POSCO Daewoo, a subsidiary of steelmaker POSCO, decided to withdraw from a Korean consortium that took part in a Nickel plant project in Madagascar, due mainly to a continuous deficit issue prompted by the plummeting Nickel price, the company said Friday.

Since 2006, POSCO Daewoo has injected 150 billion won ($134 million) into a Nickel mine project in Ambatovy, Madagascar, after forming the Korea Ambatovy Consortium with STX and Korea Resources Corp.

POSCO Daewoo’s withdrawal from the Ambatovy project is considered part of POSCO’s moves to liquidate insolvent subsidiaries.

The Korean consortium owned a total of 27.5 percent out of the entire shares of the project, with POSCO Daewoo holding 4 percent of the shares. The rest were owned by a Japanese firm and a Canadian company.

The nickel mine project was initially estimated to draw 60,000 tons of nickel and 5,600 tons of cobalt a year for the next three decades.

The project, however, has faced challenges since 2012 when nickel prices started to fall, leading to massive deficit.

Nickel price, which soared to over $20,000 per ton in early 2012, plummeted to $8,000 late last year.

The project recorded 545 billion won in operating loss in 2014 and 3.31 trillion won in net loss last year.

By Lee Hyun-jeong (rene@heraldcorp.com)