Tue 29 Sep 2009
Filed under: Business / Trade
The Korean company heading the construction of a controversial pipeline project in Burma has announced a rise in shares after acquisition interest from one of the world’s largest steel companies.
Daewoo International has attracted interest after nine financial institutions put their collective 68 percent stake in the company up for sale, Reuters reported.
The shares, worth $US1.8 billion, pushed the world’s sixth largest steel firm, POSCO, to express interest in the company.
The news comes despite heavy criticism of Daewoo’s role in the construction of a $US6.7 billion oil and gas pipeline project in Burma, known as the Shwe Gas Project.
Daewoo is heading a consortium of companies building pipelines to connect Burma’s Bay of Bengal gas fields to China’s southern Yunnan province. The pipelines will also transport Middle Eastern oil cargo across the breadth of Burma.
Daewoo’s surge in success has been attributed largely to its Burmese assets, stemming from a project that has received strong support from the Burmese government and Beijing.
Extraction costs in Burma are believed to be amongst the lowest in the world, with many complaining that this is partly due to a lack of environmental and labour regulations.
Campaigners have warned that the human and environmental costs could be huge, with intense militarisation along the length of the pipeline and damage to ecosystems likely.
The campaign group, Shwe Gas Movement, have quoted the International Labour Organisation (ILO) as estimating that “more than 800,000 Burmese are currently conscripted in slave-like conditions with little or no pay” in various projects across Burma that come under the banner of ‘development’.
The military junta has also been accused recently by EarthRights International of siphoning off up to $US4.83 billion in profits to Singaporean banks.
It was also accused of utilizing exchange rate irregularities to hide funds from the public accounts.