Korea Zinc’s Battery Precursor Technology Recognized as National Core Technology
Korea Zinc, the world’s largest producer in the non-ferrous metals sector, has had its patented technology for processing secondary battery precursors officially recognized by the South Korean government as a national core technology. This designation means that the government will manage the technology with special oversight, particularly in matters of mergers and acquisitions involving foreign companies, which could have broader implications for the ongoing management dispute between Korea Zinc and MBK Partners.
The South Korean Ministry of Trade, Industry, and Energy recently confirmed that specific precursor manufacturing technology used by Korea Zinc qualifies as national core technology. The technology, developed in collaboration with its subsidiary Kemco, focuses on the production of high-nickel precursors for secondary batteries, a crucial component in the electric vehicle industry. Precursor materials are mixtures of elements like nickel, cobalt, and manganese, which, when combined with lithium, become anode materials essential for battery production.
The recognition of this technology as a national core asset is significant as it prevents its leakage abroad, which could negatively impact South Korea's national security and economic growth. The technology, referred to as the "high-nickel precursor processing patent," is crucial for increasing energy density and performance in electric vehicle batteries by raising the nickel content to over 80% in the precursor.
Korea Zinc's initiative to mass-produce these high-nickel precursors domestically is part of a broader effort to reduce reliance on Chinese imports, an area in which South Korea's secondary battery manufacturers, including LG Energy Solution, have historically been dependent. With the South Korean government’s backing, Korea Zinc now has an even stronger case for protecting its strategic assets during a heated management dispute with MBK Partners.
The government’s authority to approve any merger involving Korea Zinc adds a layer of complexity to MBK Partners' plans. Should MBK Partners aim to profit from reselling Korea Zinc to an overseas entity, especially one based in China, it could face significant regulatory hurdles. This, combined with the government’s newly solidified role in managing Korea Zinc’s assets, has led many to view it as a protective measure for the company during this period of corporate uncertainty.
MBK Partners has publicly stated that they will not sell Korea Zinc, labeling it as a national key industry, particularly in light of these recent developments. Meanwhile, Korea Zinc has canceled its previously announced capital increase of up to 2.5 trillion won in a public offering, which had been part of its strategy to defend management rights.
The contest over management rights is expected to culminate in a shareholder vote at an extraordinary meeting scheduled for the end of the year. Currently, an alliance between MBK Partners and Youngpoong holds a 39.83% stake in Korea Zinc, with Chairman Choi Yoon-beom holding an estimated 34.65%. With neither side in clear control, the deciding factor may rest with third-party shareholders, including the National Pension Service, which holds a 7.48% stake.
An official from Korea Zinc emphasized the value of the precursor technology, stating that it has high technical and economic potential and is critical for national security. "The government’s recognition of our precursor technology with Kemco underscores its significance for the country's economy and security," the official said.
