Cutting Ties With Myanmar's Military Regime, South Korean Steel Producer Considers Two Options

JAKARTA - South Korean steel producer POSCO is said to be reviewing steps to end a military-controlled joint venture in Myanmar.

Sources familiar with the matter said South Korea-based POSCO C&C is seeking to sell 70 percent of its stake in a joint venture with Myanmar Economic Holdings Ltd., (MEHL), or buy a 30 percent share of its partner whose ownership value is not yet known.

This was done due to the worsening situation in Myanmar, where violence against protesters continues. It was recorded that around 557 protesters against the Myanmar military anti-coup had died as of Sunday, April 4.

MEHL is one of only two Myanmar military business entities recently sanctioned by the United States and Britain. Meanwhile, POSCO C&C confirmed that it has not paid dividends to MEHL since the Rohingya crisis in 2017.

However, POSCO is said to be paying close attention to the stability of the steps taken, considering the impact on the potential income of hundreds of millions of dollars generated from more profitable projects. The project operated with other Myanmar state companies with POSCO International affiliates.

"We don't want to run the business like we are doing now, and we are reviewing the restructuring of our Myanmar operations", one of two sources familiar with the discussions told Reuters.

"This does not mean we are in a rush to make any decisions, but the two potential options include selling our shares or buying their shares (MEHL)", the source continued.

POSCO C&C previously said their business would not be subject to sanctions, and would only take action if it found MEHL was directly involved in the Myanmar military coup. MEHL did not respond to Reuters' requests for comment.

Meanwhile, POSCO's profit from Myanmar's steel business was around 2 billion won or around USD 1.77 million last year. As for about two-thirds of the operating profit at Posco International last year, about 300 billion won or USD 265.5 million in partnership with local energy company Myanmar Oil and Gas Enterprise (MOGE).

"In relative terms, the steel sheet business does not generate a lot of money. And the ownership structure is much simpler than some of the other POSCO businesses in Myanmar", said a second source at the company.

"But if we go out, it's important to say 'goodbye' well", he added.

Separately, Shin Mee-jee from the South Korean People's Solidarity for Participatory Democracy, asked the National Pension Service (NPS) to pressure POSCO to cut ties with the Myanmar military.

NPS is the largest shareholder in POSCO, with an 11.1 percent stake valued at USD 2.42 billion. NPS is the third-largest pension fund in the world as a whole with assets of nearly USD 1 trillion.

"It doesn't make sense to see our taxpayer money being channeled to kill the Myanmar people through (pensions). The government also needs to be more responsible about where the pension funds go", said Shin.

An NPS spokesman declined to comment when asked if the fund or its regulatory committee would take action to possibly remove POSCO from its funds.

Regarding the Myanmar Coup. VOI editorial team continues to monitor the political situation in one of the ASEAN member countries. Casualties from civilians continue to fall. Readers can follow the news surrounding the Myanmar military coup by tapping on this link.