The controversial project has faced mounting opposition not only from environmentalists but also the communes around Bettembourg and Dudelange, where Fage purchased land for construction back in 2016.

The economy ministry confirmed reports that the project had fallen through in a statement on Tuesday, saying Fage had first approached the ministry on Thursday 17 September and confirmed its decision on Monday 21 September.

“As economy minister I regret that Fage has decided to abandon its industrial project in Luxembourg after four years of proceedings,” economy minister Franz Fayot said in the statement.

“National and European industry are going through a difficult phase,” Fayot said, adding that the project would have helped preserve the “industrial fabric” of the region. Earlier this month, steelmaker ArcelorMittal announced it would cut 570 jobs.

The €280 million investment by Fage was supposed to create up to 300 jobs, according to the ministry. But the plant was also expected to need 2.5m litres of water a day to operate--the equivalent of a city with 18,000 residents--prompting concerns over its resource requirements.

More than 20 complaints were filed against the project with authorities in Bettembourg and Dudelange over the summer. The environment and economy ministers last week had said that they would analyse all documents over the coming weeks and approve planning permission if the company met all legal requirements.

The decision to pull the plug came shortly after Luxembourg’s public prosecutor opened an investigation into the company’s finances. Fage over a period of eight years paid more than $53m to two consulting companies, its annual report shows. But the companies don’t employ any staff and are tied to the family behind Fage.

Fayot had defended the payments as tax optimisation in a meeting with lawmakers on 17 September but MPs from the CSV opposition party forwarded documents to the prosecutor for investigation.

The minister also said the state would buy the land purchased by Face back for the original price, around €30m.