Other mega-investors take care to watch the intricate Ps and Qs of Indian policy while putting down money. South Korean steel major Posco, however, is having trouble enough with its Ps and Ds?delays, that is. Though the $12 billion Posco steel project secured approval almost two years ago, and was announced as India?s largest ever greenfield project, involving 4,000 acres of land in Orissa, to make 12 million tonnes of steel, its progress has been a sorry tale of fits and starts. Despite top-level interventions by the Centre, delays have so debilitated the effort that Posco executives seem to be on the verge of giving up. The core issue is access to iron ore, but even obtaining land for the project is proving troublesome. Posco still does not have clear title to the land the state government had promised to hand over. But it is the issue of iron ore on which the odds seem to have lengthened for Posco?s prospects, with domestic considerations weighing heavily on the state?s mind. The company, armed with the size of its investment, had originally demanded mining rights for one billion tonnes of iron ore over a 50-year period. The state government was only willing to give rights to 480 million tonnes for a 25-year period. But even these limited mining leases were thrown into doubt once Kudremukh Iron Ore Corporation laid its own claim to the mines that were to be allocated to Posco. The case went to the High Court, which has asked the government to settle the issue. So, after all the running around, all that Posco has to itself is SEZ status for the proposed project zone, as approved by the Union ministry of commerce.
India needs to sort out its iron ore policy muddle, and this means keeping it free of any irrational streak of ultra-nationalism. It is unfair if ad hoc decisions are made selectively in favour of mining leases to some steelmakers, while others are deprived of the privilege. Captive mines are a source of competitive advantage in this business, and a fair way to ensure a level playing field would be to let market mechanisms determine prices and supplies of such raw materials on a dynamic basis. An efficient steelmaker that has strong market capabilities should not be at a disadvantage only because it lacks equal access to the core raw material. India believes in free and fair competition.
