Bangalore, July 16 : Due to prolonged delay in land acquisition, South Korean steel major Posco has decided to pull out of Karnataka where it was planning to set up its $5.3-billion (Rs. 31,800-crore) steel plant, a top company official said Tuesday.

"We have decided to scrap the six-million tonne steel project in Karnataka due to long delay in acquiring the required land in the state," Posco India chairman and managing director Yong Won Yoon said in a statement here.

Confirming Posco's withdrawal from the state, a senior official said the Korean company had withdrawn its proposal after farmers refused last year to part with their agriculture lands for the steel plant in Gadag district, about 460 km northwest of Bangalore.

"They (Posco) conveyed to us long ago about withdrawing from the state as we could not acquire land in time as hundreds of farmers protested against the project on their farm lands," state Principal Secretary (Industry) M. N. Vidyashankar told IANS here.

"With the given market conditions and significant delay in acquiring the required land in Gadag, we have decided to close our proposed six-million tonnes per annum plant in Karnataka," Yong said.

The Korean giant signed an agreement with the state government in June 2010 at the global investors' meet in the city to set up the steel plant in Gadag.

"The land acquisition was halted in July 2011 due to agitations by farmers and religious leaders. The mining scam in the state also made the progress on the project stagnant," Yong recalled.

The state government returned in June Rs. 60 crore deposit the company' paid as an initial payment for land acquisition in 2010.

The Karnataka Industrial Area Development Board (KIADB) identified 3,382 acres of farm lands for the steel project at Halligudi in Mudaragi taluk of Gadag in the northern region of the state.

Of the 536 farmers, whose fertile lands were notified, 275 filed objections against the acquisition. They also launched a massive public campaign with the help of local religious heads against parting with their farmlands.

Though the then Bharatiya Janata Party (BJP) government had shown alternative lands in other mining districts, Posco India did not show interest in them. (IANS)