Korea Zinc Applies for National Core Technology Designation for its Hematite Production and Antimony Metal Manufacturing Technologies

Korea Zinc (KRX:010130) announced that it has applied for its smelting technologies to be designated as a national core technology. This follows the recent announcement by the Korean government to designate Korea Zinc’s high-nickel precursor manufacturing technology both as a national core technology and national high-tech strategic technology. Companies with such designations require government approval in case of an acquisition by a foreign company, safeguarding them for economic and security reasons. This move is interpreted as a strategic step to prevent the potential sale of Korea Zinc to the alliance between MBK Partners and Young Poong.

There has been ongoing speculation that if MBK Partners, a private equity firm, acquires Korea Zinc’s management rights, some of the company’s assets or technologies could be sold to China, based on some reported Chinese capital involved in MBK. However, Young Poong’s CEO, Kang Sung-doo, dismissed these concerns, stating, “The fund being established with MBK has committed to a 10-year operational period, making a short-term exit impossible.”

MBK is currently reviewing the formation of a continuation fund with Young Poong, with a minimum shareholder agreement period of 10 years. A continuation fund is an investment strategy that allows a private equity firm to transfer high-quality assets or companies from an existing fund to a new one while maintaining management continuity.

Regarding the two-month suspension of operations at Young Poong's Seokpo Smelter due to environmental issues, which garnered global attention, Kang stated that Young Poong does not intend to retain Korea Zinc’s management rights, adding that their aim was to leverage MBK’s talent pool to find a manager capable of running Korea Zinc more effectively.

Regarding MBK’s stated goal of improving Korea Zinc’s management, Korean Zinc Chairman Yun B. Choi stated in a recent interview with Bloomberg that Korea Zinc’s governance, especially when compared to Young Poong with its various environmental controversies and poor financial performance, is a far cry from a governance that is in an emergent need of repair. Choi also called into question whether MBK and Young Poong’s interests would align with those of Korea Zinc’s shareholders and the long-term health of the company.

Meanwhile, Korea Zinc recently reported its consolidated Q3 revenue of KRW 3.2 trillion, marking a substantial 40% year-on-year increase. Additionally, the Ministry of Trade, Industry and Energy has listed Korea Zinc's high-nickel precursor manufacturing technology as a national core technology, further evidencing the company’s irreplaceable corporate value.

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