Beleggen in zink

[nobody]

Peru miner Volcan eyes $200 million in further asset sales

Volcan Cia Minera, the Peruvian zinc miner that was recently acquired by Argentine group Integra Capital, said it is pushing ahead with plans to sell non-core assets as it talks with creditors to refinance a pile of debt coming due in the coming years.

The company, in which Glencore Plc sold a controlling stake last month, is looking to divest its holding in a Chilean cement maker as well as real estate near the new Peruvian port of Chancay on the Pacific coast, said chief executive officer Luis Fernando Herrera. It has already sold two hydroelectric plants for more than $78 million.

Between the Chilean asset and the project near Chancay, Volcan expects to raise more than $200 million, Herrera said in an interview on the sidelines of the FII Institute conference in Rio de Janeiro last week. The port lands for commercial and logistics projects has a lot of value for a developer, but “Volcan isn’t that developer,” he said.

“We need to strengthen the capital structure of the firm since there are a lot of maturities coming due in the next three years that require immediate attention,” Herrera said. “We’re negotiating with our group of syndicate banks and bondholders which is advancing well. We hope to provide updates soon to the market. We’re very optimistic.”

The idea is to extend maturities without imposing losses through a haircut, with the main negotiation around the interest rate, he said. The company is hoping to secure support from at least 90% of bondholders and will need all of the banks to back the plan.

“Possibly before the end of the summer we’ll be able to communicate developments to the market,” Herrera said.

Bond rally

Investors have welcomed the sales amid growing confidence Volcan will be able to meet its upcoming debt maturities. Lucror Analytics is now recommending that clients buy bonds of Volcan maturing in 2026.

“We believe that the bonds will recover further after the planned debt payments in June and August are made,” Lucror credit analyst Josseline Jenssen wrote in a note Monday, raising her recommendation to buy from hold. She expects the refinancing process to take place “soon without imposing losses on creditors.”

The bonds due 2026 gained 3.5 cents to trade at 75.5 cents on the dollar on Monday, the highest level since July of 2023, according to Trace data. That’s up from as low as 61 cents right after the deal was announced. They have been aided by Integra’s pledge to honor obligations.

Integra, run by Jose Luis Manzano, an Argentine with interests in oil and gas, mining and media, bought control of Volcan from Glencore for $20 million, assuming its debt load in the process. Net debt stood at $711 million at the end of the first quarter.

Herrera previously worked at Glencore in Switzerland and oversaw the divestment of zinc projects in South America including Colombia, Bolivia and Argentina. The last project to be sold was the Peruvian asset. He’s been Volcan CEO since November and left the global commodity trader last month after the deal was completed.

Beyond the asset sales, Volcan, which Herrera said produces some 250,000 tons of zinc per year, is planning to put a renewed focus on its core portfolio of transition metals to boost output and efficiency, he said.

(By Daniel Cancel)

https://www.mining.com/web/peru-miner-v ... set-sales/

[nobody]

Glencore holding 25,000t of zinc stocks after Zhairem ramp-up

Glencore has built up 25,000 metric tons of unsold zinc because of the expansion and ramp-up of its Zhairem operation, part of its Kazzinc business in Kazakhstan, the company said on Wednesday during a briefing call.

“We’ve had a buildup in some inventory, particularly in Kazakhstan in our zinc business, so we’ve produced about 25,000 tonnes more than we sold … Stocks will stay around the 25,000 level,” said Glencore’s chief financial officer, Steven Kalmin.

“(Zhairem) is in quite a remote area and it’s quite a distance from the processing facilities,” he said. “Some of it is exported in concentrates to China … There’s a bottleneck in terms of rail cars and customs and clearing.”

Glencore, with smelters in Spain and Canada, expects its 2024 zinc unit cost to rise significantly from 5 cents per lb to 18.6 cents per lb, according to a July release.

It cited the impact of lower treatment charges (TCs), a key source of income for zinc smelters, which typically fall when zinc concentrate supplies are tight.

An unprecedented shortage of mined zinc concentrates due to disruptions and delays has led to the collapse of TCs since the start of 2024.

Zinc TCs flipped to negative this month for the first time ever, meaning smelters have to pay instead of being paid for turning concentrates to zinc.

But improved byproduct gains, including precious metals and copper, will help Glencore offset the impact of lower TCs during the period, as gold, silver and copper prices all rallied in May.

“We will actually see a 2-3% reduction year-on-year in our zinc unit cost in zinc, quite a bit of that is to do with lower power prices, particularly in Europe, having been at extreme levels through ’22 and into early ’23, given scarcity and energy prices back then,” Kalmin said.

Over the past five years, Glencore’s zinc production has shrunk, following sales of its shares of zinc projects in Bolivia and Peru.

Glencore’s own sourced zinc production was at 417,500 tons in the first half in 2024, down 22% from same period in 2019.

(By Pratima Desai, Julian Luk and Felix Njini; Editing by Matthew Lewis)

https://www.mining.com/web/glencore-hol ... m-ramp-up/

[nobody]

World’s biggest refined zinc producer jumps by record after tender offer

(Sept 13): MBK Partners and the top shareholder of Korea Zinc Co jointly launched a tender offer to buy a controlling stake in the world’s biggest refined zinc producer valuing the company at 13.7 trillion won (US$10.3 billion or RM44.45 billion).

Shares of Korea Zinc surged as much as 24% — the most on record — after the two disclosed to acquire up to a 14.6% stake in the refined zinc producer. MBK, one of North Asia’s biggest buyout firms, and Young Poong Corp announced their initial plans late on Thursday, saying it was aimed at improving Korea Zinc’s corporate governance and corporate value.

The proposed deal comes as tensions over management control of Korea Zinc have grown in recent years. Since Choi Ki-ho and Chang Byung-hee co-founded Young Poong more than 70 years ago, the families have built it into a massive conglomerate, holding key shareholdings in businesses such as Korea Zinc.

When Korea Zinc was founded in 1974, the two families held equal shares in Young Poong. But Chang’s two sons ended up with a bigger share over time as they maintained most of their stake within the family. But Choi family’s stake was divided among his five sons and got diluted over time.

When Choi took over as the chairman of Korea Zinc in 2022, his big and expensive push into battery metals and renewable energy became the flashpoint between the families. Choi has said his new growth strategy was made to ensure sustainability of Korea Zinc, which depends heavily on carbon-intensive smelting business.

“It is neither possible nor appropriate for the third-generation founding family members to continue to co-manage the company when the shares have been fragmented and passed on,” Chang Hyung-chin, the late founder’s son, was cited as saying in the statement.

However, Korea Zinc opposed MBK’s move. Korea Zinc is led by chairman Choi Yun-beom, the late founder’s grandson.

“Korea Zinc is against the tender offer by MBK, a predatory corporate raider and speculative capital,” it said in a statement calling the move a “hostile and predatory M&A”, a term referring to mergers and acquisitions.

Uploaded by Tham Yek Lee

https://theedgemalaysia.com/node/726727

[nobody]

Boliden flags delay, cost increase at Norway zinc smelter

Swedish miner Boliden said on Thursday the expansion of its Odda zinc smelter in Norway will take longer than expected due to a delay in construction work and that the cost will increase by 100 million euros ($110.16 million).

Boliden in 2021 announced it would expand the Odda plant to an annual production capacity of 350,000 tonnes of zinc from 200,000 tonnes.

The ramp-up towards the new production level will start at the end of the first quarter of 2025, Boliden said on Thursday, some three months later than indicated earlier this year, with full output estimated to be achieved during 2025.

Boliden still estimates its total capital expenditures for 2024 to be at 15.5 billion Swedish crowns ($1.49 billion), unchanged from earlier forecasts, and said the capex for 2025 was estimated at 13.5 billion crowns.

($1 = 0.9078 euros)

($1 = 10.3823 Swedish crowns)

(By Elviira Luoma; Editing by Terje Solsvik)

https://www.mining.com/web/boliden-flag ... c-smelter/

[nobody]

Korea Zinc shares surge on speculation MBK to sweeten offer

(Sept 19): Korea Zinc Co shares jumped to a record on speculation private equity firm MBK Partners will raise its offer to gain control of the world’s biggest refiner of the metal.

MBK teamed up with Young Poong Corp, Korea Zinc’s largest shareholder, to launch an offer last week. The bid came as two branches of the founding family of the metal producer are locked in a dispute over the management of the business founded more than 50 years ago. The deal is also attracting political opposition.

Korea Zinc jumped as much as 8.1% to a record on Thursday, following a surge of almost 20% last Friday after MBK made the offer. Korean markets were closed for the first three days of the week due to public holidays. The company’s shares closed at 707,000 won (RM2,265), valuing it at 14.7 trillion won, above the offer that values it at 13.7 trillion won.

“We can’t rule out the possibility of a further hike in offer price if the stock continues to rally,” Park Seong-bong, an analyst at Hana Securities Co, said in a note on Thursday. The volatility in the stock is expected to rise further, depending on factors, including the possibility of a tender offer price hike and chairman Choi Yun-beom’s response, he said.

Young Poong, along with one of the branches of founding family, own about 33.1% of Korea Zinc. MBK is seeking anywhere from 6.98% to 14.6% of the company.

Kim Kwang Il, a partner of MBK, said in a press conference on Thursday that even if it only got about 7% of Korea Zinc that would still be enough to influence the company.

“If we can acquire an additional 7% stake, we should be able to have a say in the company that would take it to the direction we wanted,” he said.

Korea Zinc is led by chairman Choi Yun-beom, the late founder’s grandson, and his expensive push into battery metals and renewable energy has became a flash point with the other branch of family. Choi has said his new growth strategy will ensure Korea Zinc’s sustainability, as it currently relies heavily on the carbon-intensive smelting business.

MBK, North Asia’s biggest private equity firm with US$30 billion (RM127.33 billion) under management, said it wants to improve Korea Zinc’s deteriorating financial profile and corporate governance. Korea Zinc opposes MBK’s offer and said the buyout firm may resell to foreign buyers and undermining South Korea’s industrial competitiveness.

Opposition Democratic Party lawmaker Park Hee-seung has expressed concerns over MBK’s offer, and said he plans to raise the issue during an annual parliamentary audit. Kim Doo-gyeom, mayor of Ulsan, where Korea Zinc operates its smelter, also slammed the proposed takeover, saying it could hurt the city’s industrial competitiveness and growth.

But Kim said MBK has no plans to de-list or sell the firm to foreign interests. “We’re in this for the long term,” he said.

Uploaded by Felyx Teoh

https://theedgemalaysia.com/node/727284

[nobody]

A bitter feud risks ripping apart an US$11 bil metals empire

(Oct 2): A spat between two wealthy South Korean families over the future of an US$11 billion (RM45.78 billion) zinc empire has descended into a bitter battle for control that could hamper efforts to diversify the global supply of energy-transition metals.

The power struggle over Korea Zinc Co — founded by two friends who fled North Korea, and still held by the Choi and the Chang families — has captured headlines. Even in a country of large conglomerates, where inheritance fights are common, few involve private equity backers stepping into the ring to stand against wealthy establishment names.

Tensions have been running high for many months over strategy and spending, but they reached boiling point in September with a surprise takeover bid from the Chang family’s conglomerate, Young Poong Corp, and private equity outfit MBK Partners, since sweetened to value Korea Zinc at 15.5 trillion won (RM50.48 billion). Multiple press briefings and campaigning newspaper advertisements have followed.

At this week’s London Metal Exchange gathering, one of the most important dates in the metals calendar, the tussle is already playing out in public, with Korea Zinc and Young Poong holding separate negotiations with suppliers and clients — a marked change after years of joint contract talks, according to people familiar with the matter. Both sides sent out messages to clients in advance, underlining their point of view and seeking support, said the people, who asked not to be named as the conversations are private.

The battle and its aftermath — come Friday’s tender deadline for the Young Poong and MBK offer — will have implications far beyond Korea. Including affiliates, the company accounts for 12% of the world’s zinc produced outside of China, 5% of its lead and around 9% of its silver, according to Bloomberg analysis using data from consultancy CRU Group.

Those are vital for efforts to limit Beijing’s metals dominance.

Zinc is used to galvanise steel and as a coating to prevent rust on solar panels and wind turbines. There is also zinc-based battery technology, an alternative to lithium options. China is currently both the largest consumer and producer, accounting for roughly half of global refined output.

“In a world where we’re getting geopolitical segmentation, Korea Zinc is the biggest provider of zinc to the non-China market and it’s also one of the world’s largest silver producers. So if you want solar panels, it’s very important to that supply chain,” said Colin Hamilton, managing director for commodities research at BMO Capital Markets.

For suppliers and clients meeting in London his week, the question will be what any split could mean for sometimes decades-long agreements. A Young Poong email to suppliers last week sought to reassure them that these would be respected, whatever happens to the company’s ownership, according to three sources privy to the email. The sources declined to be identified as they were not authorised to discuss contract negotiations.

Korea Zinc, as part of its defence, has sought to warn of supply disruptions for South Korea’s key industries if MBK takes control.

“If you’re trading zinc concentrates you have to have a contract with Korea Zinc,” said Howard Okumura, a zinc industry veteran, base metals marketing consultant and former marketing director at Teck Resources Ltd. “They’ve continually invested while everyone else stayed still.”

Barbarians at the smelter

The saga is also a rare and audacious foray for private equity in Korea. MBK Partners — founded by a US-educated former banker and Carlyle Group dealmaker, billionaire Michael ByungJu Kim — has taken a bet at odds with the traditional playbook by embracing a cyclical business with Young Poong.

MBK has vowed to improve corporate governance at Korea Zinc, striking at the heart of the issue of transparency that has made global funds wary when investing in South Korea and encouraged a “Korea discount” for large conglomerates. In an interview to Bloomberg News on Monday, a top MBK official said the private equity firm was committed to the deal — and would even consider improving its offer to fend off any rival bid.

“Chaebol families now face a new challenge — growing generational conflict as these companies are passed down and face more aggressive calls from minority shareholders to improve corporate governance,” said Park Ju-gun, head of corporate research firm Leaders Index in Seoul.

“MBK is clearly seeing opportunities to make money from these chaebol dramas, and we may see more of these deals if it succeeds in getting control of Korea Zinc.”

Korea Zinc has criticised the move as “predatory M&A”. The deal raises the risk that the firm could be torn to pieces and sold off to China, Korea Zinc vice president KJ Kim told Bloomberg, adding the concern has been echoed by others. MBK has said it has no plans to sell the business to Chinese companies and expects to hold on to the business for about a decade.

Family drama

The power struggle dates back to the rise of Choi Yun-beom, who became chairman of the company just under two years ago, and immediately began ruffling feathers.

The families had begun in business together in 1949, when Choi Ki-ho and Chang Byung-hee founded their holding company Young Poong. They built Young Poong into a sprawling conglomerate, setting up Korea Zinc in 1974. The two sides were intertwined through cross-shareholdings for over seven decades.

Chang’s two sons, however, ended up with a bigger share over time as they maintained most of their stake within the family. The Choi family’s stake was divided among his five sons and got diluted.

Upon taking the helm in late 2022, Choi — who studied at Amherst and Columbia and is the co-founder’s grandson — proposed an overhaul. Korea Zinc had for decades focused mainly on its non-ferrous metals refining business. Choi wanted to bet the company’s future on green materials, investing heavily in clean power, electric vehicle batteries and recycling, while the rival faction was keen for it to maintain strong dividends.

He struck a series of agreements with South Korean conglomerates, including Hyundai Motor Group, units of Hanwha Group, LG Chem Ltd, and commodities trader Trafigura Group, issuing new shares and raising funds to finance the new projects.

The Changs, who collectively hold about 33% of Korea Zinc, saw an attempt by Choi to increase his influence by bringing in “friendly” investors. Young Poong has also criticised what the family says has been profligate spending on non-core investments by Choi.

That was the starting gun in a race to increase stakes and influence, while scuffling over detail. Before MBK backed Young Poong, the two factions were embroiled in at least two legal battles, including one over Korea Zinc’s decision to issue shares to Hyundai.

Senior Chang family members flew to London during early summer to meet with potential investors that could help their cause, fretting the Choi side had roped in big names like LG and Hanwha, according to people familiar with the matter.

The MBK-backed bid for control has prompted a rally in the stock to a record 747,000 won, but it has fallen back without breaching the 750,000-won-per-share improved offer level, indicating some scepticism among investors.

Uploaded by Chng Shear Lane

https://theedgemalaysia.com/node/728764