Korea Zinc attracts investment from top three global commodity brokers and participates in the nickel subsidiary of Trafigura, Chemco.

Korea Zinc has drawn investment from ‘Trafigura,’ one of the top three global raw material brokerage firms, for its new business venture in electric vehicle battery materials. Trafigura has decided to participate in the investment for the eco-friendly ‘all-in-one nickel refinery’ being pursued by KEMCO, a subsidiary of Korea Zinc that manufactures nickel sulfate. Trafigura will also participate in KEMCO’s equity.

On the 16th, Korea Zinc signed an investment agreement worth a total of 184.9 billion won ($155.8 million) with Trafigura at its headquarters in Gangnam-gu, Seoul, for the construction of the all-in-one nickel refinery. The investment from both companies will be used for the construction costs of the nickel refinery and initial operating capital.

Along with the investment agreement, a contract was also signed to secure raw materials stably for the new refinery. Trafigura is a multinational company based in Singapore. It is known as the brokerage firm that distributes the most nickel in the world. According to the contract, Trafigura will supply 20,000 to 40,000 tons of nickel to KEMCO annually. In return, Trafigura will have rights to 20% of the total nickel sulfate volume produced by KEMCO, corresponding to its investment share.

With this investment, Korea Zinc’s stake in KEMCO will increase from the existing 35% to 64%. As a result, KEMCO’s business performance will be reflected in Korea Zinc’s financial statements in the future. Trafigura will also hold a 12.9% stake in KEMCO. This investment can be seen as a follow-up action to the business partnership announced last November. Since last year, Hanwha, LG Chem, Hyundai Motor Group, and Trafigura have participated in Korea Zinc’s growth strategy, the ‘Troika Drive,’ as business partners. The industry evaluates this investment as reflecting Korea Zinc’s confidence in the success of the electric vehicle battery material business.

Trafigura, with sales of 400 trillion won ($337 billion) as of last year, leads the global resource brokerage market, handling oil, metals, and minerals worldwide. Korea Zinc, which has the world’s number one non-ferrous metal refining technology, has continuously strengthened its cooperation with Trafigura, which can stably procure nickel, a key mineral for electric vehicle batteries, from various countries. The intention is to respond quickly to regional regulations such as the U.S. Inflation Reduction Act (IRA). They also decided to build an all-in-one nickel refinery through KEMCO, which can produce various products according to the demand of battery material consumers.

KEMCO is a company that manufactures and sells nickel sulfate, which is used as a precursor material. Currently, it produces up to 100,000 tons of nickel sulfate annually at a factory on a site of about 64,583 square feet near the Onsan Refinery of Korea Zinc. In June of last year, it established a joint venture company, ‘Korea Precursor Co., Ltd.,’ with LG Chem. They plan to complete a precursor factory with an annual maximum scale of 20,000 tons within this year and start test operation from next year.

Korea Zinc, which has the world’s best refining technology, has been producing a total of 21 valuable metal and chemical products by processing not only zinc and lead concentrates but also low-grade concentrates and scraps. They plan to apply their accumulated technology and know-how to the new refinery. They will introduce a dry and wet combined process to process all kinds of nickel-containing raw materials such as nickel matte and nickel hydroxide precipitate (MHP, a nickel intermediate) from oxidized ore and produce everything from nickel sulfate to cobalt sulfate and precursors. They will also pursue businesses related to waste batteries containing nickel and plan to produce various products from liquid or crystallized nickel sulfate to cobalt sulfate and precursors according to customer demand.

Chairman Choi Yoon-bum of Korea Zinc said, “We will do our best to ensure that our reputation as the world’s number one non-ferrous metal company continues in the field of nickel refining, a core material for batteries,” and added, “We will strengthen our position in the global nickel market through the all-in-one nickel refinery where the world’s best refining technology is concentrated.”

Gonzalo De Olazaval, Global Head of Metals & Minerals at Trafigura, said, “Korea Zinc is a company that is optimally structured to support various refining businesses using Trafigura’s metal distribution and brokerage know-how and global network,” and added, “It is meaningful to cooperate with Korea Zinc at a time when the importance of metals is emphasized.”

Reporter Kim Min-beom, mbkim@donga.com