Hanoi: The decision by state-run shipbuilder Vinashin to cancel its $1bn stake in a $5bn steel joint venture with South Korea's POSCO, has not gone down well with shareholders.
The decision is part of an effort by the Vietnamese government effort to cut spending spurred by a 25% inflation rate, and is also expected to impact 40 other projects with a total investment of 6.5trillion dong ($395m). Vinashin has stated that it intends to refocus on the group's core shipbuilding businesses.
The move comes as an additional blow to POSCO, which has seen a $12bn plan to build steel mill in India delayed by frequent protests. A POSCO spokesman told Reuters the company would proceed with the steel mill plan on its own.
In January, Vietnam approved POSCO's proposal to build the steel mill in Van Phong Bay, near the south-central resort town of Nha Trang, raising environmental concerns in one of Vietnam's most beautiful bays. The steel maker said earlier this year that it aimed to start construction of the plant, which will have annual output of 4m tonnes, next April.
POSCO has already started building a separate $1.13bn facility in the southern coastal province of Ba Ria-Vung Tau that will produce 1.2m tonnes of hot-rolled steel products annually from next year.
But the group has seen its overseas expansion drive hitting a snag on weakening global economic growth and local protests.
Last week, one man was killed and two others injured in clashes over the steel maker's planned plant in an east Indian village, as tensions mounted between residents looking forward to jobs and economic development and those angry at having to give up land. [25/06/08]
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