Youngpoong facing deficits, supervision, and provisional debt for the fifth consecutive year...What kind of influencing stock at Korea Zinc's shareholders' meeting

*This content was translated by AI.

Ahead of Korea Zinc's regular shareholders' meeting (24th), interest in Youngpoong's management performance, environmental risks, and governance structure is also growing. While Korea Zinc, MBK, and Youngpoong are in conflict over management rights in the end, Youngpoong's management ability can also affect shareholders' votes. In fact, some voting rights advisors raised their hands with Korea Zinc's current management, pointing out the deterioration of Youngpoong's management performance.

According to the Financial Supervisory Service's electronic disclosure and media reports, Youngpoong's provision on a consolidated basis at the end of 2025 was 374.3 billion won, up 45% from the end of 2024. It is estimated that most of the provisions for export are due to environmental pollution at the Seokpo Smelter, including 225 billion won for export, 118.5 billion won for land purification, and 14.9 billion won for groundwater purification. This is the amount of debt that is likely to be used for pollution purification.

It is analyzed that the environmental pollution problem of the Yeongpung Seokpo Smelter is also affecting management performance. In fact, the Seokpo smelter was administered by the authorities for unauthorized discharge of wastewater, and the annual utilization rate of the Seokpo smelter fell to 45.9% as it implemented a 58-day suspension from February 26 to April 24 last year. According to the Youngpoong business report, the utilization rate of the Seokpo smelter continued to decline to 81.32% in 2022, 80.04% in 2023, 52.05% in 2024 and 45.9% in 2025.

In the end, Youngpoong recorded 1.1927 trillion won in sales on a separate basis last year, but its operating loss widened to 277.7 billion won, compared to 88.4 billion won a year earlier. It has not escaped from the separate standard operating deficit for five consecutive years since 2021.

On a consolidated basis, the company recorded 2.99 trillion won in sales and 259.7 billion won in operating losses last year, continuing its deficit for the third consecutive year. Sales in the smelting sector reached 1.149 trillion won, but operating losses stood at 265.6 billion won. On the other hand, Korea Zinc, the same non-ferrous metal smelter, has continued its operating surplus for 44 consecutive years, widening the gap in management performance between the two companies.

Youngpoong's deterioration in management cannot be seen as having no effect on the vote-off of Korea Zinc's shareholders' meeting to be held on the 24th. "When comparing the management performance of the company and Youngpoong over the past three years, the company has maintained sales growth and stable profitability, while Youngpoong continues to decline in sales and sluggish profitability," said SustinBest, a domestic voting advisory firm, in a recent Korea Zinc bill analysis report. "Considering this, it is judged that it has not been sufficiently verified at this point whether the continuity of management strategies and the stability of execution in the process of promoting strategic projects can be sufficiently secured if Youngpoong-MBK secures management rights."

For this reason, MBK and Youngpoong are seeking to expand the number of directors with the governance structure of Korea Zinc at this shareholders' meeting, while there are concerns over the continued hostile M&A attempts. In addition to the criticism from voting rights advisors, the Korea Zinc Labor Union is protesting, saying, "We will fight to the end to prevent the black touch of speculative capital from dirtying our sacred workplace at this general shareholders' meeting." Furthermore, he declared a hard-line response policy, saying, "If the company is violated, we declare that we will fight to the end by all means, including a general strike."

Concerns among voting rights advisors and opposition from the Korea Zinc union are largely due to distrust in management, including the operating performance of Youngpoong, which operates a non-ferrous metal smelter such as Korea Zinc.

Some are paying attention to Youngpoong's alleged accounting fraud. According to media reports, the Financial Supervisory Service launched an accounting review of Youngpoong in October 2024 and then switched to accounting supervision in November of the same year. The key issue of supervision of Youngpoong was whether the cost of waste disposal at the Seokpo Smelter was properly reflected in the provision.

In addition, ahead of the regular shareholders' meeting of Youngpoong on the 25th, KZ Precision, a shareholder of Youngpoong, proposed to expand the separation of audit committee members, upgrade the ESG committee's committee within the board of directors, and establish a basis for in-kind dividends, but Youngpoong expressed opposition, saying, "It reflects the interests of specific people, not the interests of all shareholders of Youngpoong." However, some say that it does not adequately respond to the trend of amendments to the commercial law, such as the introduction of a concentrated voting system and the expansion of separate election of audit committee members.

An industry official said, "There is no choice but to say that Youngpoong should restore confidence in its accounting transparency and internal control before taking issue with the governance of other companies," adding, "At the upcoming general shareholders' meeting, shareholders will eventually judge based on who will increase Korea Zinc's corporate value, but it is true that it is difficult for Youngpoong to gain strength in his voice as he does not show exemplary behavior in his main job."

"As Youngpoong's governance structure is also difficult to see as an example, it will inevitably sound like an argument only for management disputes," he pointed out.

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*This content was translated by AI.