Korea Zinc (KRX:010130) has successfully completed the ‘Onsen Smelter Rationalization Project,’ a key initiative undertaken throughout 2024 to strengthen the competitiveness of its Onsan Smelter. This achievement is expected to result in higher operating profits than initially forecasted in its business plan.
Korea Zinc, led by Chairman Yun B. Choi, announced the successful completion of its year-long ‘Onsan Smelter Rationalization Project,’ aimed at bolstering the competitiveness of its operations. As a result, the company expects operating profits to exceed its original business targets for the year.
Through this project, Korea Zinc implemented improvements in operational processes, enhanced energy efficiency, and strengthened cost competitiveness, yielding significant results expected to positively impact profitability. The company attributes this success to the dedicated collaboration of management and employees, underscoring the value of teamwork and unity.
Korea Zinc has maintained profitability for 99 consecutive quarters since 2024, achieving an annual operating margin of approximately 10%. However, the company faced global uncertainties in 2024, including the ongoing Ukraine war, rising energy costs (electricity and coal), and falling treatment charges (TC), which increased raw material expenses. In light of these challenges, Korea Zinc conservatively projected KRW 6.828 trillion in sales and KRW 407.8 billion in operating profit (6.0% operating margin) for 2024 – relatively lower than its five-year average operating margin of 12.2%.
To address these difficulties, Korea Zinc devised various strategies, including Onsan Smelter Rationalization Project. The initiative, which engaged all employees from senior executives to frontline workers, focused on improving processes and enhancing cost competitiveness.
The project was led by Chief Smelting Officer President Tae-Woong Jung, who personally supervised its execution. Jung relocated to Ulsan, spending 2-3 days per week at the smelter while working the rest of the week at the Seoul headquarters. His hands-on leadership style facilitated close collaboration between the site and headquarters ensuring unified efforts toward achieving ambitious goals.
Key initiatives included: Appointing 23 Key Personnel for process rationalization management; Forming task forces for process optimization and cost management; Establishing cross-functional task forces for materials, technology, production, research and development, safety, environment, and equipment; Organizing 18 cost-reduction teams with 95 sub-groups, incentivizing top-performing teams; Managing global price fluctuation risks for raw material purchases and product sales.
Jung’s “on-the-ground management” approach encouraged seamless collaboration, aligning the workforce toward a common goal.
Vice Chairman and Chief Technology Officer Je-Joong Lee also played a pivotal role by leading weekly process improvement meetings between the Seoul headquarters and the Onsan Smelter. This effort increased profitability and advanced technical capabilities. A notable achievement was increasing annual lead production from 420,000 tons to 450,000 tons. Additionally, logistics system improvements reduced related costs to KRW 3 billion—one-third of the previous year’s expenses. Other initiatives included themed cost management activities, such as conveyer system improvements, and rationalizing integrated processes for zinc, lead, and copper.
The project’s success was further bolstered by strong labor-management cooperation. Korea Zinc credits the success to decades of trust and collaboration among leadership, managers, and employees, underscored by a record of 37 consecutive years without labor disputes.
A Korea Zinc representative remarked that the domestic steel industry is struggling due to dumping by other major steelmakers, and the non-ferrous metals market faces numerous challenges with bleak prospects for 2025. To adapt to rapidly changing global conditions and internalize supply chains, we remain committed to maintaining our smelters’ competitiveness. Korea Zinc’s sustained superior performance compared to peers is a testament to the exceptional leadership of our current management and the long-standing trust and collaboration among all employees—something speculative capital cannot replicate.
