Posco may quit its steel plant project in Karnataka: report

Posco may quit its steel plant project in Karnataka: reportPolitical instability and ongoing opposition from residents have reportedly forced South Korea's Posco to reconsider its decision to build a $5.3 billion steel plant in Karnataka.

Citing an anonymous source, Reuters said in a report that Posco - the world's fifth-largest steel producer by output - is reviewing the plan and a decision on whether or not to drop the plan could be announced later this week.

Speaking on the condition of anonymity, the source said, "Posco is in internal talks to quit the Karnataka project because protests by local residents make it difficult for us to acquire land."

The South Korean steel producer had signed a preliminary agreement with the Karnataka government in 2010 for building the steel plant that would be capable of producing six million tonnes of steel per annum.

However, the source also said that Posco would proceed as planned with another steel plant worth $12 billion in the state of Odisha.

Posco is trying to stretch its feet further in overseas markets to offset competition from rivals like Hyundai Steel Co, which is backed by renowned auto manufacturer Hyundai Motor Co.

Shares of Posco slipped 0.3 per cent in line with the wider market's 0.3 per cent decline as of 0128 GMT.