State seeks exchange of Posco ore through Odisha Mining Corporation

It is to be seen whether the Posco-India authorities would agree to exchange of high alumina-content iron ore through the state-owned Odisha Mining Corporation (OMC).

It is one of the key points in the proposed renewal of the South Korean steel major’s MoU with the state government. The state government proposes that Posco be allowed exchange of high alumina-content iron ore through the OMC. With top officials in the state government fine-tuning the expired MoU for renewal, this issue has come to the fore once again.

Chief secretary Bijay Kumar Patnaik has expressed his intention for an early renewal of the MoU which has been delayed inordinately. Legal experts said that after six and a half years of signing of the MoU, there is no need for renewing it. Both Posco and the Odisha government need to enter into an agreement for establishment of Posco’s steel project near Paradip. However, taking opinions from other departments, it has been decided to renew the expired MoU, which was signed on June 22, 2005 and expired on June 21, 2010.

Posco has proposed to set up a 12-million-tonne-per-annum (MTPA) plant in three phases of four MTPA each instead of four phases of three MTPA in each phase at a cost of Rs 52,000 crore as provided in the expired MoU. During these 21 intervening months, a lot of discussions took place and a few changes had been worked out in the proposed MoU. The earlier clause of swapping of high alumina-content iron ore with foreign ore has already been deleted with Posco’s consent. Posco in order to produce quality steel wanted to blend iron ore from Odisha with foreign ores, for which it proposed such a swapping. This is because iron ore available in Odisha has high alumina content of 2.5-5 per cent whereas foreign ore contents only 0.7 per cent.

After the state government’s denial of swapping, Posco proposed that the exchange of ore needed to be done outside the State and inside the country. Posco sources admit that the company was not sure to get a proper price if the ore was sold inside the state. The state government, however, is of the view that as there are a number of plants inside the state which are in dire need of iron ore, therefore, there would be enough buyers for it. Now, Posco has to agree to the proposal, official sources said.

However, it is not yet known as to whether the company would agree to the proposal.

[Source – Orissaindia]

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