"The work has been moving forward slowly. But we never announced a termination to it," head of publicity for the state-owned Chinese steel giant, Sun Jing, told AFP.

"We must carry out careful feasibility studies to make a comprehensive assessment and analysis of various risks. We would only invest when returns on the investment are assured," he said.

Under the 2010 agreement with Brazil's LLX -- a unit of the EBX group controlled by Brazil's richest man Eike Batista -- the plant was slated to come online next year with annual steel output of five million tonnes.

The project, if realised, would become China's biggest investment in Brazil as well as the largest Chinese investment in an overseas steel plant, then Brazilian president Luiz Inacio Lula da Silva said at the time.

China's 21st Century Business Herald reported this week that the Chinese company had shelved the project due to high costs, a slump in demand for steel and the failure to secure a stable coking coal supply for the plant.

Sun acknowledged that feasibility studies had found the project faced "many difficulties" and the company had to calculate whether the investment would make profits.

Peng Weike, an official from the Chinese steel giant, said that it was hard to predict how long the plant would be delayed at this stage.

"What we can say is that the studies are still going on. We can't say when a feasibility report will be out because we are still analysing some data," he told AFP.

According to the terms of the original agreement, the Chinese company would own 70 percent of the plant, with the Brazilian firm taking the remaining stake.