Korea Zinc Sends Shareholder Letter Ahead of AGM: "Governance Improvements and Enhanced Shareholder Value"

68% Outside Directors, 2.04 Million Treasury Shares Cancelled
Company Opposes Shareholder Proposals from MBK Partners and Young Poong

Korea Zinc has begun strengthening communication with shareholders ahead of its annual general shareholders' meeting scheduled for the 24th. On March 5, Korea Zinc announced that it had sent a letter to shareholders explaining its achievements in governance improvement, enhancement of shareholder value, and future management direction. Earlier this year, the company also sent a shareholder letter detailing the U.S. integrated smelter construction project, maintaining ongoing communication with its shareholders.

Aerial view of Korea Zinc Onsan Smelter. Provided by Korea Zinc

In this letter, Korea Zinc emphasized its achievements in improving governance, such as enhancing the independence and diversity of the board of directors. Currently, outside directors make up 68% of the Korea Zinc board, exceeding the domestic listed company average of 51%. All board committees consist of outside directors, and the chairman of the board is also an outside director. Last year, the company further expanded board diversity by appointing an additional female outside director and a foreign director.

The company also established a management committee to strengthen the pre-review of major investments and strategies, as well as its risk management system. Korea Zinc’s compliance rate with the Korea Exchange’s key corporate governance indicators stands at 80%, far surpassing the listed company average of 55%.

The company highlighted that it has faithfully executed its shareholder return policy. In response to last year’s hostile takeover attempt by MBK Partners and Young Poong, Korea Zinc kept its promise to cancel all of the approximately 2.04 million treasury shares it acquired through a public tender offer. Additionally, the company set the 2025 year-end dividend in advance at 20,000 won per share to increase dividend predictability.

Korea Zinc also disclosed the outcomes of its value enhancement policy. According to the “Implementation Status of Corporate Value Enhancement” announced last year, the total shareholder return rate exceeded 200% in both 2024 and 2025, greatly surpassing the target of at least 40%. The number of investor meetings increased from 20 in 2023 to 54 in 2024 and 81 in 2025, further strengthening communication with the market.

The company also highlighted its operational performance. On a consolidated basis, Korea Zinc achieved record results in 2025, with sales of 16.5812 trillion won and operating profit of 1.2324 trillion won. The company also maintained an operating surplus for the 44th consecutive year. Despite challenging business conditions, such as historically low treatment charges (TCs), the company explained that it achieved results by increasing the proportion of high value-added metals and pursuing its new business strategy, the “Troika Drive.”

Several proposals aimed at further improving governance and protecting shareholder rights will be presented at the upcoming annual general meeting. Major proposals include converting 917.6 billion won of discretionary reserves into retained earnings, introducing electronic general meetings, revising the articles of incorporation for quarterly dividends, introducing the duty of loyalty for directors, expanding the separate election of audit committee members, and adopting cumulative voting for director elections.

In particular, the proposal to convert 917.6 billion won of discretionary reserves into retained earnings is a measure to secure resources for quarterly dividends and is more than twice the 392.4 billion won proposed by MBK Partners and Young Poong.

The company explained that measures such as introducing the duty of loyalty for directors and expanding the separate election of audit committee members are proactive steps to strengthen board functions and enhance minority shareholder protection, in line with amendments to the Commercial Act scheduled to take effect in September this year.

On the other hand, the company expressed opposition to some proposals made by MBK Partners and Young Poong, stating that they violate laws and the articles of incorporation or could undermine management efficiency. In particular, the company pointed out that re-proposing the stock split, which was approved at last year’s extraordinary general meeting but whose effect was suspended, could result in procedural redundancy and additional uncertainty.

Korea Zinc also highlighted the importance of the U.S. integrated smelter construction project, which is expected to play a key role in the global critical minerals supply chain. In December last year, the company announced plans to invest approximately 11 trillion won, together with the U.S. government and others, to build an integrated smelter in the United States to produce 13 types of non-ferrous metals, including 11 critical minerals such as zinc, copper, silver, and antimony. About 91% of the total investment will be covered by the U.S. government and investors, making this a large-scale project.

The company stressed that the continuity of leadership by the current management team, who have demonstrated their management capabilities, is crucial for the stable execution of such a large-scale project.

In the shareholder letter, Korea Zinc stated, “This project, which is being pursued with the institutional trust and financial support of the U.S. government, is a testament to Korea Zinc’s technological strength, project execution capability, and governance system, which have earned international trust. Through the annual general meeting, we will further solidify the foundation for sustainable growth and the enhancement of corporate value.”

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