Poong

SEOUL, March 5 (UPI) — South Korean zinc producer Young Poong has become embroiled in a new controversy with shareholder KZ Precision, which manufactures hydraulic equipment.

Young Poong, a major shareholder of the world’s largest non-ferrous metals producer Korea Zinc, said Wednesday that it has brought KZ Precision, an affiliate of Korea Zinc, to court.

Young Poong accused KZ Precision of deliberately creating an illegal cross-shareholding structure during the Korea Zinc management control dispute ahead of Korea Zinc’s shareholders’ meeting early last year.

Young Poong alleged that KZ Precision sold its shares in Young Poong to an Australian-based Korea Zinc subsidiary with the aim of restricting Young Poong’s voting rights over Korea Zinc.

Over the past year, Korea Zinc has sought to fend off a takeover bid from Young Poong, which has joined with Korea’s top private equity firm, MBK Partners.

“We have filed a damages lawsuit against KZ Precision as our shareholder value was harmed by an unlawful restriction of voting rights,” Young Poong said in a statement.

“As the largest shareholder of Korea Zinc, we will keep playing a responsible role in normalizing the company’s corporate governance and enhancing shareholder value,” it added.

Meanwhile, KZ Precision criticized Young Poong’s management.

“Young Poong’s corporate value, reputation and internal control system have been damaged to an irreparable extent, resulting in adverse effects on shareholder value,” KZ Precision said in a statement.

“The current management of Young Poong was hesitant to make capital investments, which caused the corporation to lose competitiveness in its core smelting business and accumulate losses,” it said.

Young Poong has suffered from operating losses over the past few years, totaling $50 million in 2021, $74 million in 2022, $97 million in 2023, and $60 million in 2024. The Seoul-based company has yet to disclose last year’s results.

KZ Precision also took issue with the environmental concerns involving Young Poong, whose smelter operations in Korea were suspended for two months last year after discharging polluted wastewater without approval.

In response to Young Poong’s claim that it has channeled hundreds of millions of dollars to improve the environment around its smelter, KZ Precision argued that there may be accounting irregularities, which are reportedly under investigation by regulators.