Korea Zinc’s ambitious 10-year growth plan has stalled in its first year, derailed by an eight-month control battle with private equity firm MBK Partners, raising concerns about the company’s financial health and strategic direction.

The world’s top non-ferrous metal smelter laid out its long-term vision in December 2023 during its first-ever investor day in Seoul, pledging to invest 11.9 trillion won ($8.8 billion) over the next decade in battery materials and other new businesses, with a target of 10% annual growth.

But since September 2024, the company has been locked in a high-stakes ownership fight with MBK, which has poured billions into acquiring a stake. Korea Zinc’s share price has swung sharply during the standoff, and the company has yet to finalize a business plan for 2025, despite being seen as a key supplier of critical minerals outside China.

The dispute has overshadowed hopes that Korea Zinc could benefit from U.S. President Donald Trump’s renewed tariff push and global supply chain realignment. “They’ve already wasted eight months,” said an industry source. “If this continues, the company may miss its window of opportunity.”

Korea Zinc’s battery materials subsidiary KPC, a joint venture between its affiliate Kemco and LG Chem, operates this plant in Ulju County, Ulsan. The facility began mass-producing high-nickel precursors—key materials for secondary batteries—earlier this year using technology designated as a national strategic technology. Chinese companies currently account for more than 90% of global precursor production./Korea Zinc

The cost of the battle has exceeded 3 trillion won ($2.3 billion). Korea Zinc borrowed 1 trillion won at an annual interest rate of 6.5% to fund share buybacks and defend management control. In a rare move, the previously debt-free company launched a 700 billion won bond offering—its first in 15 years—to repay loans.

The company’s debt-to-equity ratio jumped to 94.8% at end-2024 from 36.5% six months earlier. Interest expenses almost tripled year-on-year to 117.9 billion won from 42.3 billion won.

Korea Zinc’s board and labor union have united in the fight against MBK, but the company’s balance sheet has weakened. Industry insiders say that regardless of who wins, the damage to the company is already significant.

MBK has also heavily leveraged its bid, using about 1.2 trillion won in margin loans from brokerages to fund a 1.6 trillion won stake in the company. Its use of a leveraged buyout (LBO) model mirrors its controversial 2015 acquisition of retailer Homeplus, where key assets were sold to repay debt.

Korea Zinc Chairman Choi Yun-beom adjusts his glasses while speaking at a press conference on Oct. 2, 2024, at the Grand Hyatt in Seoul. The event addressed the company’s ongoing ownership dispute with Young Poong and MBK Partners./News1

The financial strain is threatening Korea Zinc’s push to pivot from traditional smelting to battery materials and renewable energy. The company is among a handful globally capable of producing antimony and indium—minerals dominated by China—as well as battery precursors. But last year, it spent more on the ownership dispute than on new growth initiatives.

At a March 28 shareholder meeting, Chairman Choi Yun-beom’s camp secured 11 of 15 board seats, fending off MBK’s takeover attempt. But MBK is challenging the outcome in court, arguing that voting restrictions placed on its 25% stake were unlawful, and has filed an appeal with the Seoul High Court.

The private equity firm is also preparing further legal actions, leaving management mired in litigation and delaying key business decisions.

Industry officials say the Korea Zinc case highlights broader risks posed by financial capital. Private equity funds can mobilize vast sums to pursue hostile takeovers, potentially destabilizing even financially sound firms. Critics warn that companies vital to national industries could fall under the control of opaque, offshore-backed investors with limited oversight.