The agreement, which would create the first US zinc refinery since the 1970s, involves the construction of a 650,000m² smelting facility in Tennessee.

Korea Zinc shares surged as much as 26% on Monday.

The announcement comes as China dominates the world’s supply of critical minerals, often used in military technology and semiconductors.

Korea Zinc – a leading global processor of the metal – has “entered into a strategic partnership with the US department of war and the US department of commerce, who will jointly invest in the construction of a large-scale smelter,” the company said in a statement.

The project entails a “total planned investment of US$7.4 billion, including working capital and financing costs,” it said, adding it is expected to contribute “significantly to global supply chain diversification”.

Korea Zinc said geopolitical competition over natural resources is intensifying “globally and certain countries increasingly exert influence over critical mineral supply chains”.

Washington’s deputy secretary of defense Steve Feinberg said the project, reportedly located near a major US military base, will create “750 American jobs”.

It will also “unlock strategic minerals as a force multiplier across aerospace, defence, … without chokepoints,” he said in a statement shared by Korea Zinc.

US commerce secretary Howard Lutnick said the deal was a “Big win for America”.

The project will “produce 540,000 tonnes per year of essential materials right here in America,” he said on X.

These minerals power “the technologies that matter most for our future,” including defence systems, semiconductors, AI, quantum computing, and data centres, he added.

Seoul and Washington in October struck a trade deal, which included a pledge by South Korea to invest US$350 billion in strategic US sectors.