[Interview] Choi Yunbeom "At the General Meeting, Someone Will Be Evaluated on Their Management Competence"

"Ultimately, the Choice Lies with Other Shareholders...
I Hope They Consider the Long-Term Vision"
"If the Investment Timeline Is Shortened by 10 Years, There Will Be Problems"
"Willing to Discuss with Youngpoong for the Company's Development"

"I want to be evaluated on who has the vision to grow the company more."

Choi Yoon-beom, Chairman of Korea Zinc, recently said this in an interview with Asia Economy ahead of the proxy battle with the Youngpoong-MBK alliance at the extraordinary general meeting of shareholders scheduled for the 23rd. He emphasized, "I hope this general meeting will be an opportunity to evaluate which management team will lead the company correctly."

Choi Yoon-beom, Chairman of Korea Zinc. Photo by Korea Zinc

"Please choose management with vision"

Since September last year, Chairman Choi has been engaged in a fierce share competition with the Youngpoong-MBK alliance through a public tender offer. However, neither side has secured a majority stake. The key agenda items submitted to this extraordinary general meeting are expected to be decided based on the votes of other shareholders.

Korea Zinc has put forward the ‘cumulative voting system’ as an agenda item for this meeting. The cumulative voting system grants voting rights proportional to the number of directors to be appointed regardless of the shares held, aiming to protect the rights of minority shareholders. Chairman Choi said, "The biggest goal is to gain support from other investors holding around 15-16%," adding, "We had to show action to resolve the governance issues raised."

He expressed his hope that shareholders would make their judgment considering the company's long-term growth potential rather than a short-term perspective. Although MBK, a private equity fund (PEF), inevitably pursues an exit to recover investment rather than long-term holding, considering Korea Zinc’s impact on the domestic industry, long-term investment and development are necessary.

Regarding MBK’s indication that it would not sell Korea Zinc for 10 years, Chairman Choi pointed out, "The current management has been making bold investments with a view of at least 30 to 40 years," and added, "If this investment timeline is shortened to 10 years, there will be serious problems with the company’s growth potential."

"Copper, key to the future of non-ferrous metals... Igneo plays a central role"

Chairman Choi devoted a significant portion of the interview to the ‘copper business.’ This is interpreted as his determination to prove his management capability through copper smelting. Korea Zinc currently has an annual copper production capacity of about 30,000 tons and aims to expand it fivefold to 150,000 tons by 2028. According to the quarterly report, Korea Zinc sold a total of 8,332 tons of copper in the third quarter of last year alone, generating sales of 100.4 billion KRW.

Choi Yoon-beom, Chairman of Korea Zinc, is speaking at a Korea Zinc press conference held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on November 13 last year. On that day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible, and an outside director will take over as chairman of the Korea Zinc board." Photo by Kim Hyun-min

Compared to competitors, the performance is relatively good given the scale of copper production. The key is that they use by-products such as electronic waste instead of copper ore as raw materials. He emphasized resource recycling as "a business that is fundamental to Korea Zinc."

Chairman Choi also stated that securing raw materials necessary for copper smelting will be achieved through recycling. He mentioned Igneo Holdings, acquired in 2022, as the entity responsible for this. Igneo Holdings is one of the main targets of criticism from the Youngpoong-MBK alliance against Chairman Choi. MBK claims that the acquisition price was too high compared to the company’s value.

Chairman Choi firmly said, "We might have been able to acquire it more cheaply in 2-3 years, but if we had waited until then, it would have been difficult to create the business structure we wanted." He added, "The past investment in the Ulsan LNG power plant was also made with a 10-year perspective," explaining, "If that investment had not been made, we would have paid about 90 billion KRW more annually in electricity fees." Regarding Igneo’s performance, he emphasized, "This year, it will definitely turn a profit."

Chairman Choi added, "I also believe we can do well in nickel smelting, which is why we ventured into it." Nickel is gaining attention as a key raw material not only for electric vehicles but also for batteries. He mentioned that the nickel smelter Korea Zinc is promoting will play a crucial role in forming a global supply chain excluding China.

"Open to cooperation... management rights are separate"

Chairman Choi described himself as a sincere person. He still hopes to have discussions with Youngpoong-MBK, the major shareholders of Korea Zinc, for the company’s development. He said, "If we think about the future and shareholder value and discuss constructively together, there will be many good things."

Regarding the main reason for the deterioration of relations between the two companies, Chairman Choi said the difference in management capabilities was significant. He said, "Korea Zinc was able to grow this much thanks to bold investments that were almost reckless," and added, "The biggest reason for the worsening relationship is that the gap between the two companies has already become so wide that the other side cannot compete."

When asked about the difference in location between Youngpoong’s Seokpo smelter and Korea Zinc’s Onsan smelter, he replied, "No matter how unfavorable the location is, if you invest boldly and solve problems, there will naturally be a breakthrough." He also said, "Considering Youngpoong management’s investment style, it would be difficult for them to manage Korea Zinc like we do," emphasizing, "(If MBK takes over) the company could collapse in a short time." Regarding the possibility of technical personnel outflow, he said, "Even if just three or four key figures leave, it would be an enormously big problem."

Chairman Choi also expressed his determination to actively improve governance issues through this situation. He said, "Starting with the cumulative voting system, we are trying to create a system that reflects shareholders’ opinions," emphasizing, "From now on, I will dispel governance controversies and devote more than 90% of my energy to the business."

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