Company Overview
Korea Zinc (KOSPI: 010130) is South Korea's largest non-ferrous metals smelter, producing zinc, lead, gold, silver and a range of other metals. Founded in 1974 and anchored by its Onsan smelting complex in South Gyeongsang Province, the company has dominated the domestic non-ferrous industry for nearly half a century. It is also one of the world's leading zinc refiners by output. Listed on the KOSPI — South Korea's main stock exchange — Korea Zinc has long been regarded as a high-quality mid-cap, valued by long-term investors for its steady earnings and reliable dividends.
Yet Korea Zinc's emergence at the centre of South Korea's "value-up" debate — a government-backed initiative to close the persistent discount at which Korean equities trade relative to global peers — was about far more than dividend policy. In the second half of 2024, a long-simmering governance dispute between the company's founding families erupted publicly. The contest for control between chairman Choi Yun-bum and an alliance of Youngpoong (the other founding family) and private equity firm MBK Partners triggered a rapid-fire sequence of share buybacks, boardroom battles and value-enhancement announcements, turning Korea Zinc's story into a landmark case study in Korean corporate governance.
Business and Financial Performance
*A globally competitive smelter*
Korea Zinc's core business is multi-metal smelting, covering zinc, lead, gold, silver, indium and bismuth. Through its Australian mining subsidiary Sun Metals Corporation (SMC) and renewable energy affiliate KGEP, the company has pursued resource security and diversification. More recently, under a strategy it calls "Troika Drive", it has committed substantial capital to three adjacent growth areas: battery materials (nickel sulphate and precursors), renewable energy (solar and wind), and urban mining (recycling of metals from waste).
*Financial results*
Year | Revenue (bn KRW) | Operating profit (bn KRW) | Operating margin | DPS (KRW) | Buybacks
2019 | 7,211 | 685 | 9.5% | 10,000 | —
2020 | 6,830 | 721 | 10.6% | 10,000 | —
2021 | 8,756 | 984 | 11.2% | 14,000 | —
2022 | 10,543 | 1,029 | 9.8% | 18,000 | —
2023 | 9,715 | 893 | 9.2% | 20,000 | Minor
2024 | TBC | — | — | Increase signalled | ~KRW 2tn+ tender offer
*Note: Figures are on a parent-only basis. 2024 figures are preliminary estimates subject to revision.*
Despite fluctuations in global zinc prices, Korea Zinc has maintained operating margins of roughly 10%, underpinned by high-margin precious metals — gold and silver — which provide a durable earnings floor. The commodity boom of 2021–22 pushed profits to record levels and accelerated dividend growth.
Value-Up Timeline
*Mid-2010s: A dividend-growth story takes shape*
Korea Zinc spent much of the early 2010s as an unremarkable dividend payer, distributing KRW 5,000–7,000 per share annually. That changed from around 2015, when rising profits and a generational shift in management — Choi Yun-bum's ascent to effective leadership — prompted a more shareholder-friendly posture. Dividends rose steadily: KRW 10,000 in 2019, KRW 14,000 in 2021, KRW 18,000 in 2022. The trajectory attracted growing attention from institutional and foreign investors.
*March 2023: The KRW 20,000 dividend and a public pledge*
The final dividend for the 2022 financial year — KRW 20,000 per share — confirmed Korea Zinc's status as a premium income stock. At the annual shareholder meeting, Chairman Choi publicly committed to sustaining and strengthening shareholder returns, presenting the Troika Drive strategy as a long-term growth complement to rising payouts. Internally, awareness was growing that the shares traded below book value (price-to-book ratio below 1x), flagging a valuation problem.
*Second half of 2023: Tentative governance reform*
Korea Zinc quietly expanded the proportion of independent directors on its board and strengthened its audit committee — early moves towards better governance, predating the Korea Exchange's formal value-up programme. It was also during this period that tensions with the Youngpoong side of the founding family began to surface.
*February 2024: Aligning with the government's value-up initiative*
When the Korea Exchange launched its Corporate Value-up Programme — designed to address the so-called "Korea discount", by which Korean equities trade at lower valuations than comparable companies elsewhere — Korea Zinc was among the earlier respondents. With its price-to-book ratio at approximately 0.8–1.0x, it fell squarely within the programme's target group. The board began work on a formal value-enhancement plan.
*September 2024: MBK Partners and Youngpoong launch a hostile bid*
In September 2024, MBK Partners — one of Asia's largest private equity firms — and Youngpoong (controlled by the Chang family, co-founders of Korea Zinc) announced a public tender offer for Korea Zinc shares at KRW 660,000 per share, a substantial premium to the prevailing market price. The move fundamentally altered the nature of Korea Zinc's value-up story: what had been a voluntary exercise in shareholder engagement became entangled with a high-stakes battle for corporate control.
*October 2024: Chairman Choi's counter-offer*
Choi Yun-bum's camp responded with a dramatic counter-move: a self-tender offer for Korea Zinc's own shares at KRW 830,000 per share — well above the rival bid. The total transaction was reported to exceed KRW 2 trillion (approximately USD 1.5bn), making it one of the largest share buyback transactions in Korean corporate history. The company simultaneously announced plans to cancel the repurchased shares, framing the exercise as an act of genuine value creation. Critics were quick to note, however, that the primary motivation was plainly defensive.
*November 2024: An extraordinary shareholder meeting and a boardroom battle*
The dispute moved to an extraordinary general meeting, where MBK and Youngpoong sought to install their nominees on the board. Chairman Choi's side lobbied intensively to retain the support of institutional and foreign shareholders. In this campaign, Korea Zinc's value-up commitments — expanded dividends, share cancellation plans, governance reforms — served directly as arguments for returning the incumbent management. It was an unusual instance of a value-up programme functioning simultaneously as a takeover defence.
*December 2024: Formal value-up disclosure*
By the end of 2024, Korea Zinc had filed a formal corporate value-enhancement plan through the Korea Exchange's disclosure platform. The document set out a phased increase in the dividend payout ratio, a timetable for share cancellation, explicit return-on-equity targets, and measures to strengthen board independence. A medium-term goal of sustaining a price-to-book ratio above 1x was stated, supported by the Troika Drive growth roadmap.
Key Metrics
Year | DPS (KRW) | Payout ratio | Buyback scale | Operating profit (bn KRW) | P/B (x)
2019 | 10,000 | ~25% | — | 685 | ~1.2
2020 | 10,000 | ~23% | — | 721 | ~1.0
2021 | 14,000 | ~24% | — | 984 | ~1.3
2022 | 18,000 | ~28% | — | 1,029 | ~0.9
2023 | 20,000 | ~32% | Minor | 893 | ~0.8
2024 | Increase signalled | Target raised | ~KRW 2tn+ | TBC | >1.0 targeted
*Note: P/B ratios are year-end estimates. 2024 figures carry high uncertainty owing to the takeover contest. Buyback figures refer to the tender offer.*
Challenges Ahead
Three structural questions will determine whether Korea Zinc's value-up commitments prove durable.
First, governance stability after the battle. The 2024 contest has been fought but not fully resolved. The underlying tension between the Choi and Chang families persists. Without a genuinely independent and functional board, value-up disclosures risk becoming procedural gestures rather than substantive commitments.
Second, balancing growth investment with shareholder returns. The Troika Drive strategy demands billions of dollars in capital expenditure on battery materials and renewables. How management allocates capital between growth and returns — and whether it can make a credible case for both simultaneously — is the central financial challenge.
Third, transparency over treasury shares. The large volume of shares acquired during the buyback must be disposed of or cancelled in a manner that is clearly in shareholders' interests. Any suggestion that the shares could be placed with friendly investors to shore up the chairman's voting position would reignite accusations of self-dealing, and the Financial Supervisory Service has reportedly been watching the process closely.
Assessment
Korea Zinc's value-up history carries two lessons for South Korea's capital markets.
On the positive side, the company built a credible track record as a dividend-growth stock across nearly a decade. Whatever its motivation, the 2024 share buyback and cancellation commitment demonstrated that Korean companies can use treasury shares as genuine shareholder return mechanisms — a precedent with wider significance for a market where buybacks have historically been treated as management tools rather than returns of capital.
On the critical side, the timing and content of Korea Zinc's formal value-up disclosures were so tightly bound up with the takeover defence as to make their sincerity hard to assess. Whether the company's shareholder-friendliness reflects an organic, internally driven commitment or merely a reaction to external pressure is a question that investors will not be able to answer quickly.
Controversies and Limitations
*The buyback's dual purpose*
The KRW 830,000 tender offer was presented publicly as an exceptional act of generosity towards shareholders. Its practical function was something closer to a poison pill — a mechanism to concentrate shares in the hands of management and its allies, frustrate the hostile bid and preserve incumbent control. The risk that treasury shares are redeployed to cement a controlling position, rather than cancelled in the interests of all shareholders, remains a live concern. This episode illustrates a structural flaw in Korean corporate law that allows share repurchases to serve governance ends rather than purely economic ones.
*Opaque founding-family governance*
For decades, Korea Zinc operated under a dual-founder structure, with the Choi and Chang families sharing management responsibilities. This arrangement functioned as long as the two sides agreed; once strategic differences and succession dynamics drove them apart, the fragility of the arrangement became apparent. Outside investors had, in effect, been exposed to a governance risk they could not easily observe or price. A board designed to mediate between two family clans is poorly suited to representing shareholders independently.
*The Troika Drive's unproven economics*
The strategic pivot towards battery materials, renewables and urban mining is ambitious. The capital requirements are vast, and the synergies with the core smelting business remain unproven. For shareholders focused on returns, the concern is that long-term speculative investment will crowd out near-term payouts. The capital consumed in the 2024 buyback battle has also raised questions about the balance sheet's capacity to fund both growth and distributions.
*Value-up as a reactive, not proactive, exercise*
The most persistent critique of Korea Zinc's value-up participation is that it was driven by the exigencies of a takeover fight rather than by a spontaneous desire to improve shareholder outcomes. In the broader context of South Korea's effort to close the Korea discount, Korea Zinc's experience is often cited as an illustration of the programme's limitations: disclosure requirements and index inclusions can produce the forms of shareholder engagement without reliably generating its substance.