Korea Zinc sees joint growth in indium and germanium as strategic minerals gain prominence in U.S. supply chain reshuffle

[Financial News] As demand for critical minerals such as indium and germanium rises rapidly on the back of expanding AI data centers and the semiconductor industry, Korea Zinc is benefiting from its efforts to expand its rare metals business. Indium is driving earnings improvement through both higher prices and stronger sales, while germanium is also moving up its commercialization schedule by more than a year as the company accelerates efforts to secure a new growth engine. With the Donald Trump administration also pushing to restructure supply chains for key minerals, Korea Zinc's strategic value is drawing even more attention.
According to industry sources on the 13th, demand for Korea Zinc's strategic minerals, including indium and germanium, is rising quickly on the back of growth in AI data centers, optical communication, and the semiconductor industry. As China continues to restrict exports of strategic minerals, supply chain diversification is being pursued mainly in the United States and Europe, further increasing the value of Korea Zinc's rare metals business, which has secured a non-China supply chain, analysts said.
Indium is the item benefiting the most. In the first half of this year, Korea Zinc's indium sales volume rose 51% from a year earlier, and its share of rare metals revenue expanded to 22%. Indium prices also more than doubled, climbing from around $355 per kilogram in the first quarter to about $800 recently.
The surge in indium demand is attributed to increased investment in AI data centers and growth in the optical communication market. Indium is a key raw material used in optical transceivers and semiconductor materials, and demand has been steadily rising alongside the spread of AI infrastructure. Industry watchers say the simultaneous increase in raw material prices and sales volume will also have a positive effect on profitability in Korea Zinc's rare metals business.
Korea Zinc is also considering expanding into higher value-added businesses to meet growing demand. The company currently sells indium ingots, but it is reportedly reviewing a plan to produce indium compounds in-house and supply them directly to customers in optical transceivers and AI data centers. Expanding beyond raw material sales into higher value-added compound products is expected to further improve profitability.
Its germanium business is also moving faster than expected. Korea Zinc has brought forward its commercial production schedule by more than a year from the original target of 2028. Using facilities at its affiliate Kemco, the company plans to begin sales in early next year. The strategy is to reduce the burden of new facility investment while responding proactively to market demand.
Earnings are also continuing to grow. In the first half of this year, Bismuth sales jumped 81.8% from a year earlier to 40 billion won, while indium sales rose 11.1% to 30 billion won. Semiconductor-grade sulfuric acid, used in chip manufacturing processes, also recorded sales of 71 billion won, maintaining steady growth.
Meanwhile, the U.S. supply chain reshuffle is expected to work in Korea Zinc's favor as well. The Donald Trump administration is seeking to build a supply chain for critical minerals that runs from mining to refining and processing within the United States in order to reduce dependence on China.
At a supply chain event held in Washington, D.C. on the 7th local time, U.S. Secretary of Commerce Howard Lutnick specifically mentioned Korea Zinc while explaining to President Donald Trump examples of efforts to build a U.S. strategic minerals supply chain. Korea Zinc had previously signed a Memorandum of Understanding (MOU) with Lockheed Martin Corporation for the long-term supply of critical minerals, and its role in the U.S. defense and advanced industries supply chain is expected to expand further.
[email protected] Lee Dong-hyeok Reporter