Korea Zinc's Nickel Sulfate Manufacturing Technology Recognized as National Strategic Asset

Korea Zinc Co., Ltd. (KRX:010130), the world's leading non-ferrous metal smelting company, has received a significant boost with the Korean government's recognition of its high-nickel precursor manufacturing technology as a national core technology and national high-tech strategic technology. This designation, announced on Nov. 18, 2024, highlights the strategic importance of Korea Zinc's technology in the global battery market and has implications for the company's strategic partnerships, valuation, and expansion plans.



The recognition of Korea Zinc's technology as a national core technology and national high-tech strategic technology comes amid a tussle for control of the company, with its largest shareholder, Young Poong Corp., and private equity fund MBK Partners Ltd. launching a takeover bid. The designation requires government approval for any acquisition of Korea Zinc by a foreign company, safeguarding the technology for economic and security reasons. This move is seen as a strategic step to prevent the potential sale of Korea Zinc to the alliance between MBK Partners and Young Poong.

The designation has significant implications for Korea Zinc's strategic partnerships, particularly with LG Chem and Trafigura. The joint venture between Korea Zinc and LG Chem, Korea Precursor Company (KPC), aims to establish a mass domestic production system for high-nickel precursors. The technology, now protected under national laws, will be crucial for KPC's operations, ensuring that the company can maintain its competitive edge in the global market. The designation also signals the government's support for the joint venture, which could lead to further collaboration and investment opportunities.

Trafigura's investment in Korea Zinc's all-in-one nickel refinery is now more strategic, as the refinery will be producing a key material protected by national laws. The investment agreement, along with the long-term supply agreement, ensures that Trafigura will have access to a reliable and secure source of nickel, which is crucial for its global commodities business. The designation also strengthens Trafigura's position as a key partner for Korea Zinc, as it is now involved in the production of a critical national technology.

The recognition of Korea Zinc's precursor technology as a national core technology and national high-tech strategic technology has potential implications for the company's valuation and stock performance. The designation highlights the strategic importance and value of Korea Zinc's technology, making the company more attractive to investors. This could lead to increased investment in the company, driving up its stock price. The recognition also elevates Korea Zinc's brand and reputation, both domestically and internationally, which could lead to increased customer confidence and potentially higher sales, further boosting the company's valuation.

However, the designation could also pose barriers to potential acquisitions, particularly by foreign companies. This could make the company less attractive to potential acquirers, potentially impacting its stock performance. However, it could also deter unwanted takeover attempts, such as the one by MBK Partners and Young Poong Corp., which could be seen as positive by shareholders.



The designation may also influence Korea Zinc's expansion plans, particularly in the U.S. and European markets. The protection against foreign acquisition can help Korea Zinc maintain control over its strategic assets and prevent them from being sold to foreign entities, including those from China. This is particularly relevant given the ongoing speculation about a potential sale of Korea Zinc's assets or technologies to China if MBK Partners, a private equity firm with reported Chinese capital involvement, acquires the company's management rights.

The enhanced reputation and credibility that comes with the designation can make Korea Zinc more attractive to potential partners and customers in the U.S. and European markets. This could lead to increased opportunities for collaboration, joint ventures, or strategic partnerships, facilitating the company's expansion into these regions. Additionally, as a designated national core technology and national high-tech strategic technology, Korea Zinc may be eligible for additional government support, funding, and resources to further develop and commercialize its technology. This could help the company accelerate its expansion plans and invest in new facilities or research and development projects in the U.S. and Europe.

In conclusion, the recognition of Korea Zinc's high-nickel precursor manufacturing technology as a national core technology and national high-tech strategic technology has significant implications for the company's strategic partnerships, valuation, and expansion plans. The designation highlights the strategic importance and value of Korea Zinc's technology, making the company more attractive to investors and potential partners. While the designation may pose barriers to potential acquisitions, it can also deter unwanted takeover attempts and provide access to government support and funding. As Korea Zinc continues to grow and expand its global presence, the recognition of its technology as a national strategic asset will be crucial in maintaining its competitive edge in the global battery market.