CIC’s stake in MBK fund draws scrutiny as Korea Zinc pushes US-aligned supply chains
The upcoming Korea Zinc annual meeting on March 24 is set against a backdrop of escalating tensions in the ownership battle between the Young Poong-MBK alliance and Korea Zinc. The involvement of China Investment Corp. (CIC) in MBK’s Fund VI has resurfaced, adding another layer of complexity to the ongoing power struggle.
In 2024, Young Poong, the largest shareholder in Korea Zinc, partnered with MBK to challenge Chairman Choi Yun-beom, leading to the current control contest. With Young Poong and MBK believed to hold a larger stake, Chairman Choi is relying on supportive shareholders and undecided votes, making the upcoming meeting a critical moment to determine the future leadership of the company.
China link clouds Korea Zinc’s US push
The controversy surrounding CIC stems from its indirect investment through MBK’s financial structure.
As a limited partner in MBK’s Fund VI, CIC contributes to the financing of MBK’s campaign for Korea Zinc. MBK asserts that CIC’s share represents approximately 5 percent of the fund, positioning it as one investor within a diverse pool of global institutional capital, rather than a direct shareholder in Korea Zinc. However, reports suggesting that MBK used capital from this fund to repay a portion of the bridge loan obtained for its 2024 tender offer have raised concerns about the potential indirect support CIC’s investment provides to MBK’s pursuit of control.
Korea Zinc emphasizes that even indirect exposure to Chinese sovereign capital is significant, given its strategic importance. The company’s high-nickel precursor technology was designated as a national strategy technology in late 2024. Furthermore, Korea Zinc is positioning itself as a key player in US-led initiatives to secure critical minerals outside of China. In December, the company announced a substantial $7.4 billion critical-minerals smelter project in Tennessee, backed by the US government. Chairman Choi also recently mentioned ongoing discussions with major US tech firms regarding rare-earth recycling to Reuters.
Korea Zinc raises the fundamental question of whether a bid for control of a strategically vital company can be truly separated from the influence of the Chinese capital behind it.
Small stake, big questions
Critics also point to CIC’s broader influence beyond MBK. Its ownership of approximately 5.4 percent of Canada’s Teck Resources, a key upstream counterparty for Korea Zinc, places CIC alongside Korea Zinc in both financing and raw-material supply chains. This raises concerns about potential indirect influence across the critical-minerals sector.
Some industry experts argue that CIC’s previous investments in South Korea are not directly comparable to its indirect involvement with Korea Zinc, as this particular situation is directly linked to control over a national strategic industry possessing core national technology.
“CIC has invested in many Korean companies, but the Korea Zinc case is different because the money is tied to a situation directly related to management control,” one industry official said. “With the continuity of a national strategic industry and governance reform among the key issues at Korea Zinc’s upcoming annual meeting, it would be hard to say CIC’s money in MBK’s fund is unlikely to influence shareholders’ judgment.”
Cho Dong-geun, emeritus professor of economics at Myongji University, highlighted Korea Zinc’s strategic importance and warned against a takeover by a private equity firm with ties to Chinese capital.
“Korea Zinc is a company that has built itself up over time, and such companies and their technologies need to be protected,” Cho said. “If Chinese capital accounts for about 5 percent of MBK’s fund, that is by no means a small share. If their interests align, that is enough to warrant caution.”
MBK has dismissed this argument, characterizing the security framing as an attempt by Chairman Choi Yun-beom’s side to divert attention from governance failures and wider market concerns. “This is nothing more than an attempt to blur the issue,” an MBK official stated.
The private equity firm argues that the crucial question for shareholders is not the nationality of one limited partner, but whether Korea Zinc’s board structure, oversight mechanisms, and capital allocation strategies require a comprehensive overhaul.
This perspective was echoed by proxy advisory firm ISS, which recently recommended voting against Chairman Choi’s reappointment as an inside director. Other proxy advisors, including Glass Lewis and local governance firms, have supported Choi or the company’s board proposals, creating conflicting signals for shareholders as they prepare to vote.
With proxy advisors divided, the focus has shifted back to the numbers. As the March 24 meeting approaches, the Young Poong-MBK alliance is estimated to control 42.1 percent of the voting rights, compared to approximately 38.7 percent for Chairman Choi Yun-beom and his allies.
The margin is slim, and with cumulative voting in effect, the outcome may hinge on how each side strategically allocates votes among board candidates, rather than solely on the headline stake count. This leaves roughly 15 percent of votes as swing votes, including the National Pension Service’s approximate 4.8 percent stake, making the March 24 ballot a test not only of ownership strength but also of each side’s ability to effectively utilize it.
jwc
