Korea Zinc has announced a $7.4 billion smelter project that will be backed by the U.S. government, as Washington seeks to reduce its reliance on China for critical minerals including rare earths.
As part of the plan, the World’s largest zinc smelting company will sell new shares worth $1.9 billion to a joint venture controlled by the U.S. government and unnamed U.S.-based strategic investors, which would then control around 10% of the South Korean firm.
The U.S. Department of War will hold a 40% stake in the venture, while Korea Zinc’s stake will be less than 10%, the company said.
Following the announcement, Korea Zinc’s shares rose by up to 26% on Monday. It later pared gains to end up 4.9%.
It will secure the remaining $5.5 billion for the plant through $4.7 billion in loans from the U.S. government and financial institutions, as well as $210 million in subsidies from the U.S. Commerce Department under the CHIPS and Science Act.
The deal to build the first U.S.-based zinc smelter and critical minerals processing facility since the 1970s comes as the the US President Trump administration ramps up efforts to secure U.S. supply chains for critical minerals to reduce its reliance on China.
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The new smelter, to be built in Tennessee, would produce major non-ferrous metals such as zinc, lead and copper, precious metals such as gold and silver, and strategic minerals such as antimony, germanium, and gallium, Korea Zinc said.
It will start commercial operations in phases from 2029.
Korea Zinc said; “the plant will respond to the expansion of global supply chain risks and the increasing demand for non-ferrous metals and strategic minerals in the United States.”
China dominates the world’s supply of critical minerals such as antimony and germanium, which are used in telecommunications equipment, semiconductors and military technology.
Beijing banned exports of these minerals to the U.S. on December 3, 2024, following Washington’s crackdown on China’s chip sector. The ban has been suspended since November.
Reuters/Wumi