A Rare Corporate Takeover Battle in South Korea Reaches Its Climax
On January 23, the fate of Korea Zinc, the world’s largest smelter of zinc, will be decided. Shareholders will vote on a new slate of board directors proposed by the company’s largest shareholder and its private-equity partner, marking the end of a fierce and rare corporate takeover battle in South Korea.
A Taxing Experience for Korea Zinc’s CEO
Yun B. Choi, Korea Zinc’s chairman and CEO, has been at the helm since 2022. He describes the past few months as “a taxing experience, and a soul-searching experience.” Choi’s leadership has been under scrutiny, with critics accusing him of governance issues and delays in implementing his business strategy.
A Window of Opportunity for Korea Zinc
The current global landscape presents an opportunity for Korea Zinc to expand its operations. With China increasingly leveraging its metal production power to exert pressure on other countries, Korea Zinc can capitalize on its position as a metal smelter outside of China. Choi envisions a “Chinese-free” technology and supply chain, with plans to expand into nickel production for electric vehicle batteries.
Korea Zinc’s “Troika Drive” Strategy
Choi’s three-prong strategy, dubbed “Troika Drive,” focuses on renewable energy, electric vehicles, and sustainability. The company aims to take greater advantage of minerals and metals that might normally be ignored during the smelting process. This approach has led to the discovery of new opportunities, such as courting U.S. buyers for antimony, a metal used in chipmaking.
Geopolitics and Supply-Chain Diversification
The recent ban on antimony exports from China to the U.S. has created a demand for alternative sources. Korea Zinc is well-positioned to tap into growing concerns about supply-chain diversification and an overreliance on China. Choi believes the company can expand its production of metals like nickel and copper, currently not major parts of its output.
A New Nickel Refinery in Ulsan
In 2023, Korea Zinc signed a deal with Trafigura to build a new nickel refinery in Ulsan, with planned production of up to 40,000 tonnes per year. Choi claims the new refinery will be “the biggest nickel refinery in the non-Chinese world.”
A Takeover Bid and Governance Issues
The takeover battle between Korea Zinc and Young Poong, a fellow metal smelter, and MBK Partners, a private-equity firm, has been marked by harsh accusations and governance issues. Young Poong and MBK point to Choi’s “tyranny” and delays in implementing his business strategy as reasons for their takeover bid. Korea Zinc argues that Young Poong hopes to siphon off cash from the company, and that MBK has little experience running a smelter.
The Final Days of the Takeover Battle
The battle will come to a close on January 23, where shareholders will vote on governance changes proposed by Korea Zinc’s current board. Choi remains optimistic, despite the challenges, and believes that Korea Zinc will emerge stronger from this experience. As he says, “We will keep making zinc…I’m sure other members of the business community will do the same.”
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