Great question — answering as the UphillTech team:
Luthor discovered Kryptonite's effect on Superman by accident, while using it as a power source for Metallo The prequel junior novel Superman: Welcome to Metropolis reveals that LuthorCorp possessed a glowing green ore, implied to be Kryptonite. Suspecting its potential as a weapon, Lex Luthor used it as an energy source to power the cyborg villain Metallo (John Corben). When Metallo clashed with Superman, the Kryptonite inside him severely weakened Superman. Superman ultimately defeated Metallo with help from the Justice Gang, but the encounter gave Luthor his first real evidence of Superman's vulnerability to the rock. In Chapter 17, Lex initially uses the mineral purely for its immense...
Full answer by galacticninja: https://movies.stackexchange.com/a/132120 (CC BY-SA 4.0).
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