In the wake of the coup in Myanmar in February, a review of how it would bring to an end a joint venture in the country with a company that is controlled by the military there is being conducted by South Korean steel making giant POSCO, said a report from the news agency Reuters quoting information from sources.
The management of the Korean parent company of POSCO is contemplating whether to sell off its 70 per cent stake in its joint venture with Myanmar Economic Holdings Ltd (MEHL) or to purchase the stocks of the partner with a deadly crackdown on protests being carried out by Myanmar’s army rulers in which hundreds of protestors have been killed, said the report quoting the sources. There was not immediate clarity on the actual worth of the remaining 30 per cent stake in the joint venture.
Since the coup there has been an increasing scrutiny of international businesses still operating partnerships in Myanmar by shareholders and rights activists which prompted the South Korean company to start discussions of this issue internally. Those companies that have already detached their business links with the Myanmar military include the likes of Australia’s Woodside Petroleum and Japan drinks giant Kirin Holdings.
The recent sanctions by the United States and Britain on the military entities in Myanmar also include MEHL. Ever since the 2017 Rohingya crisis drew international criticism of Myanmar’s military, no dividend has been paid to MEHL by POSCO C&C, the company has said on multiple occasions.
But the report also quoted sources as saying that the management of POSCO is also weary of a sudden and complete pull out from the steel joint venture in Myanmar because that could possible put at stake the hundreds of millions of dollars earned by an affiliate of the company, POSCO International, from the more lucrative gas projects that it operates jointly with state company of Myanmar.
“We won’t want to run the business like we do now, and we are reviewing restructuring our Myanmar operation,” one of the two sources with knowledge of the discussions reportedly told Reuters. “This doesn’t mean we are rushing to make any decision, but two options that could potentially take place include selling our stake or buying out their (MEHL’s) stake,” the source reportedly added.
On a previous instance, POSCO C&C had said that the US and British sanctions will not affect its business in Myanmar and had confirmed that any action at terminating its business relationship with MEHL would be considered only if its partner in Myanmar was found to be directly involved in the coup.
There were no comments on the issue available from MEHL.
The profits that POSCO International makes from its operations of the Myanmar gas projects is much larger than the earning that are made by PSOCO from the Myanmar steel business which was about 2 billion won ($1.77 million) last year .
(Adapted from Reuters.com)