US Backs $7.4 Billion Korea Zinc Smelter To Cut China Mineral Dependence

In a bid to lower its reliance on China for critical minerals, Korea Zinc, the world’s largest zinc smelting company, has unveiled a $7.4 billion smelter project, backed by the U.S. government.

US-Backed Korea Zinc Smelter Plan

Korea Zinc announced the project on Monday and stated that the U.S. government will support the initiative, which aims to reduce Washington’s dependence on China for essential minerals, including rare earths, Reuters reported.

Korea Zinc shares closed 4.87% higher at KRW 15,92,000 ($1086.01) on Kospi on Monday. However, the plan has drawn criticism from major shareholders who are pushing to remove the company's chairman.

As part of the project, the Korean smelter plans to issue $1.9 billion in new shares to a joint venture controlled by the U.S. government, along with undisclosed U.S.-based strategic investors, giving the venture roughly a 10% stake in the South Korean firm.

Under the structure, the U.S. Department of War would hold a 40% interest in the joint venture, while Korea Zinc's ownership would be below 10%.

The remaining $5.5 billion for the smelter will be funded through $4.7 billion in loans from the U.S. government and financial institutions, along with $210 million in subsidies from the U.S. Commerce Department under the CHIPS and Science Act.

The White House did not immediately respond to Benzinga’s request for comment.

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US Moves to Cut China Rare Earths

The U.S. is almost entirely dependent on foreign supplies for processed rare earths used in high-tech magnets, with China dominating mining and refining, a reliance experts see as a security risk drawing White House attention.

This move by Korea Zinc is in line with the U.S. government’s recent efforts to reduce its reliance on China for critical minerals. This has been a growing concern, especially after China imposed restrictions on rare earth mineral exports in 2022 and 2025.

The U.S. has been taking steps to realign the global rare earth supply chain with its economic and national security interests, including forming partnerships with companies like MP Materials Corp. (NYSE:MP) and Saudi Arabian Mining Company.

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