POSCO to terminate joint venture with firm backed by Myanmar junta

The Korea Times

The Korea Times

Business

Wed, November 29, 2023 | 05:28

Manufacturing

POSCO to terminate joint venture with firm backed by Myanmar junta

Posted : 2021-04-16 14:09

Updated : 2021-04-17 11:14

A POSCO flag stands alongside a Korean flag at the main gate of the steelmaker's headquarters in Gangnam-gu, Seoul in this undated photo. Korea Times file

By Yi Whan-woo

POSCO announced Friday that its affiliate, POSCO C&C, will terminate a joint venture with a firm backed by the military in Myanmar.

The world's fifth-largest steelmaker has been under fire for its business ties with Myanmar's military junta that seized power in February.

POSCO has claimed that the joint venture, Myanmar POSCO C&C (MPCC), is its only link to the military junta.

Coated and color steel manufacturer, POSCO C&C, has been running MPCC since 2013 with Myanmar Economic Holdings Limited (MEHL), one of the Southeast Asian country's military-controlled conglomerates.

"We will end the joint venture with MEHL, as issues (concerning the military coup) have been raised recently," POSCO C&C said in a statement delivered by POSCO.

POSCO C&C has a 70 percent stake and MEHL has a 30 percent stake, respectively, in MPCC.

The Korean firm did not specify how it will end the venture, saying it will continue to disclose related issues.

"We hope that our steel business will continue to contribute to improving Myanmar's residential environment and revitalizing the economy," POSCO C&C added.

MEHL is among the Myanmar military entities sanctioned by the United States and the United Kingdom.

POSCO has repeatedly said that it has not paid dividends to MEHL since the Rohingya crisis.

In late August 2017, hundreds of thousands of Rohingya were forced to flee their homes in Myanmar's Rakhine region and escape to Bangladesh, following armed attacks, arson and mob violence, triggering a major refugee crisis.

The Korean steelmaker has a total of five businesses in Myanmar, including a gas field, a hotel, a rice-processing factory and a trading company, all run by its trading arm, POSCO International.

The gas project has been disputed as well, as it includes Myanmar Oil and Gas Enterprise (MOGE), a state-run company in a consortium of six international companies led by POSCO.

The project off the coast of Shwe, located 500 kilometers away from Myanmar's capital of Naypyidaw, is the most profitable among the five.

It posted sales of $623 million in 2020, accounting for 86 percent of POSCO International's total sales in Myanmar.

POSCO has argued that all POSCO International-managed businesses were in operation for 20 years before the coup was staged in February, when the democratically-elected government was overthrown.

yistory@koreatimes.co.kr