South Korean steelmaker Posco said Friday it has decided to put on hold a $12 billion project to build a steel plant in India, as part of restructuring to cut its overseas business amid a global industry slowdown.

“We have decided to shut down unprofitable local and overseas businesses as part of a restructuring plan aimed at boosting profit growth,” said a Posco spokesman.

But he added that the decision didn't necessarily mean the company will give up its Indian project for good.

Posco and the government of India’s eastern state of Orissa signed an initial agreement to build the plant in 2005.

The project was mired in delays due to problems surrounding environmental clearanceand procuring land in an area populated by poor communities and farmers.

In May 2007, three executives were kidnapped for a day by activists protesting against Posco’s project. The company has also faced lengthy court battles over the acquisition of forest land and delays in obtaining permissions, including environment clearance, which was finally granted in January 2014.

A Posco India spokesman said the company has so far acquired only around 600 acres out of more than 4,000 acres needed for the 12-million-tons-per-annum steel plant, billed as one of the largest foreign-direct investments in India.

“There has been no progress on the site. We are not able to acquire land,” he said.

The company isn’t planning to shift the steelmaking project to another Indian state, the spokesman added.

R. K. Sharma, secretary of Orissa’s steel and mines department, wasn't reachable for comment.

Two years ago, Posco pulled the plug on plans to build a 6-million-ton-per-annum steel plant in the southwestern state of Karnataka citing deteriorating market conditions and delay in securing mining rights as the reason for canceling the plans.

Posco, the world’s sixth-largest steelmaker by revenue, said earlier this week it will reduce by about a third its overseas businesses and cut the number of local units by half to boost the company’s profitability.

Will Byun, an analyst at NH Investment & Securities, said Posco will likely continue to stay in India even if it decides to scrap the project altogether.

“Emerging markets are the only place where steelmakers see growth. That’s why Posco and other global players have shown great interest in India,” said Mr. Byun.

Posco has already established a downstream steel project in the western Indian state of Maharashtra through establishing a cold rolling mill and galvanizing line to transform primary steel into a better finished product.

“We are looking for downstream projects in other states,” the Posco India spokesman said.

The Indian steel ministry’s Chief Economist A.S. Firoz said he believed that Posco’s decision on the Orissa project was probably influenced by a global steel glut as well as the company’s overall plans world-wide.

While acknowledging that the South Korean company would have been unhappy at not being able to complete the project, Mr. Firoz said: “The world view has determined their view on their project in India.”

On Friday, Posco’s shares fell to the lowest level in nine years following a worse-than-expected second-quarter earnings earlier in the week.

The steelmaker’s operating profit fell 18% on year to 686 billion won ($598 million) in the April-June period.

A flood of cheap exports from China, where steel demand is faltering after decades of growth, pushed prices to the lowest level in more than a decade, eroding profits at mills across Asia. Posco Chief Executive Officer Kwon Oh-joon said on Wednesday he would drop noncore operations to focus on Posco’s mainstay steel.