Korea Zinc’s $7.4 billion U.S. smelter signals a shift in American critical mineral strategy

Korea Zinc is investing in a large-scale smelter in Tennessee, backed by U.S. government support, marking a strategic move to bolster domestic processing of critical minerals and reduce reliance on foreign processors, especially China.

Korea Zinc’s decision to build a large-scale smelter in Clarksville, Tennessee, marks a turning point in U.S. industrial policy and supply‑chain strategy, and signals the start of a concerted effort to bring critical‑mineral process...

According to Korea JoongAng Daily, the South Korean company will invest $7.4 billion to construct a facility that the company and U.S. officials describe as capable of processing 1.1 million tonnes of raw material a year into roughly 540,000 tonnes of finished nonferrous metals. Korea Zinc’s own statement says the project, dubbed the “U.S. Smelter”, will produce 13 metals, spanning common industrial inputs such as zinc, copper, lead, gold and silver, and a suite of defence‑ and technology‑critical elements including indium, gallium, antimony, tellurium, cadmium, germanium, palladium and bismuth. Construction is slated to begin in 2026 with phased commercial operations targeted for 2029, according to the company press release.

The deal rests on an unusual public‑private alignment. Korea Zinc’s announcement and reporting in Economy.ac and Korea Pro state that the U.S. Department of Defense and the Department of Commerce are partners in the project, with a conditional commitment from the Pentagon and federal incentives that effectively underwrite much of the commercial risk. Korea Zinc’s release specifies total capital expenditures of about $6.6 billion within the broader $7.4–7.5 billion figure cited in other accounts. The Tennessee Economic Development Company noted the project will be the company’s U.S. headquarters and will create roughly 420 jobs in Montgomery County and 320 jobs in Smith County, a combined workforce roughly consistent with other reporting that puts permanent positions at about 750.

The Clarksville plan also follows a strategic acquisition. Nyrstar said it has reached an agreement to sell its East Tennessee and Mid Tennessee mining complexes and the existing Clarksville smelter to Korea Zinc, providing the buyer with a domestic asset base and an operational foothold. The Clarksville smelter is the only primary zinc smelter in the United States and has been in operation for nearly 50 years; its integration into Korea Zinc’s programme underlines how much processing capacity the U.S. has allowed to lapse.

Industry context makes the project’s significance plain. The United States currently imports large shares, or, in the case of some elements, virtually all, of certain critical materials. Lead reporting in the lead article notes 100% import reliance for indium and gallium and highlights that U.S. copper‑smelting capacity is measured in only a few hundred thousand tonnes, while Chinese processors handle far larger volumes monthly. Those imbalances translate into vulnerability: defence procurements, semiconductor fabs and renewable energy projects all depend on steady access to ultra‑pure, traceable supplies. The Department of Defense’s involvement, and the use of the Defense Production Act and other incentives, reflect a recognition in Washington that raw ore discoveries matter little if concentrates are exported for refinement abroad.

Geopolitically, the Clarksville smelter is intended as insurance rather than autarky. Korea Pro and Korea JoongAng Daily emphasise the project’s role in reducing reliance on single foreign processors, principally Chinese facilities, that dominate many stages of nonferrous refining and separation. The lead article underscores the national‑security logic: materials such as tungsten, antimony, gallium and germanium are integral to munitions, guidance systems and semiconductors; dependence on foreign processors creates leverage that could be decisive in crisis scenarios.

The economics behind the investment are pragmatic. Korea Zinc is pursuing a commercially viable operation supported by long‑term government purchase commitments and loan guarantees that improve returns on capital‑intensive, multi‑year projects. Reporting notes that rising labour costs in China and attractive federal incentives in the United States make onshore processing more attractive now than it would have been a decade ago.

Operational hurdles remain. Modern smelting is energy and skill intensive. The project’s site benefits from proximity to Tennessee Valley Authority baseload power, largely nuclear and hydroelectric capacity, which helps meet the continuous high‑volume electricity demands Korea Zinc says are necessary. Environmental management will be closely watched: processing more than a million tonnes a year of complex concentrates poses emissions and waste‑management challenges even for state‑of‑the‑art facilities, and local permitting and regulatory oversight will shape how the plant operates. Korea Zinc and local economic development authorities have framed the venture as compatible with environmental safeguards, but the balance between industrial capacity and community impact will be scrutinised.

Workforce development is another constraint. Technical skills for modern nonferrous metallurgy have waned in U.S. training programmes; both the lead article and local economic releases describe partnerships with Tennessee technical colleges to rebuild skills pipelines. The jobs created are specialised and higher skilled than legacy smelting roles, but scaling up a trained workforce will take years and concerted investment in vocational education.

Strategically, the Clarksville smelter may be the first of several moves to re‑establish domestic processing for lithium, rare earths, battery precursors and other advanced materials. The objective is not complete supply‑chain independence, that would be economically unrealistic, but rather to eliminate single points of failure and to provide alternative sources for materials deemed critical by industry and government. As the lead article notes, shocks such as pandemic‑era semiconductor shortages, commodity price spikes after Russia’s invasion of Ukraine, and past Chinese export curbs have shown how quickly industrial dependencies can translate into national vulnerability.

Taken together, the Korea Zinc project represents a test case for U.S. industrial policy: can targeted federal backing, foreign direct investment and local asset integration revive processing capacity that was offshored over decades? The company and its government partners argue the answer is yes, positioning the Clarksville smelter as strategic infrastructure that will supply defence, semiconductor and clean‑energy industries while anchoring skilled employment in Tennessee. Critics will watch costs, environmental performance and the pace of domestic supply‑chain development closely; proponents will point to the project as a necessary corrective to nearly half a century of declining onshore refining capability.

If realised as planned, the Clarksville facility will be a tangible expression of a broader shift in Washington’s approach to critical minerals: from prioritising raw‑material discovery alone to deliberately rebuilding refining and processing capacity that underpins modern industry and national security.

Source: Noah Wire Services