Young Poong Ordered to Shut Zinc Refinery for Two Months Over Environmental Violations
Young Poong, the world's sixth-largest zinc smelter, has been ordered to suspend operations at its Seokpo refinery facility for two months due to the unauthorized discharge of polluted wastewater. The shutdown is expected to impact the company's ongoing attempt to secure ownership control of Korea Zinc, its affiliate and the world’s largest zinc producer.
Earlier this month, the Supreme Court upheld an administrative order to shut down the Seokpo refinery in North Gyeongsang Province for two months, citing a violation of water conservation laws. Young Poong responded by stating that it would prepare for the suspension while prioritizing safety and working to minimize the impact of reduced zinc production.
The decision to shut down the Seokpo facility comes after cadmium levels exceeding the river water quality standard by up to 4,578 times were detected near the plant in April 2019, according to data from the Environment Ministry. The authorities confirmed that cadmium had contaminated soil and groundwater before leaking into the Nakdong River. Despite these findings, Young Poong has spent five years filing legal appeals to reverse administrative punishments, without issuing an official apology for the incident.
Since 2013, Young Poong's Seokpo site has been involved in 76 violations of environmental laws, including multiple releases of cadmium into the Nakdong River. The two-month suspension is the most severe penalty imposed on Young Poong to date, following a 10-day shutdown in 2021.
The operational halt comes at a critical time for Young Poong, which is grappling with financial difficulties and a prolonged power struggle over control of Korea Zinc. The shutdown of the Seokpo refinery, which has an annual capacity of 325,000 tons, is expected to deepen operating losses, which amounted to 170 billion won ($122 million) last year. Concerns are growing that the suspension could disrupt zinc supply chains within South Korea, as zinc is an essential element used to prevent corrosion in steel products.
Korea Zinc and Young Poong accounted for 56% and 37% of South Korea’s zinc market, respectively, last year. With growing scrutiny of Young Poong’s safety practices and environmental compliance, its claims that it could improve governance at Korea Zinc have faced skepticism.
The Seokpo refinery is also facing another administrative order after the Environment Ministry discovered that the facility was operating without sulfuric acid detectors, a hazardous pollutant released during the zinc extraction process. Additionally, on Monday, Young Poong shareholders and a civic group filed a lawsuit at the Seoul Central District Court seeking compensation from five current and former directors of Young Poong for damages related to the Seokpo plant's environmental violations.
The plaintiffs are pursuing compensation for a 28 billion won fine levied by the Environment Ministry in November 2021 and costs incurred from cleaning up cadmium-contaminated water illegally discharged from the zinc plant. "What Young Poong has done is not a coincidence. These are planned crimes," said the civic group Solidarity for Economic Reform in a statement.
