#South Korea #Seoul #EGM #Korea Zinc #Sun Metals

Korea Zinc's Commitment to National Industry

As Korea Zinc (KRX:010130) approaches its Extraordinary General Meeting (EGM), set for January 23, 2025, the management has voiced strong hopes for the meeting's outcomes. The management and all employees firmly believe that successful proceedings will not only safeguard Korea Zinc as a cornerstone of South Korea's crucial industry, but will also protect essential national technologies from being relocated overseas.

Strategic Acquisitions and Rationale

In a bold move, the Sun Metals Corporation Pty. Ltd. (SMC), which is a second-tier subsidiary of Korea Zinc, announced the acquisition of shares from Young Poong Precision Corporation. As of January 22, 2025, SMC acquired 190,226 shares, equivalent to 10.3% of Young Poong’s total share issuance. This acquisition, valued at KRW 57.5 billion, is portrayed as a strategy to ensure stable business operations and tackle market dynamics at a reasonable price. Notably, SMC purchased the shares previously held by the Choi family at a discounted rate, suggesting a significant value proposition for SMC at the expense of potential profits for the Choi family.

Legal Framework for Corporate Governance

The acquisition of shares is supported by legal provisions in the Commercial Act, which implements a new framework for voting rights as the EGM approaches. Given that SMC is classified as a subsidiary of Korea Zinc under Article 342-2(3), it operates within necessary legal guidelines protecting shareholder and corporate interests. Under Article 369 (3), if voting shares exceed 10% of the total, they lose the right to vote, promoting fair governance through limiting relationships between parent and subsidiary firms.

Crucial Support from Young Poong Precision

Speaking about the acquisition, officials from Young Poong expressed a supportive stance toward Korea Zinc, citing their joint contribution towards stabilizing the local economy. They endorsed SMC’s share acquisition as a necessary step towards diversification of supply chains, which is crucial in the current global climate that often leans heavily on Chinese manufacturing.

Long-Term Vision and Strategy for Growth

Korea Zinc’s current management pledges to extend their traditional focus on non-ferrous metals to encompass growth in the energy materials domain, including secondary battery materials, renewable energy, and resource recycling initiatives. This expansion is projected to enhance both its presence as a leading corporation and its contributions to the South Korean economy.

Management remains open to discussions with MBK Partners, aiming for a collaborative approach toward further development and expansion. They believe mutual trust and cooperation can bolster Korea Zinc’s position as a pillar in the industry and beyond. The company stresses its commitment to community and regional growth, primarily benefitting Ulsan and surrounding localities.

EGM Objectives: Enhancing Shareholder Value

The imminent EGM stands as a vital pillar for enhancing shareholder value and instituting corporate governance reforms. The agenda includes adopting a cumulative voting system, capping the number of directors, implementing a stock split, and introducing an executive officer system. These initiatives aim for foundational corporate growth and shareholder engagement, setting the stage for Korea Zinc’s trajectory toward becoming a national enterprise with significant technological capacities.

Through its efforts and innovations, Korea Zinc is preparing to not just survive but thrive as a leader in the non-ferrous metal industry, contributing actively to South Korea's long-term economic health and security.