July 16 (Bloomberg) -- Posco, Asia’s third-biggest steelmaker by output, scrapped a plan to build a mill in the southern Indian state of Karnataka because of delays in getting mining rights and purchasing land.
The South Korean steelmaker agreed with the Indian state to pull out of the project, the Pohang-based company said in a regulatory filing today. Both parties signed an initial agreement for the 323 billion rupee ($5.44 billion) integrated mill project in June 2010.
The decision came at a time when steelmakers globally are suffering from falling profitability amid the economic slowdown. Posco, South Korea’s biggest steelmaker, in April reported a worse-than-estimated profit for the first quarter as slow demand depressed prices. Second-quarter earnings are due July 25.
Separately, the Korean company’s proposed $12 billion project in the eastern state of Odisha has also been delayed by eight years because farmers had refused to vacate government-owned land they occupied for generations. Posco is waiting to hear from the state government, which has said it has completed land acquisition for the mill, I.G. Lee, spokesman at Posco’s India unit, said in phone interview from New Delhi today.
Posco fell 1 percent to 310,000 won in Seoul trading at 2:29 p.m. local time, compared with a 0.6 percent drop in the local benchmark Kospi index. The stock has lost 11 percent this year, underperforming a 6.7 percent decline in the Kospi.
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