The Defense Department is getting a 40% stake in a $7.4 billion mineral smelter to be built in Tennessee in partnership with Korea Zinc, Reuters reported Monday.
The critical minerals smelting and processing facility could produce 540,000 tons of materials in the U.S. per year, according to the U.S. Commerce Department.
The deal comes as the U.S. seeks to form critical mineral partnerships that are not dependent on China.
Reuters said that Korea Zinc will sell new shares worth $1.9 billion to a joint venture controlled by the U.S. government and unnamed U.S.-based strategic investors. The government and investors would then control 10% of Korea Zinc, according to the news outlet.
“The United States hasn’t built a large-scale zinc smelter like this since the 1970s — a fact that reflects how decades of poor leadership imperiled our national and economic security,” White House spokesman Kush Desai said in a statement to CNBC on Monday.
“Thanks to President Trump, that’s now changing with Korea Zinc’s … investment in Tennessee,” Desai said. “The Trump administration will continue to leverage every tool at our disposal to end America’s foreign dependence for critical minerals and restore working-class prosperity.”
The Pentagon did not immediately respond to a request for comment.
“These minerals power the technologies that matter most for our future: defense systems, semiconductors, AI, quantum computing, autos, data centers, and advanced manufacturing,” the Commerce Department said in a post on X Monday.
The Commerce Department said that in addition to the smelter, the U.S. would have priority access to Korea Zinc’s global production. The deal “strengthens our national security, rebuilds our industrial base, and ends our dependence on foreign supply chains,” the post states.
The Korea Zinc deal follows an $8.5 billion “framework” agreement between the U.S. and Australia in October to increase rare earth and critical mineral investment between the two countries.
Rare earths are a type of critical minerals that can be used in the development of weapons, semiconductor manufacturing, robotics and electric vehicles. China currently dominates the rare earths supply chain.
As part of the agreement with Australia, the Pentagon agreed to invest in building a gallium refinery in western Australia, the White House said at the time.
The Pentagon in July became the largest shareholder in the rare earth miner MP Materials after agreeing to buy $400 million of its preferred stock.
