US monitoring Korea Zinc acquisition due to China supply chain worries

The recent attempted takeover of Korea Zinc, the world’s largest zinc smelter, by private equity firm MBK Partners has caught the attention of the US State Department. Concerns have been raised among US lawmakers about the deal potentially disrupting critical mineral supply chains and strengthening China’s control in a sector deemed vital to US national security.

Republican Rep. Zach Nunn expressed his worries about the possible acquisition of Korea Zinc by MBK Partners, highlighting the risk of Beijing’s increased leverage in critical mineral supply chains. The State Department, through Paul Guaglianone, stressed South Korea’s awareness of economic coercion by China and its active involvement in the Minerals Security Partnership.

Guaglianone noted that Korean companies play a crucial role in the critical minerals supply chain and are essential partners in countering Chinese market manipulation. The State Department emphasized its commitment to expanding the production of critical minerals and diversifying supply chains for the economic and national security of the US and its allies.

Korea Zinc’s production of rare metals essential for semiconductor manufacturing, renewable energy, and defense aligns with US security interests. The dispute arose when MBK, in collaboration with Young Poong, Korea Zinc’s major shareholder, sought greater control over Korea Zinc’s management, drawing scrutiny due to alleged ties with Chinese capital.

MBK’s denial of any plans to sell Korea Zinc to Chinese interests and its clarification that Chinese capital only constitutes a small part of its funding aimed to allay concerns. However, as MBK holds a significant stake in Korea Zinc, the State Department continues to monitor the situation closely and engage with South Korean officials on this matter.

The statement from the State Department reiterated the importance of countering Chinese dominance in critical minerals supply chains and collaborating with allies like South Korea to safeguard economic and national security interests. The US remains committed to diversifying supply chains to prevent overreliance on a single country for critical minerals.

The potential implications of the Korea Zinc takeover by MBK Partners extend beyond commercial interests to broader geopolitical and national security concerns. The State Department’s vigilance highlights the intricate interplay between economic interests, technological security, and geopolitical strategy in the global mineral supply chain landscape.