December 19, 2025
SOUTH KOREA – The US government’s decision to back Korea Zinc’s planned $7.4 billion smelter in Tennessee came as a surprise, given how rarely Washington directly invests in foreign companies, especially in a sector linked to national security and strategic minerals.
Under the plan, the US Department of Defense and undisclosed US investors will jointly invest $2.15 billion in a new joint venture, Crucible JV. The Pentagon is poised to hold a 40 percent stake in the JV alongside Korea Zinc to operate the critical mineral processing facility — an arrangement that would give the US government control of about 10 percent in Korea Zinc.
Washington’s involvement extends to financing as well, with the remaining funding to be provided through $4.7 billion in loans from US government agencies and financial institutions, as well as $210 million in subsidies from the US Department of Commerce under the CHIPS and Science Act.
The rare partnership to build the first US-based zinc refinery since the 1970s — described by US Commerce Secretary Howard Lutnick as a “transformational deal” — reflects Washington’s wider push to reduce dependence on China for critical minerals needed in semiconductors, defense and aerospace industries. But of the world’s many smelters, why Korea Zinc?
Industry observers point to the 50-year-old company’s capability to extract a wide range of strategic minerals — beyond just basic metals — positioning it as more valuable than single metals-focused facilities for tackling supply chain vulnerabilities at a time when resource security has become a key national concern.
While the US has significant mineral reserves, it has long lacked the refining capacity to process them, often shipping raw ore to China for refinement. In particular, China dominates the smelting and refining stages for critical and rare earth metals, making it difficult for the US to utilize these minerals domestically even when they are mined at home.
The US currently depends on imports for over 70 percent of its zinc, over 80 percent for antimony and bismuth, and 100 percent of gallium — all materials essential to chips, batteries, defense systems and energy technology, according to US government data.
China’s recent deployment of export controls on strategic minerals has heightened vulnerabilities in Washington’s heavy dependence on Beijing for most of its critical supplies.
In these circumstances, Korea Zinc’s “integrated smelting” technology, which enables the extraction of a wide variety of high-value strategic metals from a single raw material source, caught Washington’s attention.
Korea Zinc explained that it was Washington that requested the company to build the facility in the US as a “strategic partner” amid growing global supply chain risks and rising demand in the US for nonferrous metals and strategic minerals.
The company currently produces 12 of the 60 minerals classified as “critical” by the US government, including antimony, bismuth, indium and tellurium. By 2028, Korea Zinc plans to expand production to 14 minerals, adding semiconductor-critical gallium and germanium — both of which China recently moved from full trade ban to a licensing-based export system.
“At a time when resource security has become an urgent priority, multimetal smelters are better positioned than single-metal facilities to tackle supply chain vulnerabilities,” said an official at Korea Zinc. “Particularly for the US, which has been heavily dependent on China for rare metals, the need to secure stable supply chains across a broad range of minerals has increased. In these circumstances, Korea Zinc’s production structure, capable of processing multiple strategic minerals, aligns precisely with Washington’s supply chain strategy.”
In addition, Korea Zinc’s capacity to run an environmentally sustainable smelter using advanced byproduct recovery technologies is cited as another key reason it has drawn US attention, according to industry officials. This technology would allow the company to operate with relatively fewer limitations even under the strict US environmental regulations.
Experts say Washington’s investment in Korea Zinc signals a fundamental shift in how the US perceives critical minerals — no longer as mere commodities, but as strategic assets subject to geopolitical weaponization.
“Importing rare earths and critical minerals from China, which major countries once took for granted, has become weaponized as a strategic asset,” said Heo Yoon, professor of international studies at Sogang University. “What we are seeing now is only a temporary pause, and the risk of further export controls remains.”
Heo added that Chinese policy documents explicitly designate these rare earths and critical minerals as “strategic assets,” where export controls will be adjusted in response to pressure from the US and other countries. “If the US ups the pressure on China, export restrictions will be tightened.”
As a solution, the US has begun focusing on allied countries and companies that possess advanced refining and processing capabilities, he added. “The objective is to build substitute supply chains that reduce dependence on China,” said Heo. “This is a symbolic move.”
Analysts echoed the view that Korea Zinc’s US facility has elevated the company’s status in Washington.
“Korea Zinc has effectively emerged as a strategic asset for the US government,” said Hong Kwang-pyo, an analyst at Macquarie Securities. “The planned US smelter is set to produce eight metals, including zinc, lead, copper, silver, gold and antimony, all of which the US is highly dependent on for imports.”
Lee Jung-woo, an analyst at Daol Investment and Securities, said these minerals to be produced in the US are key sources for data centers, artificial intelligence and defense industries. “This aligns directly with Washington’s need to diversify the value chain of strategic minerals,” said Lee.
“Korea Zinc has become a ‘core partner’ in the US supply chain restructuring strategy,” said Park Kwang-rae, researcher at Shinhan Investment. “Direct involvement of the US departments of commerce and defense signals that the project has become a symbolic asset of the Korea-US economic security alliance.”
South Korean Industry Minister Kim Jung-kwan also hailed the US facility decision that would help secure supply chains for rare earths and critical minerals for Korea.
“Despite the financial burden, we see it as a positive move for Korea Zinc to make this strategic decision,” Kim said Wednesday during a press conference. “It will help Korea to establish stable supply chains for rare earths.”
Kim also opened possibility for discussion with the US whether Seoul’s pledged $350 billion investment package in key US sectors, recently finalized under a trade agreement, could be utilized to help finance the Korea Zinc project.