SEOUL: The Trump administration’s investment in a US zinc development has thrust it into the middle of a South Korean proxy fight, an example of how the government’s push for equity stakes in critical industries is facing free-market blowback.
The administration announced last week it struck a joint venture with Korea Zinc to back construction of a US$7.4bil smelter project in Tennessee that would bolster US production of key critical minerals.
But the reaction has been mixed, with shares fluctuating as South Korea Zinc’s largest shareholders baulk at the structure of the deal.
The activist investors – Young Poong Corp, and MBK Partners Ltd – filed an injunction last week in a South Korean court to halt a share issuance to fund the new smelter, according to an emailed statement, arguing the move was aimed at evading the proxy battle.
The case has the potential to disrupt the administration’s effort to spur domestic production of critical minerals in order to wean the nation off Chinese supplies, a key goal of President Donald Trump’s economic agenda.
It also threatens to complicate ties between Seoul and Washington, which were already roiled earlier this year by the president’s tariff push.
Critics say the administration’s methods, which include taking direct stakes in critical mineral producers and other firms in sensitive industries, put their goals at risk by inserting the government into business dealings outside of its control. — Bloomberg
