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The US has backed a $7.4bn investment in a critical minerals processing plant to be built by Korea Zinc as Washington tries to counter China’s dominance over the supply chain for strategic metals.
Korea Zinc, the world’s biggest zinc smelter, said the US government had asked the company to build the facility to address growing supply-chain risks for materials essential to industries from cars to defence.
The plant will produce antimony, germanium and gallium — elements used in semiconductors and electronics — as well as non-ferrous metals such as zinc, lead and copper and precious metals including gold and silver.
Commercial operations would begin gradually after construction in 2027-29, the company said in a regulatory filing on Monday.
Korea Zinc shares rose as much as 27 per cent after local media reported on the agreement.
The project comes after South Korea agreed to invest $350bn in the US in return for lower tariffs as part of a trade deal signed in late October. Choi Yun-birm, Korea Zinc’s chair, was part of a South Korean business delegation to Washington in August.
The project is one of South Korea’s largest investments in the US critical minerals sector and underscores Korea Zinc’s strategic importance as the materials become central to US national security and industrial policy.
Korea Zinc’s board on Monday approved the plan to set up a foreign joint venture, which will include the US government.
The joint venture would raise about $2bn for the project, the filing said, while the rest of the money will come from a mix of US government loans and grants and capital contributions from Korea Zinc.
“The facilities will help us secure a strategic status in the US critical minerals market and strengthen our competitiveness,” the company said. “It will also boost our corporate and shareholder value by helping us secure future growth drivers.”
The company plans to acquire a smelting site owned by Nyrstar in Tennessee and rebuild the infrastructure to produce 13 types of metals and sulphuric acid used in chipmaking.
Korea Zinc said it aimed to produce 300,000 tonnes of zinc, 35,000 tonnes of copper, 200,000 tonnes of lead and 5,100 tonnes of rare earths annually.
The US and its allies rely heavily on China for critical minerals and have recently stepped up efforts to build a non-China supply chain.
Korea Zinc is a producer of several key materials, including antimony, indium, tellurium, cadmium and germanium, many of which are under strict Chinese export controls.
Beijing said last week it was issuing general licences for rare earths exports as part of a trade war truce agreed between the US and China last month.
The move could ease trade tensions with the US and its allies and alleviate acute shortages that have gripped global supply chains.
This article has been amended to clarify that the smelting site owned by Nyrstar in Tennessee remains in operation
