By Hyunjoo Jin, Heejin Kim and Ernest Scheyder SEOUL, Dec 15 (Reuters) – Korea Zinc said on Monday it will build a $7.4 billion critical minerals refinery in Tennessee that will be funded largely by Washington and help cut U.S. reliance on China for the building blocks of most electronics and weapons. The deal to build the first U.S.-based zinc refinery since the 1970s comes as the Trump administration has been investing in a range of mines and refining projects at a breakneck pace in recent months. The project also aims to refine copper and a range of other minerals considered critical by the U.S. government, officials said. An existing zinc refinery in Clarksville, Tennessee – roughly 50 miles (80 km) northwest of Nashville – will be bought from Trafigura's Nyrstar, torn down and replaced by a larger facility that will open in 2029 and grow to annual output of 540,000 metric tons of critical minerals, including 300,000 tons of zinc, 35,000 tons of copper, 200,000 tons of lead and 5,100 tons of rare earths, officials said. "The Trump administration will continue to leverage every tool at our disposal to end America's foreign dependence for critical minerals and restore working-class prosperity," White House spokesperson Kush Desai said in a statement to Reuters that confirmed the investment. Under the plan, Korea Zinc will sell shares worth $1.9 billion to a joint venture controlled by the U.S. government and unnamed U.S.-based strategic investors, who would then control around 10% of the South Korean firm. The U.S. Department of Defense will hold a 40% stake in the venture, while Korea Zinc's stake will be less than 10%. Korea Zinc will secure the remaining $5.5 billion for the plant through $4.7 billion in loans from the U.S. government and financial institutions as well as $210 million in subsidies from the U.S. Commerce Department under the CHIPS and Science Act. The news sent shares in Korea Zinc, the world's largest zinc smelting company, surging as much as 26% in Monday trading in South Korea, though they later pared gains to end up 4.9%. Korea Zinc will also restart a Tennessee zinc mine that will feed the new complex. Local officials approved a property tax abatement for the project this week. The sale is expected to close in the first half of 2026. Major Korea Zinc shareholders, who have been seeking to oust the refiner's chairman, lambasted the planned U.S. investment, saying it was aimed at cementing management's hold on the company. REFINING PROJECT AIMS TO HIRE U.S. VETERANS The project is located near a major U.S. military base and is expected to recruit retiring soldiers for 420 new jobs with annual salaries starting at $86,000, local economic development officials said. "Our workforce is young, trainable and usually very disciplined," Buck Dellinger, head of the Clarksville economic development office, told Reuters. LG Chem and Alphabet's Google are among the other international firms with operations in Clarksville. In October, South Korea and the U.S. agreed to a trade deal, which included a cut in tariffs imposed by U.S. President Donald Trump earlier in the year and a pledge by South Korea to invest $350 billion in strategic American sectors. Seoul-based Korea Zinc said the plant will "respond to the expansion of global supply chain risks and the increasing demand for non-ferrous metals and strategic minerals in the United States." Korea Zinc also agreed earlier this year to help deep-sea mining firm The Metals Company process polymetallic nodules from the seafloor. TMC has asked Trump to issue it an international seabed mining permit. Reuters was first to report earlier this month that the U.S. military would develop a fleet of small-scale refineries to produce critical minerals used to make bullets, armor and other types of weaponry. MAJOR SHAREHOLDERS TO FILE TO BLOCK SHARE ISSUE The Young Poong conglomerate, which together with a private equity firm MBK Partners held nearly 50% of Korea Zinc, said it will file a complaint with a court to block the new share issue plan. It is rare for the U.S. government to acquire a stake in a foreign company, and Korea Zinc's management was simply attempting to secure a "white knight" so that Chairman Yun B. Choi can retain control, Young Poong said in a statement. China dominates the world's supply of critical minerals such as antimony and germanium, which are used in telecommunications equipment, semiconductors and military technology. Beijing banned exports of these minerals to the U.S. in December 2024, following Washington's crackdown on China's chip sector. The ban has been suspended since November. Trump has ordered the Department of Defense to rename itself the Department of War, a change that will require action by Congress. ($1 = 1,475.5400 won) (Reporting by Hyunjoo Jin, Heejin Kim, Jack Kim and Ernest Scheyder; additional reporting by Vallari Srivastava in Bengaluru; Editing by Edwina Gibbs, Miyoung Kim, Jan Harvey, Anil D'Silva and Joe Bavier)
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