Strategic investment targets critical supply chains
The United States has backed a $7.4bn investment in a critical minerals processing plant to be built by Korea Zinc, as Washington steps up efforts to reduce its reliance on China for strategic metals essential to technology, defence and manufacturing.
Korea Zinc, the world’s largest zinc smelter, said the US government requested the project to address growing supply chain risks tied to materials used in sectors ranging from electric vehicles to semiconductors and national security.
Wide range of metals planned for production
The new facility will process key elements such as antimony, germanium and gallium, which are critical for semiconductors and electronics. It will also produce non ferrous metals including zinc, copper and lead, as well as precious metals like gold and silver.
Commercial operations are expected to begin gradually between 2027 and 2029, according to a regulatory filing released on Monday.
Strong market reaction and joint venture structure
Shares in Korea Zinc surged by as much as 27 percent following reports of the agreement. The company’s board has approved the creation of a foreign joint venture that will include the US government as a participant.
The joint venture is expected to raise around $2bn, with the remaining funding coming from a mix of US government loans, grants and capital contributions from Korea Zinc itself.
Tennessee site and production capacity
Korea Zinc plans to acquire and redevelop a smelting site owned by Nyrstar in Tennessee. The upgraded facility will be capable of producing 13 different metals, along with sulphuric acid used in chip manufacturing.
Annual output targets include 300,000 tonnes of zinc, 35,000 tonnes of copper, 200,000 tonnes of lead and approximately 5,100 tonnes of rare earth materials.
Geopolitical and trade implications
The project follows South Korea’s agreement to invest $350bn in the US in exchange for lower tariffs under a trade deal signed in October. It also highlights Korea Zinc’s growing role in US industrial policy as Washington and its allies attempt to build a non China critical minerals supply chain.
China currently dominates global supply of many of these materials and has imposed strict export controls on elements such as antimony and germanium. While Beijing recently announced broader export licences for rare earths, analysts say long term diversification remains a priority for the US.