SEOUL (Reuters) – A decades-long partnership that built Korea Zinc Co. into the world’s largest zinc smelter is unraveling into a bitter power struggle. The battle pits Korea Zinc Chairman Yun B. Choi against Young Poong Corp., the largest shareholder led by the Chang family, co-founders of the metals empire.
This high-stakes conflict, fueled by a surprise hostile bid, escalating corporate drama, and governance challenges, exemplifies the turmoil often seen in South Korea’s chaebols — but with a modern twist involving private equity and global energy-transition ambitions.
The turmoil erupted in September when Young Poong, backed by private equity firm MBK Partners Ltd., launched an unexpected bid to wrest control of Korea Zinc. The move, timed strategically just before the Chuseok holidays, left Choi scrambling to respond.
Choi, a US-educated executive, described the shock in a Bloomberg TV interview, recounting how he learned of the bid while heading to dinner with a friend. His initial response — a costly share buyback — drew criticism for poor governance and heightened the company’s debt. The situation worsened when a subsequent $1.8 billion share sale proposal sparked a stock selloff and regulatory scrutiny, forcing Choi to cancel the plan and step down as chairman of the board.
Now, Choi is fighting to regain the confidence of independent shareholders, whose support is crucial to maintaining his family’s control. Reflecting on the missteps, he admitted: “Our real mistake was the rights offering. We misread the market… It was definitely not the wisest move.”
Seeking to repair relationships, Korea Zinc has announced governance reforms, including appointing a non-executive chairman, introducing quarterly dividends, and amplifying shareholder voices.
Choi remains defiant. “We will definitely continue to fight. I see that as my duty to our employees and shareholders,” he said, while acknowledging the personal toll. “It’s a cleansing experience… It crystallizes what is important and what isn’t.”
Choi, 49, is a blend of tradition and modernity. A former New York lawyer, he joined the family business after stints in the US, Ulsan, Peru, and Australia. Known for his fitness enthusiasm and understated public presence, he has cultivated ties with other chaebol families while steering Korea Zinc toward “green” industries, such as renewable energy, electric vehicle materials, and recycling.
His strategy has drawn investment from prominent players like Hyundai Motor Group and LG Chem Ltd., and he sees global dynamics — such as rising scrutiny of Chinese suppliers — as an opportunity. “If the US or Europe seeks non-China-produced nickel or zinc, we’ll be at the top of the list,” he asserted.
The unfolding drama underscores broader governance vulnerabilities in South Korea’s chaebols. Analysts, like Clepsydra Capital’s Sanghyun Park, argue that improving board independence is key. “Private equity funds are exploiting these weaknesses to expand aggressively in Korea’s buyout market,” Park said, predicting wider reforms spurred by this conflict.
The outcome could have far-reaching consequences, not just for Korea Zinc but for South Korea’s broader economy. “This is different,” said Munseob Lee, an expert at UC San Diego. “If private equity presents a compelling vision, Koreans may support them, especially if current management is seen as ineffective. It’s a wake-up call.”
While Choi warns that MBK Partners’ leadership could harm Korea Zinc’s operations, he is open to dialogue. “I’m willing to talk,” he said. “I’m not interested in being a dictator, or any of the other things they claim.”
The fight for Korea Zinc is far from over, but its resolution could redefine corporate governance and control within one of South Korea’s most influential conglomerates.
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