Korean steelmaker Posco urged to cut ties with Myanmar’s junta

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 the country’s junta.

APG, the $668bn Dutch pension fund, said it was among a group of investors worried their holdings in Seoul-listed Posco would undermine responsible investing commitments after Myanmar’s military overthrew 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.

“The military is killing people every single day . . . A lot of investors are engaging [with the campaign at Posco],” said APG adviser Park Yoo-kyung.

Posco’s majority-owned subsidiary Posco C&C runs the steel joint venture with Myanmar Economic Holdings Limited, one of the country’s military-controlled conglomerates.

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.

General Min Aung Hlaing’s security forces have killed more than 500 civilians, including children, and arrested more than 2,600, including former officials and protesters, according to human rights groups. 

Posco C&C is reviewing its Myanmar arrangements but gave no deadline for a decision. Dividends to MEHL have already been suspended since 2017.

Justice for Myanmar, an influential campaign group, has pushed for APG as well as PGGM, a second Dutch pension fund, to shed $2.3bn in combined equity stakes linked to businesses in the crisis-hit country.

Park added that shareholders faced a “dilemma” in that divesting from Posco was “an easy option”, but it would mean abandoning their leverage over the company.

PGGM said it was “extremely concerned” by the situation in Myanmar. But the fund said it “does not directly finance the Myanmar government”.

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.

South Korea’s presidential Blue House and foreign ministry declined to comment.

JFM has also called on the Dutch funds to divest from foreign companies that do business with state-owned companies, which the military now controls. 

These include energy groups Total, Chevron and Thailand’s PTT, which work in partnership with the state-owned Myanmar Oil and Gas Enterprise on the offshore Yadana gas project.

However, the companies have questioned the impact they would have on Myanmar’s people during a time of political crisis and pandemic.

Total, which operates Yadana, at the weekend rejected campaigners’ calls to suspend tax payments to the junta, warning that doing so could expose its local managers to arrest and imprisonment.

To cut off military revenue from the project, the French energy group said it would need to cease gas production, which provides half the power for Yangon’s 5m people.

Chevron, as with Total, has condemned the military’s human rights abuses, and said it was working with the project operator “to ensure safe and reliable energy for the people of Myanmar at a time of crisis, and during a pandemic”.