BRATISLAVA -- Slovakia's government has approved a plan to expropriate land needed to build a 1 billion euro ($1.2 billion) Kia Motors car plant and to safeguard the investment, a minister said on Wednesday.
The government of the new EU member state will miss the end-August deadline for preparing the site for its largest greenfield investment because some landowners had refused to sell their land at prices offered by the state.
The land dispute has been dragging on since end-May and the delay has weighed on the Slovak crown as banks have worried that the South Korean car maker could abandon the project.
But the government, which had so far secured around 80 percent of the land needed for Kia and its parts supplier Hyundai Mobis, said expropriation should solve the land problem.
"The government agreed on procedures that will lead to expropriation of the land," Economy Minister Pavol Rusko told journalists.
"It is the most realistic way to save this investment for Slovakia," he added.
Rusko had originally favoured moving Kia to a new location in Slovakia, but both the car maker and the government rejected such an idea.
However, Rusko had previously warned that even expropriation could delay the project by up to nine months because the landowners had the right to challenge such a motion in court.
He said the government would continue to preparing the land that had already been secured for construction of the plant and this strategy should make up for some of the delay.
The Kia project is a major part of Slovakia's ambition to become the top car producer by head of population.
The country already produces around 280,000 cars a year at a Volkswagen factory. The output will double in 2006 when PSA Peugeot Citroen is scheduled to finish its 300,000 cars-a-year plant, while Kia wants to start assembling 200,000 units a year in late 2006.