1. Posco will have to compete for Khandadhar iron ore mines

Posco will have to compete for Khandadhar iron ore mines

Posco-India’s proposed $12-billion Odisha steel project, hanging fire for years, has received another jolt with the Centre refusing to allot the Khandadhar mines...

By: | Bhubaneswar | Published: April 10, 2015 3:50 AM

Posco-India’s proposed $12-billion Odisha steel project, hanging fire for years, has received another jolt with the Centre refusing to allot the Khandadhar mines to the South Korean giant outside the auction route mandated by the Mines and Minerals (Development and
Regulation) Amendment Act, 2015.

The mines ministry has made it clear that the Khandadhar mines would be put up for auction under the new law. The ministry, while rejecting the state government’s appeal for allotment of the Khandadhar mines to Posco-India, has asked the state government to initiate the auction process under the new Act, sources in the know told FE.

Apart from the uncertainty inherent in an auction, this means Posco will have to incur auction expenses and make an additional contribution of up to 100% of the royalty that goes to the states towards the District Mineral Foundation to grab the mine.

Posco’s misfortune is despite scores of other metal companies standing more than a fair chance of their current reconnaissance permits (RPs) and prospecting licences (PLs) for different minerals getting upgraded to the all-important 50-year production leases under the new MMDR Act, without having to go through the auction route.

The issue is that the Korean major is yet to obtain a PL for the area concerned. Its application for a PL has been pending with the centre for a while. Odisha chief minister Naveen Patnaik had earleir written to PM Narendra Modi to intervene in the matter to facilitate the 12–million-tonne steel unit.

Sources said union mines minister Narendra Singh Tomar has informed Patnaik that Posco’s application for the Khandadhar mines has become ineligible under the MMDR Ordinance, which was issued prior to parliament passing the relevant Bill.

“For facilitation of setting up of a steel complex by Posco-India can only be done in the present ambit of prevailing Act and Rules”, Tomar has said in his letter to the chief minister.

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