Korea Zinc to Jointly Purchase Raw Materials and Cease Sales with Young Poong

Korea Zinc will terminate joint raw material purchasing and joint sales with Yeongpung, its largest shareholder, with whom it is engaged in a dispute over management rights.

On the 9th, Korea Zinc announced, "Regarding raw material procurement and product sales, we plan to conduct business through individual negotiations and contracts with each client," stating this decision.

Korea Zinc explained that due to the non-ferrous metals market facing difficulties in raw material supply and product sales amid an economic downturn, this measure was taken to improve performance and reduce costs.

Yeongpung Seokpo Smelter is experiencing operational disruptions and production declines due to environmental and safety-related risks becoming a reality, and the uncertainty in raw material procurement has increased the burden on Korea Zinc, which has been jointly purchasing and selling with Yeongpung, leading to the necessity of contract reevaluation for management reasons.

Korea Zinc stated that in a situation where securing raw material volumes is difficult, the increase in various incidental costs due to having to jointly purchase raw materials at high prices, along with intensified domestic competition such as a surge in imports despite decreased demand caused by the economic downturn, necessitates differentiated sales and marketing strategies according to products.

Additionally, although the number of customers demanding stable supply and high-quality products is rapidly increasing, complaints from customers continue due to discrepancies arising from joint sales and marketing. Furthermore, the existence of risks such as compensation liabilities in case of delivery disruptions caused by supply reductions due to three-party joint contracts with clients and Yeongpung also influenced this decision.

A Korea Zinc official stated, "This is a practical measure to enhance corporate value and improve performance, and we will continue to make our best efforts to increase shareholder value."

Yeongpung and Korea Zinc have maintained a partnership for 75 years since being jointly founded in 1949 by the late founders Choi Ki-ho and Jang Byung-hee. Currently, Korea Zinc is led by Chairman Choi Yun-beom, the third generation of the Choi family, while Jang Hyung-jin, the second generation of the Yeongpung Jang family, participates in the board of directors as a non-executive director. Recently, conflicts between the owners have escalated as Yeongpung publicly opposed the articles of incorporation amendments and dividend proposals submitted by the board at Korea Zinc’s general shareholders’ meeting.

This content was produced with the assistance of AI translation services.