROK is also closely tracking the situation, including any potential impact.'
The State Department US policy prioritizes expanding production of critical minerals and diversifying supply chains to protect the economic and national security of the US and its allies, it said.
'The ROK will continue to be a key ally in diversifying supply chains, and the Department will continue to collaborate with it to protect our economic and national security,' it added. 'The department will continue to work to counter Chinese efforts to dominate critical minerals supply chains, including through active participation in the MSP.'
Korea Zinc produces several rare metals crucial for semiconductor manufacturing, renewable energy and defense projects directly tied to US security interests. These include antimony, indium, tellurium and cadmium, all of which China has restricted from exporting.
The dispute began late last year when MBK, partnering with Young Poong, Korea Zinc's largest shareholder, sought greater influence over Korea Zinc's management.
The MBK faction holds a 40.97 percent stake in Korea Zinc, compared to the 34.35 percent held by Korea Zinc Chairman Choi Yun-beom and his allies, including Bain Capital.
The takeover caught US attention following accusations that MBK has strong ties to Chinese capital. The controversy intensified when it was revealed that China Investment Corporation, China's sovereign wealth fund, is among MBK Partner's limited partners, raising concerns about potential leakage of technology or talent.
In response, MBK said Chinese capital represents only around 5 percent of MBK's funding and firmly denied plans to sell Korea Zinc to Chinese interests.