South Koran major’s project stuck since 2005 for want of land, iron ore linkage and other clearances
The Prime Minister’s Office has asked the Odisha government and South Korean steel major Posco to amicably work out a solution to the problems plaguing the company’s $12-billion steel project in the state.
A source who was present in the meeting called by the PMO on the issue on Tuesday told FE that the Centre has categorically pointed out that no mines can be given to Posco without following the mandatory auction route, prescribed in the amended MMDR Act. The state and the company have to decide among themselves on the issued raised by Posco in this connection.
However. it is learnt that Posco did not give any definitive indication on its future course of action. On its part, Odisha government offered two solutions for steady iron ore supply for the project that includes a joint venture with state-run Odisha Mineral Corporation (OMC) or a long-term supply agreement with the firm.
Stating that it would deliberate on the proposals internally before commenting, Posco India officials expressed their dissatisfaction with the Odisha government’s failure to hand over the required land to it, causing inordinate delays to the project and in the process, huge monetary losses to the company.
Apart from principal secretary to the prime minister Nipnedra Mishra, the meeting was attended by union steel secretary Rakesh Singh, mines secretary Balvinder Kumar, Odisha chief secretary G C Pati, and DIPP secretary Amitabh Kant among others.
Posco’s Odisha project, dubbed the single-largest FDI proposal in the country, has been stuck since 2005 for want of land acquisition, iron ore linkage and other clearances. It had the potential to create more 48,000 permanent jobs and several thousands of crores of annual tax revenues. The company, however, has in the recent past given indications that it might put the project on hold.
The MMDR Act permits a state to reserve mines for public sector companies. However, the permission for that should come from the Centre. “Both the Centre and the state do not want Posco project (to fail). But the fact remains that nothing is in the hands of the Centre. So the onus is on the state and Posco to resolve the issues,” said a senior government official. But the official remained evasive when asked whether Posco did show keenness to carry on with the project.
The South Korean major has also been trying to enter the promising Indian market through the joint venture route.
Besides inking an MoU with Uttam Galva Group to conduct feasibility study for setting up a 3 mtpa steel plant in Maharashtra, it has resumed fresh talks with SAIL for a JV and is in talks with Mesco Steel for setting up a steel plant in Odisha.