The hot-rolled steel mill proposed for south-central Nha Trang’s Van Phong Bay would have breached environmental protection rules, said a decision from Prime Minister Nguyen Tan Dung, according to the Tien Phong (Pioneer) daily.
The newspaper, and other media reports, said another reason the government scrapped the project was that it would have clashed with the planned development of a major container port in Van Phong Bay.
Dung asked Khanh Hoa province leaders to discuss other possible sites for the mill, according to the news website VietnamNet.
The premier, in a televised address to the national assembly on Thursday, said the communist government had “refused a project worth 4-5 billion dollars in steel” for environmental reasons, without naming the project.
He added that the government was determined to prevent further pollution in the country of 86 million people, where rapid industrialisation since the 1990s has caused widespread river and air contamination.
In January local authorities had given Posco and local ship builder Vinashin the green light to build the mill, including a 1,000-megawatt power plant.
But the news triggered a wave of protests in the local media, with residents and tourism operators saying it would spoil the environment in the seaside resort, where a number of new luxury hotels are now being built.
The Korean industrial giant is already building a 1.1-billion-dollar steel plant, set to start operation next year, in the southern industrial Ba Ria Vung Tau province near Vietnam’s largest urban centre and port Ho Chi Minh City.