Supreme Court of Korea has ordered Young Poong, currently engaged in a management dispute with Korea Zinc (KRX:010130), to suspend operations at its Seokpo Smelter for one month and 30 days due to wastewater discharge violations under the Water Environment Conservation Act.

This ruling, disclosed through the Financial Supervisory Service’s electronic system, is expected to impact the global zinc supply chain according to industry experts.

The suspension was initially imposed by Gyeongsangbuk-do Province in 2019 following investigations that found wastewater from the smelter exceeded legal limits for heavy metals, including cadmium. Young Poong appealed the decision through multiple courts but ultimately lost each appeal, with the Supreme Court upholding the penalty. The exact dates for the suspension are yet to be determined.

The court noted, “The double containment wall at the Seokpo Smelter does not meet the standards for treatment facilities as defined under the Water Environment Conservation Act. Overflow wastewater directed into the containment wall via drains and pipes constitutes discharge, and the prosecutor’s claim is justified.¹”

Separately, the Daegu District Court overturned the initial judgment in the appeals trial, imposing fines of KRW 10 million on Young Poong and KRW 5 million on an employee for unauthorized pollutant discharge and use of unlicensed groundwater wells. From January 2007 to August 2019, the smelter reportedly utilized groundwater from 52 unauthorized wells for sulfuric acid cleaning in zinc refining, bypassing necessary permits.

Local media report² that the suspension may disrupt global zinc supply, as the Seokpo Smelter ranks as the world’s sixth-largest zinc producer. Together with Korea Zinc, the companies supply over 10% of global zinc production. Despite a recent slowdown in zinc demand due to economic conditions in China and Europe, concerns over supply stability persist. Global zinc inventories, currently around 250,000 tons on the London Metal Exchange (LME), are under pressure due to reduced concentrate availability from mines and declining processing fees. Recent disruptions, such as the temporary shutdown of a Canadian smelter due to a fire, are adding more pressure to global supply.

Industry sources indicate that even after the mandated two-month suspension, Young Poong may need additional time to fully restore high-purity zinc ingot production. Experts estimate that including shutdown preparation and restart time, the total production downtime could extend up to four months, based on similar delays observed in prior suspensions in 2021.³

With expected impacts on zinc prices and processing fees, some industry stakeholders and local media are calling for government intervention to prevent further supply disruptions. Korea Zinc, a key player in maintaining global zinc supply stability, has affirmed its commitment to maintaining stability despite these challenges and is closely monitoring the situation.

As the situation develops, stakeholders are watching for broader impacts on the zinc market. Given that Young Poong and Korea Zinc hold a significant share in the global zinc market, any production disruptions could destabilize the domestic industrial ecosystem and potentially lead to a supply crisis.

¹ ChosunBiz, Korea Zinc Management Dispute: Young Poong’s Seokpo Smelter Operations Suspension Confirmed

² MTN, Korea Zinc Management Dispute: Young Poong Ordered to Halt Seokpo Smelter Operations for Two Months Due to Unauthorized Wastewater Discharge

³ News1, Young Poong’s Seokpo Smelter Operations Suspended for 2 Months…prompting concerns over Zinc Supply

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