Investors Press POSCO to Stop Business with Myanmar Military
Australian Financial Review reported that investors are urging South Korean industrial group Posco to exit a steel joint venture with a Myanmar military-controlled conglomerate as pressure builds on multinationals to cut financial links with Myanmar’s junta. Dutch pension fund APG is among a group of investors worried their holdings in Seoul-listed Posco would undermine responsible investing commitments after Myanmar’s military overthrew Ms Aung San Suu Kyi’s government in a coup in February. They pointed to Japan’s Kirin, which announced it would pull out of its two brewery joint ventures with a Myanmar military-owned company during the week of the coup, as an example to heap pressure on Posco. APG adviser Ms Park Yoo-kyung said “The military is killing people every single day. A lot of investors are engaging with the campaign at Posco.”
An influential campaign group Justice for Myanmar, has pushed for APG as well as PGGM, a second Dutch pension fund, to shed USD 2.3 billion in combined equity stakes linked to businesses in the crisis-hit country.
The US and the UK have imposed sanctions against MEHL and Myanmar Economic Corporation, another military conglomerate with extensive holdings in a number of sectors, further complicating the picture for companies with links to the groups.
The Korea Metal Workers' Union posted about 20 banners around POSCO’s Gwangyang Steelworks on March 18 calling for the suspension of economic cooperation between POSCO and Myanmar's military government.
Calls for foreign groups to divest from Myanmar mounted in the wake of the military’s 2017 deadly crackdown on Rohingya Muslims in the country’s western Rakhine state. But they have intensified since the February coup. According to human rights groups, General Min Aung Hlaing’s security forces have killed more than 500 civilians, including children, and arrested almost 2700, including former officials and protesters.
POSCO has been conducting several joint ventures with Myanmar Economic Holdings Limited, the economic foundation of Myanmar's military, through subsidiaries such as POSCO Coated & Color, POSCO International and POSCO E&C. POSCO C&C set up two joint ventures with MEHL and POSCO International and POSCO E&C own more than a 5% stake in the Yangon Lotte Hotel Project, which is promoted on a military owned site. Also Shwe natural gas project is being developed in a three-phase scheme by a consortium of six companies, led by POSCO subsidiary Daewoo International. The consortium includes POSCO Daewoo International 51% operator, Oil and Natural Gas Corporation Videsh 17%, Myanmar Oil and Gas Enterprise 15%, Gas Authority of India 8.5% and Korean Gas Corporation 8.5%.
Now according to a latest report in Reuters, POSCO has begun reviewing how it might end a joint venture with Myanmar Economic Holdings Limited. Sources told Reuters that POSCO C&C is looking into either selling its 70% stake in the venture or buying out its partner's stake. But the people with knowledge of the matter say POSCO is wary of an abrupt steel exit because it could potentially jeopardise hundreds of millions of dollars earned from more lucrative gas projects operated jointly with another Myanmar state firm by an affiliate, Posco International.
Sweden's public pension fund, which owns POSCO shares, told Reuters it has quizzed the company over its Myanmar investments as it is concerned about human rights issues in the country. Meanwhile Nordic investor Nordea told the Swedish arm of the Fair Finance network, initiated by Oxfam, that it had put POSCO in quarantine until further notice regarding its Myanmar plans.