Battle for control of Korea Zinc heats up as shareholders vote

Korea Zinc Co. shareholders will vote on Wednesday to fill five board seats, a contest that could tilt the balance in a bitter two-year battle for control that has pitted Chairman Yun B. Choi against the company’s largest investor.

Choi holds sway over nine of the current 14 board seats at the giant metal refiner, despite controlling just 38% of voting shares alongside allies. A rival alliance between MBK Partners Ltd. and Young Poong Corp. — Korea Zinc’s largest single shareholder — has the backing of roughly 41% of shareholders, but only the remaining five seats.

The new additions, which extend the board to 19 positions, could alter that distribution. The two sides are expected to appoint two independent directors each, focusing attention on the fifth position — an independent director who would also serve on the company’s audit committee. 

South Korea caps the voting power of major shareholders and related parties at 3% for audit committee votes, diluting the influence of the two rival camps and instead giving the upper hand to minority investors, including Korea’s National Pension Service.

Four of the five board vacancies arose in June, after directors resigned over procedural issues. 

Institutional proxy advisers including Institutional Shareholder Services Inc. and Glass Lewis Co. have backed the Choi nominee for the audit committee position, Baek In-kyu, citing his accounting and auditing background. A win for Baek would strengthen the chairman’s sway over the board and company strategy.

Yet the California State Teachers’ Retirement System, one of the world’s largest public pension funds, has said it would vote against Baek. The Korea Institute of Corporate Governance and Sustainability is backing Young Poong-MBK nominee Park Yoo-kyung, saying Baek’s previous tenure at Deloitte Korea, which conducted financial due diligence for Korea Zinc, could undermine his independence from management. 

Korea Zinc has rejected those independence concerns, emphasizing Baek’s qualifications. A win for Park would give the opposition an independent watchdog to scrutinize management decisions.

The battle over Korea Zinc has been a rare public show of hostility in the upper reaches of a major conglomerate, breaking out after MBK and Young Poong teamed up for a hostile takeover attempt in 2024. That shattered a decades-old alliance between Korea Zinc’s founding families and triggered a series of law suits and regulatory probes. 

The contest is closely watched by metals markets, given Korea Zinc’s position as the world’s largest refiner of the metal. It is also seen as a key test of South Korea’s corporate-governance reforms, which aim to give minority shareholders a stronger voice on boards.

Wednesday’s vote also comes as Korea Zinc embarks on a major expansion, including a planned $7.4 billion smelter in Tennessee backed by the US government. The project, set to supply critical minerals used in chips, defense and aerospace, positions the company as a key player in Washington’s push to secure strategic mineral supplies outside China.

(By Hyunbin Kim)