NEW DELHI/BHUBANESWAR, INDIA – South Korean steelmaker POSCO could scrap plans for a $12 billion project it agreed to set up in India a decade ago, after a new law made it costlier to source iron ore for the plant, a company spokesman told Reuters.
The U.S.-listed shares of POSCO fell as much as 3.3 percent to their lowest in more than six and a half years after the report.
The 2005 project to set up a steel plant in Odisha state was billed as India’s biggest foreign direct investment at the time, but it has encountered a series of delays.
The company waited almost a decade to acquire land for the proposed 12 million-tonnes-a-year steel plant due to opposition from local tribal groups.
A mining law enacted in March by India means the company would now also have to buy a mining license in an auction. Originally, the Odisha government had promised to help the company obtain the licence for free.
That could raise costs for the company at a time when a global steel glut is depressing prices.
“We will have to see how our costs will be, whether it will be viable,” POSCO’s India spokesman I. G. Lee said. “We will take a final call only after auction details come.”
Asked whether POSCO could skip the auction and withdraw from the Odisha project, Lee said: “Yes”.
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