The renewal of the MoU between Posco India and the Orissa government has reached a deadlock as the South Korean company is insisting that it be allowed to swap iron ore, as promised in the original MoU.
The company, which submitted its response to the draft MoU sent by the government, has said it should be allowed to swap up to 30% of iron ore inside the country if not allowed to import the mineral for blending.
Posco-India, in its letter, a copy of which is with FE, has stated that there is a need for swapping iron ore for blending purposes as the iron ore available in Orissa has high alumina content. So, if not from other countries, the company should be allowed to source iron ore with low alumina content from other parts of the country in exchange for the iron ore available in the state.
The state government in its draft MoU has deleted the swapping clause that was in the original MoU signed in June 2005.
Sources in the state steel and mines department said the government was not in favour of swapping of iron ore. Allowing transportation of iron ore from the captive mines to other states would create problems for mineral administration, the sources said. Posco India had been allowed to swap up to 30% of the 600 million tonne of iron ore promised to it as captive mines in the original MoU.
State steel and mines minister Raghunath Mohanty said on Wednesday that the state government was examining the response of Posco India on the draft MoU.
While doing away with the swapping clause, the state has made three other amendments in the draft MoU . As per the draft MoU, the 12 million tonne steel project would come up in three phases of 4 mtpa each instead of four phases of 3 mtpa as mentioned in the original MoU. Posco India would take up ancillary development as part of the project which was not there in the original MoU. Posco India would follow the job reservation policy of the state while recruiting people for the plant.