"With the given market conditions and significant delay in acquiring the required land in Gadag, we have decided to close our proposed 6-MTPA (million tonnes per annum) steel plant in Karnataka," Posco India Chairman and Managing Director Yong Won Yoon said in a statement.
"We highly appreciate the Industries Department (Government of Karnataka) and KIADB (Karnataka Industrial Area Development Board (KIADB) for their co-operation and cordial support in this regard," Yoon said.
"In future, if we get an attractive business proposal from the state, we may consider it and return to Karnataka, the POSCO India CMD said.
POSCO had signed an MoU with the Karnataka government at a Global Investors Meet in Bengaluru in June, 2010 to set up a steel plant with annual production capacity of 6 million tonnes in the state, the company statement said.
Subsequently in January 2011, Posco finally zeroed in on Gadag to set up the proposed steel plant and notified KIADB accordingly, it said. The hearing was held with the land owners in June, 2011.
However, progress on land acquisition was held back due to agitation by some farmers and religious leaders and finally, land acquisition was halted in July, 2011.
In addition, the mining scam in the state made the project progress even "stagnant", the statement said.
Hence, considering the "significant delay" in the project and inability to get land in Gadag, Posco finally decided to close the project in Karnataka.
"Consequently, in June 2013, KIADB and Posco cordially agreed to end this project. However, both will positively consider any good future opportunity for investment," the statement said.
On July 1, 2013, KIADB officially returned Rs 60 crore to Posco, which was deposited as initial payment for land acquisition in 2010, it added.