Vietnam's state- run shipbuilder Vinashin has cancelled plans to invest US$1 billion in a US$5 billion steel venture with South Korea's Posco, sending shares in the world's fourth largest steel maker down 3 per cent.
The decision, part of the Vietnamese government's efforts to cut spending to reduce inflation running at 25 per cent, is an additional blow to Posco, which has seen a US$12 billion plan to build a 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.
Shares in Posco dropped 2.4 per cent to close at 539,000 won after falling to 533,000 won, lagging a 0.9 per cent drop in the broader market.
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.
Posco said earlier this year that it aimed to start construction of the plant, which will have annual output of four million tonnes, next April.
The South Korean group is one of many global steel firms, including India's Tata Steel and Taiwan's Formosa, looking to Vietnam for expansion and as a gateway to the South-east Asian market.
Posco has already started building a separate US$1.13 billion facility in the southern coastal province of Ba Ria-Vung Tau that will produce 1.2 million tonnes of hot-rolled steel products annually from next year.
But the group has seen its overseas expansion drive hit a snag on weakening global economic growth and local protests.
Last week, one man was killed and two others injured in clashes over Posco's planned plant in an east Indian village, as tension mounted between residents looking forward to jobs and economic development, and those angry at having to give up land.
Vinashin chairman Pham Thanh Binh said in a statement that in addition to the Posco venture, it would also delay or suspend 40 other projects with a total investment of 6.5 trillion dong (S$536.5 million) to refocus on the group's core shipbuilding businesses.
The decision, part of the Vietnamese government's efforts to cut spending to reduce inflation running at 25 per cent, is an additional blow to Posco, which has seen a US$12 billion plan to build a 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.
Shares in Posco dropped 2.4 per cent to close at 539,000 won after falling to 533,000 won, lagging a 0.9 per cent drop in the broader market.
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.
Posco said earlier this year that it aimed to start construction of the plant, which will have annual output of four million tonnes, next April.
The South Korean group is one of many global steel firms, including India's Tata Steel and Taiwan's Formosa, looking to Vietnam for expansion and as a gateway to the South-east Asian market.
Posco has already started building a separate US$1.13 billion facility in the southern coastal province of Ba Ria-Vung Tau that will produce 1.2 million tonnes of hot-rolled steel products annually from next year.
But the group has seen its overseas expansion drive hit a snag on weakening global economic growth and local protests.
Last week, one man was killed and two others injured in clashes over Posco's planned plant in an east Indian village, as tension mounted between residents looking forward to jobs and economic development, and those angry at having to give up land.
Vinashin chairman Pham Thanh Binh said in a statement that in addition to the Posco venture, it would also delay or suspend 40 other projects with a total investment of 6.5 trillion dong (S$536.5 million) to refocus on the group's core shipbuilding businesses.