Strategic Investment in Korea Zinc's $7.4 Billion Plant: A Pivotal Move to Diversify Critical Mineral Supply Chains and Counter Chinese Dominance

The global race for critical minerals has intensified as nations seek to secure the raw materials underpinning modern technology, defense systems, and clean energy transitions. China's dominance in refining and processing these minerals-accounting for over 60% of global rare-earth element production-has created a strategic vulnerability for the U.S. and its allies. Enter Korea Zinc, a South Korean industrial giant, whose $7.4 billion U.S. smelter project, backed by the U.S. government and defense contractors, is emerging as a cornerstone in the effort to diversify supply chains and reduce reliance on China according to reports.

A $1.94 Billion Bet on Resilience

The U.S. government and strategic investors have committed $1.94 billion-nearly 26% of the total investment-to a joint venture (JV) with Korea Zinc to build a smelter in Clarksville, Tennessee as reported. This facility, expected to begin operations in the coming years, will produce 300,000 metric tons of zinc, 200,000 tons of lead, and 5,100 tons of rare minerals annually, including antimony and germanium according to data. These materials are critical for semiconductors, defense systems, and advanced manufacturing. The U.S. Department of Defense and Commerce have explicitly framed the project as a national security priority, with the latter emphasizing its role in "enhancing economic and national security" according to analysis.

Strategic Partnerships: From Germanium to Gallium

Korea Zinc's collaboration with U.S. defense contractors underscores its strategic value. In August 2025, the company signed a memorandum of understanding (MOU) with Lockheed Martin to supply high-purity germanium, a material essential for infrared sensors and semiconductor manufacturing according to official statements. To meet this demand, Korea Zinc announced a KRW 140 billion investment to build a new germanium plant at its Onsan smelter, targeting production by 2028 as reported.

The company is also expanding its role in gallium production-a mineral used in 5G infrastructure and LED technology-and has made an $85.2 million strategic investment in The Metals Company (TMC), a U.S.-based firm aiming to establish a nickel and cobalt supply chain independent of China according to reports. These moves align with broader U.S.-South Korea efforts to create a "China-free" supply chain for critical minerals according to analysis.

Countering Chinese Dominance: A Geopolitical Imperative

China's control over critical mineral processing has long been a lever in geopolitical tensions, with periodic export restrictions raising alarms in Washington and Seoul according to reports. Korea Zinc's Tennessee smelter, coupled with its U.S. partnerships, directly addresses this risk. The facility's output of antimony and germanium-materials China dominates in refining-positions Korea Zinc as a key player in reducing dependency on a single supplier according to analysis.

Moreover, the project is part of a larger strategic resources alliance between the U.S. and South Korea, formalized in 2025 to secure supply chains for minerals like lithium, cobalt, and rare earths according to sources. This alliance reflects a shift from competitive rivalry to coordinated action, with Korea Zinc serving as a bridge between South Korea's industrial expertise and U.S. market demand according to reports.

Investment Implications and Risks

For investors, Korea Zinc's project represents a high-stakes bet on geopolitical tailwinds. The U.S. government's financial and political backing-coupled with its inclusion in the SIL index as a top-four base-metal producer according to market data-signals strong institutional support. However, risks remain: the project's $7.4 billion price tag is ambitious, and execution challenges could arise. Additionally, while the U.S. aims to reduce reliance on China, it may inadvertently create new dependencies on Korea Zinc itself, necessitating careful governance oversight according to analysis.

Conclusion: A New Era in Mineral Supply Chains

Korea Zinc's U.S. smelter is more than a corporate venture-it is a geopolitical and industrial milestone. By securing access to critical minerals and forging partnerships with defense contractors, the company is positioning itself at the center of a global effort to counter Chinese dominance. For investors, this project exemplifies the intersection of strategic investment, national security, and supply chain resilience-a compelling case study in the new era of mineral geopolitics.