South Korean POSCO Cancels $5.3 Billion Steel Project In Southern India To Focus On $12 Billion Project In Western India

on July 16 2013 11:19 AM
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People walk past a POSCO logo at the company's headquarters in Seoul, August 2010. Jo Yong-Hak

POSCO (KRX:005490) will end its role in a $5.3 billion steel mill development project in India's Karnataka province, the steel giant announced Tuesday.

The world's fifth-largest steel company stated in a regulatory filing that it reached an agreement with Indian officials to end the project in the southern state of Karnataka due to delays in getting rights for iron ore mining and opposition from residents who denied POSCO land acquisition.

Meanwhile, POSCO will still proceed as planned with its main project in the eastern state of Odisha, a $12 billion steel development that is India's largest foreign direct investment. The Odisha project received legal clearance for an iron ore exploration license in May despite being hindered by eight years of stalls.

"We will proceed with a steel mill project in Odisha, which is making progress," said POSCO spokeswoman Kim Ji-young. "The latest move will make us more focused on the project."

POSCO, which is backed by billionaire investor Warren Buffett of the U.S., has struggled to establish itself in India and other overseas bases to offset competition from its South Korean rival, Hyundai Steel Company (KRX:004020). The World Steel Association's 16th-ranked company of 2012 is backed by automaker Hyundai Motor Co (KRX:005380).

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