SEOUL, Oct 4 (Reuters) - Korea Zinc, the

world's biggest refined zinc producer, has been embroiled in a

bitter feud among founding families over control of its $12

billion zinc empire.

The winner of the battle stands to control South Korea's

significant player in a U.S.-led effort to reduce heavy reliance

on China for key metals and materials used in industries ranging

from construction to automobiles, analysts said.

Private equity firm MBK Partners and Young Poong

on Friday raised their offer price for shares in Korea Zinc to

match a counteroffer from rival family members and Bain Capital.

WHO ARE THE MAJOR PLAYERS?

Young Poong was founded in 1949 as a trading company by two

co-founders surnamed Chang and Choi born in what is now North

Korea. The company expanded into smelting metals in the 1970s,

and then in 1974 the two families formed Korea Zinc, with the

Choi family managing the operation.

Scions of the two families are now joining forces with

private equity firms in a takeover battle. The co-founding Chang

family, which leads zinc producer peer Young Poong, joined

forces with private equity MBK Partners for a $1.7 billion

tender offer in September.

The Choi family teamed up with Bain Capital to fend off that

takeover attempt.

Korea Zinc's largest shareholder is currently Young Poong,

which runs a 400,000 metric ton-per-year zinc smelter at Seokpo,

South Korea, which is the world's sixth largest.

Young Poong, also known for its bookstore chains in Korea,

generates a majority of its revenue from sales of parts for

smartphones and other electronic devices.

MBK Partners, a North Asia-focused private equity firm with

investments in South Korea, Japan and China, has over $30

billion in capital under management, according to its website.

Founded by Michael ByungJu Kim in 2005, MBK has been a

frequent player in South Korean deals, including the purchase of

local hypermarket chain Homeplus from Tesco ( TSCDF ) for $6.1

billion in 2015.

MBK Partners said in September it plans to eventually become

the largest shareholder in Korea Zinc, partly by exercising a

call option to buy Korea Zinc shares owned by Young Poong and

associated entities.

WHAT ARE THE STAKES?

Korea Zinc and top shareholder Young Poong supply 85% or

more of South Korea's zinc, mostly to protect steel used in

cars, construction and other products.

Although Korea Zinc has the biggest market share among

companies in refined zinc, China dominates the global production

of refined zinc, considered a critical metal by Washington.

Korea Zinc has in recent years attracted partnerships from

LG Chem and Hyundai Motor ( HYMTF ) to produce

battery materials in Korea, in response to Washington's call to

reduce reliance on China for batteries and battery materials.

Korea Zinc also supplies materials for semiconductor firms

such as sulphuric acid for Samsung Electronics ( SSNLF ).

WHAT SPARKED THE TAKEOVER BATTLE?

After decades of intertwined business operations, in the

late 2010s Young Poong raised its ownership in Korea Zinc as

part of a governance structure reorganisation to resolve

circular shareholding, enlarging the stake controlled by the

Chang family versus the Choi family.

When a third-generation member of the Choi family, Yun B.

Choi, began to lead Korea Zinc's management in 2019, he began to

expand the company's business.

Choi, a Columbia law school graduate, expanded investments

beyond the core zinc business to battery materials, hydrogen and

renewable energy, inviting criticism from Young Poong.

The conflict between visions for the company rose to the

surface when Korea Zinc said this year it would no longer handle

the treatment of sulphuric acid generated at Young Poong's

Seokpo smelter.

Korea Zinc has said the costly transport and storage of the

dangerous by-product from the Seokpo smelter should be Young

Poong's responsibility handled with Young Poong's investment.

Young Poong said Korea Zinc had violated a long-standing

agreement and threatened Seokpo smelter's viability.

CONTRASTING FORTUNES

Korea Zinc is a key investment for loss-making Young Poong.

Although both Korea Zinc and Young Poong are both in the

smelting business in South Korea, coping with higher electricity

costs and tougher regulations, Korea Zinc has reported profits

for the past straight 98 quarters.

Young Poong's CEO has also been arrested and charged this

year over safety-related deaths at the company's Seokpo smelter,

and is engaged in a lawsuit to nullify a South Korean

authorities' environmental pollution ruling that may force the

Seokpo smelter to close for two months.

($1 = 1,333.6000 won)