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Unique: South Korea metal large POSCO weighs the best way to exit Myanmar military-backed enterprise 


© Reuters. The emblem of POSCO is seen on the firm’s headquarters in Seoul


By Cynthia Kim

SEOUL (Reuters) – Large South Korea steelmaker POSCO (NYSE:) has begun reviewing the way it would possibly finish a three way partnership with a agency managed by the army in Myanmar within the wake of the coup there in February, two folks with first-hand data of the matter instructed Reuters.

As Myanmar’s military rulers proceed a lethal crackdown on protest, with a whole lot killed, the folks mentioned the Korean dad or mum’s POSCO C&C arm is trying into both promoting its 70% stake within the enterprise with Myanmar Financial Holdings Ltd (MEHL), or shopping for out its companion’s stake. It wasn’t instantly clear how a lot the 30% holding could be price.

The interior discussions come amid rising scrutiny from shareholders and rights activists on worldwide companies nonetheless working partnerships in Myanmar. Companies from Australia’s Woodside (OTC:) Petroleum and Japan drinks large Kirin Holdings are amongst those that have already pulled the plug.

MEHL is amongst Myanmar army entities lately sanctioned by the US and Britain. POSCO C&C has repeatedly mentioned it hasn’t paid dividends to MEHL for the reason that 2017 Rohingya disaster drew worldwide criticism of Myanmar’s army.

However the folks with data of the matter say POSCO is cautious of an abrupt metal exit as a result of it might probably jeopardise a whole lot of tens of millions of {dollars} earned from extra profitable fuel tasks operated collectively with one other Myanmar state agency by an affiliate, Posco Worldwide.

“We can’t need to run the enterprise like we do now, and we’re reviewing restructuring our Myanmar operation,” one of many two sources with data of the discussions instructed Reuters. The folks declined to be recognized citing inside firm coverage.

“This does not imply we’re speeding to make any resolution, however two choices that would probably happen embrace promoting our stake or shopping for out their (MEHL’s) stake.”

POSCO C&C beforehand mentioned its enterprise wouldn’t be hit by sanctions, and that it’s going to solely take motion if it finds that MEHL is straight concerned within the coup.

MEHL did not reply to Reuters’ request for remark.


The income POSCO makes from the Myanmar metal enterprise – about 2 billion received ($1.77 million) final yr – are dwarfed by earnings from Myanmar fuel tasks.

About two thirds of the working revenue at Posco Worldwide got here from latter final yr – round 300 billion received ($265.5 million) – in partnership with native state vitality agency Myanmar Oil and Fuel Enterprise (MOGE).

“Comparatively talking, (the) metal sheets enterprise is not making large bucks. And its possession construction is way easier than a few of POSCO’s different companies in Myanmar,” the second supply on the firm mentioned.

“But when we exit, it will be necessary to say ‘bye’ on good phrases.”

Complete of France and U.S.-based Chevron (NYSE:) have additionally labored for many years with MOGE, which is but to come back underneath sanctions, though the UN’s human rights investigator final month referred to as for coordinated sanctions.

Exiting metal somewhat than fuel would even be easier as a consequence of a extra complicated possession construction within the latter enterprise, the sources mentioned.

Whereas Posco Worldwide controls the fuel tasks through its 51% stake, India’s Oil and Corp (ONGC) and GAIL personal 17% and eight.5% stakes respectively.


Worldwide strain in opposition to the army and corporations which have ties with it has steadily risen since February, with loss of life toll near 550 within the two months for the reason that generals overthrew Aung San Suu Kyi’s elected authorities.

Shin Mee-jee at South Korea’s Individuals’s Solidarity for Participatory Democracy was amongst these at strain teams who mentioned the nation’s enormous nationwide pension fund – the Nationwide Pension Service (NPS) – ought to exert strain on POSCO to chop ties with Myanmar’s army.

NPS is the most important shareholder in POSCO, with an 11.1% stake price $2.42 billion, and the world’s third-biggest pension fund total with almost $1 trillion in property.

“What a nonsense, to see our taxpayers’ cash being channeled to kill the folks of Myanmar by way of the (pension) … The federal government additionally must be extra accountable about the place the pension fund’s cash goes,” Shin mentioned.

An NPS spokesperson declined to remark when requested if the fund or its governing committee would take motion to probably exclude POSCO from its fund.

In the meantime European buyers are taking a better curiosity in POSCO’s plans for Myanmar.

Sweden’s public pension fund, which owns POSCO shares, instructed Reuters it has quizzed the corporate over its Myanmar investments as it’s involved about human rights points within the nation.

In the meantime Nordic investor Nordea instructed the Swedish arm of the Honest Finance community, initiated by Oxfam, that it had put POSCO “in quarantine till additional discover” relating to its Myanmar plans.

($1 = 1,128.6400 received)

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