Facing inordinate delays in land acquisition and local opposition, South Korean steel major Posco has scrapped its proposed $5.3-billion (R31,380-crore) project in Karnataka.
"With the given market conditions and significant delay in acquiring the required land in Gadag, we have decided to close our proposed steel plant in Karnataka," Posco chairman Yong Won Yoon said in a statement.
Posco's pull-out from Karnataka casts shadows on India's investment climate even as the government tries hard to ease norms for foreign investment amid decelerating economic growth.
Posco had signed a memorandum of understanding with the Karanataka government in June 2010 to set up a steel plant with production capacity of six million tonnes per annum. However, land acquisition was stalled due to intense protests from farmers. Also, the mining scam that hit the state also affected the project.
The company will, however, go ahead with the much larger $12-billion (R71,270-crore) steel plant project in Orissa.