Orissa likely to assure iron ore for Posco plant in full measure

Korean Steel major Posco has moved a step closer to start work on the much-delayed $12-billion steel project in Orissa

Korean Steel major Posco has moved a step closer to start work on the much-delayed $12-billion steel project in Orissa with the Orissa Mining Corporation (OMC) likely to give it the assurance to supply full quantity of iron ore for the plant under a negotiated price if the Supreme Court order on the linked mines goes against the company.

Sources in the know said the state government has indicated that this option (iron ore at a cheaper negotiated price) could be worked out. The detailed discussions between the companies and government officials are expected to start soon.

At full capacity of 12 million tonne (mt), the steel project requires roughly 20 million tonne of ore per annum. With an initial 8 mt capacity planned now, the ore requirement would be 14 mt and this could be offered by OMC till the time a linked mine is provided for the project.

“The assurance on iron ore is big step towards realising the steel plant. Mere transfer of land does not give enough comfort to the company to start work on the project unless raw material sources are assured,” said a person connected with the Korean steel project ever since the MoU was signed with the state government.

Though the company is expecting a positive outcome of the case in Supreme Court over granting prospecting licence for 600 mt Khandhadhar iron ore mines soon, raw material assurance could help it start work on the project immediately after getting possession of land from the state government.

?With the final judgment expected in the next few weeks, Posco could get necessary iron ore mines that could support its plant’s ore needs for 30 years,” said an Orissa government official. The state had won a similar case in the apex court earlier.

The development on iron ore comes at a time when land acquisition process for the steel project is expected to be completed for the first 8-mt phase of the project. Out of the total 2,700 acres required for this capacity, the state government has already acquired around 1,800 acres of land and is into the last phase of acquiring the remaining part.

The size of the $12-billion project, India?s single-largest foreign direct investment, has been scaled down from 12 mt earlier to 8 mt now due to the state government?s inability to acquire the required 4,004 acres for full capacity plant.

?We are positive to note the latest progress in handing over land to the company. Currently, the company is in possession of just 548 acres. We are ready with the plan to complete the 8 mt plant in five years once the entire 2,700 acres are handed over to us,? a Posco India spokesperson had told FE earlier.

The first phase of Posco?s $12-billion Orissa project could start churning out steel by 2018 if momentum is maintained over the recent progress achieved over land related issues.

?Demands of everyone who came forward with their claims on betel vines at the project site have been settled amicably. There could be some resistance even now, but we are hopeful this would be sorted out by the state government soon,? said another person associated with activities of Posco India.

In March, 2012, the project?s EC was suspended by the National Green Tribunal after a 2011 clearance from the environment ministry.

?Everything is clear from our side. A subcommittee of the expert appraisal committee had visited the site and given a positive report,? said an environment ministry official.

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First published on: 18-04-2013 at 00:56 IST